I greatly welcome this debate, which provides us with an opportunity to review the progress of housing policies. On this occasion it enables me to inform the House of our main conclusions on the housing Green Paper that we published just over a year ago and to outline the general aspect of the legislation that we intend to introduce.
I also welcome of course—one always does—the speech of the hon. Member for Henley (Mr. Heseltine). His speeches are always lively. I sometimes find them a little difficult to follow, because he and I study the same mass of data and information and I sometimes puzzle how it is that we draw such different conclusions from them. Nevertheless, that is what we do. I should therefore begin by describing some of the matters on which we disagree. This is right, because it is almost a year to the day since we last debated housing on an Opposition Supply Day motion, in the context of reviewing the main developments of the past 12 months and the present outlook I am glad to say—I do not see how anyone could fail to be equally glad if he was interested in housing and in people—that in nearly every sphere of housing policy there has been a considerable improvement since our last debate.
First, we have been able to increase capital expenditure on housing. In the construction package of last October, the Chancellor announced a substantial increase in public expenditure. As part of that, we were able to allocate an additional £170 million to housing investment for 1978–79 and a further £100 million for 1979–80. As those who have studied this year's public expenditure White Paper will know, the housing investment programme is now rising again and the new level will be maintained over the whole period.
Secondly, we have enjoyed another year of moderation in rent increases in the public sector. On average, rents rose by just on 60p a week in 1977–78 and all the signs are that the rise is likely to be less in the current year.
Thirdly, in spite of the setback of 9th June, we have seen over the past 12 months a most welcome fall in mortgage interest rates. When the hon. Member addressed the House on 20th June 1977, the mortgage rate stood at 11¼ per cent. When the latest increase comes into effect, it will be 9¾; per cent. Of course I regret that increase, but 9¾ per cent. is a welcome change from the 1l¾ per cent. of a year ago and the 11 per cent. at which the rate stood when we took office from the previous Administration at the beginning of 1974.
Many millions of owner-occupiers have been helped in the past year by falling mortgage rates. They have been helped, too how the hon. Gentleman can deny this I do not know—by the growing number of building society mortgages which have been available. There were 786,000 mortgage commitments in 1977 and no fewer than 858,000 in the 12 months ending May this year. Both are record figures for mortgage advances.
Fourthly, we have introduced a new and valuable measure to assist first-time purchasers. It will provide for those qualifying—and we expect about 200,000 buyers a year to qualify—an interest-free loan of £600. This will be added to the normal mortgage advance. For many first-time buyers this will make all the difference in assembling the necessary deposit. Because the loan is interest free for five years, buyers will find their mortgage payments reduced by about £4 a month. On top of this, savers can also qualify for bonus of up to £110—which is cash.
Young couples setting up their first home will understand and appreciate the help they are getting—even if hon. Members opposite continue to lack both comprehension and appreciation. If, as I hope, we shall obtain Royal Assent in the next few weeks, the two-year saving period can begin in the autumn. From that date, prospective buyers can make their plans in the knowledge of the conditions they must fulfil and the help they will receive.