Mortgage Costs and Housing

Part of Opposition Day – in the House of Commons at 6:28 pm on 13th December 1989.

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Photo of Mr Clive Soley Mr Clive Soley , Hammersmith 6:28 pm, 13th December 1989

When a Minister gets the kind of reception at the Dispatch Box at the beginning of a debate that the Minister for Housing and Planning got today, it is normally because people feel angry or because the Minister is not dealing with the issues seriously and in depth. Today both situations apply. Hon. Members are justifiably angry, and people right across the board are angry about the growing housing crisis in Britain.

The Minister does not have a good case, and that was why there was such a vacuum in his speech, and why there is a vacuum in Government policy. That is why we do not have a proper housing Minister. The Minister spends most of his time privatisating water and his junior spends most of his time privatising the Property Services Agency. Housing is a second-rate issue for them. For the welfare of thousands of people throughout the country, however, it is vital.

The Government have gone seriously wrong. I must tell the Minister and other Conservative Members who have spoken that Labour is not alone in accusing them of having a disastrous policy; nor are housing organisations alone in accusing them of having a disastrous policy.

When the Minister criticised, or rather tried but failed to criticise, my hon. Friend the Member for Dagenham (Mr. Gould) about the state of repair of the housing stock, he ignored a report produced by the Conservative-controlled Association of District Councils, which could not have put it more clearly when it said: But neither of these estimates take into account the need for resources to tackle additional dwellings falling into disrepair in the private sector or the further deterioration, while awaiting attention, of stock already in poor condition. It is therefore clear that at the current level of public expenditure the bulk of the stock condition problem cannot be tackled within the next decade. The ADC called for an increase of a minimum of £35 billion, although the upper end of its proposed scale was £50 billion. Its view is seconded by the Conservative-controlled London Boroughs Association and most Conservative councils throughout the country.

On what is the Government's reputation built? They came up with one or two policies in 1974 which, stupidly, they have stuck to. They said of helping first-time buyers: The first part of our programme for doing this is to reduce the interest rate charged by building societies to home buyers to 9½ per cent. and ensure that it does not rise above that figure…Our second proposal is to give first-time purchasers of private houses or flats special help in paying the deposit. In 1979, they backed off a bit from saying that they would keep mortgage interest so low. They were not specific but, when it came to it, the first thing that they did, in November 1979, was to increase the mortgage interest rate from 11 to 15 per cent. On only two short occasions during the past 10 years has the mortgage interest rate been below 10 per cent. That is a measure of the Government's economic policy failure.

The hon Member for Hornsey and Wood Green (Sir H. Rossi), who was the Conservative spokesman on housing at the time, said just before the general election: as soon as we are in office we shall introduce a scheme that we announced not just today but as long ago as three and half years ago.Under that scheme, the first-time buyer will receive a tax-free bonus of £ 1 for every £2 saved. Therefore, if he saves only £300, he will receive a bonus of £150 when he buys his house".—[Official Report, 20 February 1978; Vol. 944, c. 1047.] The hon. Gentleman spelt the scheme out in more detail. Neither of those promises was kept. They were both clearly broken.

The Prime Minister said in 1980: I recognise that the Government are borrowing too much. The interesting correlation is that when the Government borrow less…interest rates go down. I shall be delighted to have the support of the right hon. Gentleman"— a reference to the then Leader of the Opposition, now Lord Callaghanand those who sit behind him to get down Government spending and borrowing, because interest rates will then go down."—[Official Report, 22 November 1979; Vol. 974, c. 554.] What went wrong with the theory? It is a disastrous failure. Interest rates are still incredibly high. The failure has been unique.

Recently, something important in housing happened. The former Secretary of State for the Environment was moved to the Department of Trade and Industry, much to the regret of that Department, and we now have a new, green Secretary of State who does not understand much about housing but knows that he has a crisis on his hands. He is much more in the mould of the previous Conservative Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath). Significantly, for the first time in 10 years, as a result of the appointment of the new Secretary of State, instead of going down, the housing investment programme is to go up next year. But what the poor new Secretary of State does not know is that he has already been kiboshed by his predecessor, who put through the Local Government and Housing Act 1989 which will mean that there will still be a cut of no less than 24 per cent. in the HIP.

I am grateful to the Minister for Housing and Planning who, although he may have misquoted me several times, did me the courtesy of quoting me almost word for word when he lifted my Labour party press release in which I spoke about rents going through the roof. One of the things that I recommended to the Conservative party, and have done for a long time, is to enable local authorities to extend the lease-back scheme in the private sector to bring into use the thousands of privately-owned empty properties. Lo and behold, the Minister has done that, using almost my very words. He has, however, done it late, and it appears that there is still no policy because only in November, under the previous Secretary of State for the Environment, the Government said that they would not extend the lease-back scheme.

Those of my hon. Friends who served with me on the Committee stage of the Local Government and Housing Bill will remember that we were told that the lease-back scheme would not be extended, although we pleaded for it. More of a crisis was brought on when the Government put out their new rent guidelines, based on the capital value of houses. That was guaranteed to send rents rocketing.

I put out a press release saying that rents in Mole Valley, which is represented by the chairman of the Conservative party, would increase by a fantastic £5·20 a week in the first year, and by 115 per cent. over a longer period. Then, in a letter dated 8 December 1989, local authorities were told that the Government seemed to have misjudged the situation and that they would like to review it before Christmas. They do not know what they are doing because they do not have a policy. That is the reason for the crisis.

I said years ago what Conservative and Labour councils throughout the country said—"For heaven's sake recognise the fact that you are creating an enormous housing crisis." I repeat, for the benefit of hon. Members who have said that they did not hear any policy statement, that one way in which to tackle the problem is to allow local authorities to use capital receipts. The hon. Member for Hornsey and Wood Green wanted to do that. He claimed, possibly correctly, to be the first Conservative Member to invent the right to buy. He also said that local authorities should keep the receipts and use them for housing. As I said in Question Time, when the hon. Member for Hornsey and Wood Green pushed for that he was moved to Northern Ireland. The Secretary of State said I was insulting Northern Ireland by saying that. I do not agree. The Prime Minister insulted Northern Ireland and her housing Minister, because he was right.