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1974 Aug 28 We
Margaret Thatcher

Written Statement ("The Conservative Party’s New Policy Proposals on Housing and Rates")

Document type: Speeches, interviews, etc.
Document kind: Written Statement
Venue: Conservative Central Office, Smith Square, Westminster
Source: Thatcher Archive: CCOPR 407/74
Journalist: -
Editorial comments: 1030. Evidently circulated at the Press Conference.
Importance ranking: Major
Word count: 504
Themes: Monetary policy, Housing, Local government, Local government finance

THE CONSERVATIVE PARTY'S NEW POLICY PROPOSALS ON HOUSING AND RATES

prepared by

THE RT. HON. MARGARET THATCHER, M.P. (Finchley) Shadow Secretary of State

for the Environment

And her policy groups.

[end p1]

Housing

We shall give top priority to the nation's housing needs.

At present 51 per cent of houses are owner-occupied. Many more people would like to own their homes and it is our purpose to enable them to do so.

First, we shall hold down the interest rate charged by building societies to home buyers to not more than 9½ per cent. To attract money from savers the societies must offer the market rate. Unless Governments take action this is passed on to the home buyer. By varying the rate of tax payable by the societies (the composite rate) they could continue to keep a supply of money flowing in without passing on the full increase to the purchaser.

This step would help all home buyers.

Various questions have been raised about the liquidity and reserve ratios of building societies, the legal restrictions upon them and the possibility of widening their powers. To settle these matters we shall set up a one year inquiry to sit full-time and to make recommendations to the Government on the future role and structure of the societies.

Second, first-time purchasers of private houses and flats need special help with the deposit. We shall start a Home Savings Grant Scheme in which people who save regularly with building societies under schemes approved by the Government will receive a grant proportionate to their savings.

The scheme would take at least two years to mature so that builders had sufficient time to increase the supply of houses for purchase otherwise the extra grant would have the effect of pushing up prices. [end p2]

Third, we shall give the Council tenant of at least three years standing a new deal. He will have the right to purchase his home at one-third less than market value. In the event of re-sale within five years he would have to surrender the appropriate proportion of any capital gain to the local authority. Rates

Local authority expenditure has been growing faster than the economy as a whole. Although 60 per cent of this expenditure is met by grant from the taxpayer, the burden on the domestic ratepayer has risen sharply. The rating system itself has come under increasing criticism because it does not reflect people's ability to pay.

Further heavy increases in rates are forecast. In these circumstances Conservatives will take the following steps.

First, in the medium term, we shall transfer to central government the cost of teachers' salaries up to a specified number of teachers for each local education authority. Expenditure on police and the fire services will qualify for increased grants from the Exchequer. We shall see that this saving is passed on to the ratepayer.

Second, within the normal lifetime of a Parliament we shall abolish the domestic rating system and replace it by taxes more broadly based and related to people's ability to pay. Local authorities must continue to have some independent source of finance.