asked the Chancellor of the Exchequer what would be the total cost to a local education committee of a school, for which the tender price is £170,000, after interest has been paid for 60 years at 6¼ per cent.
Local authorities customarily borrow over 35 years for school building projects, not 60 as the hon. Member suggests. The repayments of capital and interest on a loan of £170,000 for 35 years at the current Public Works Loan Board interest rate of 6¼ per cent. would amount to £421,000.
Does not the Chancellor think that, instead of talking about cutting local authority projects, such as schools, it would be much better in the interests of education and other social services if the interest rates were cut to a more reasonable level which would not put such a heavy burden on local authorities and the individuals who have to find the money?
No. That would be quite the wrong aproach to the matter. If there is a shortage of capital the greatest possible mistake is to have artificially low rates of interest. If we are to correct the position, then I think that local authorities must pay the market rate—otherwise the position will never be corrected. Of course, one would rather that schools were built out of the savings of local authorities. They would then not have to pay interest rates. But I fully realise that that is not possible. That not being possible, I think that interest should be paid at the current market rate.
Is the Chancellor so myopic that the cannot see the connection between his last Answer and the earlier Answer to the Questions about building controls? Is he not aware that the shortage of capital is largely due to the fact that so much unnecessary and frivolous building is being allowed to go on without any restriction while restrictions are having to be applied by interest rates and in other ways to essential school building?
I do not accept that there is a large amount of unnecessary and frivolous building going on. The idea that office building provides nothing to the nation is quite wrong. There is basically a shortage of capital and I think that to fiddle about with interest rates is the wrong way to deal with the problem.