§ Question again proposed. That this House doth agree with the Lords in the said Amendment.
§ Mr. Douglas-Mann
I have in front of me figures published by the Nationwide Building Society on house prices. During the period from 1965 to 1970 house prices on the one hand and the cost of house building, wages and materials used therein on the other hand, increased almost exactly in line. If we take December 1965, as the base line of 100, we find that by December, 1970, the cost of house building, materials and wages had risen by 31 per cent. and that of house prices by 33 per cent. That position continued until June, 1971, when the two were still approximately in line—140 as compared with 144.
Then we had the White Paper, and immediately following it there was an immense rise in property prices. They rose from 144 in June, 1971, to 161 in December, 1971, and to 189 in June, 1972. That was a rise of 45 points or just over 31 per cent. I do not have the complete figures for the rise in prices of house building, wages and materials for that period, but they had risen by only two points in the first six months—from 140 to 142—and I have no reason to suppose that they rose more than another few points during the subsequent six months. My contention is that the reason for the increase in house prices that we are now experiencing and which has caused immense hardship is not any rise in the cost of wages or materials 1671 going into house building but the increase in the value of the expected return on land. It is land alone that is causing this immense rise and causing the grave hardship that so many families are now suffering.
What determines the price of land? Landis a constant. What determines the price is the price that people expect to have to pay for their homes. It is the price that council tenants will have to pay and that private tenants will have to pay for their accommodation which determines the cost of housing in one sector and also determines the return that the provider of houses expects to get from it. It also determines the rent that someone is willing to pay to get out of the rented market, because he knows that he will have to pay more next year, still more the following year and still more the year after that.
I contend that publication of the White Paper last year and the Bill that followed was directly responsible for the immense increase in house prices that we have experienced over the last year. That rise is producing acute social problems, not merely for young people seeking to buy their first home but affecting people who live in areas such as my area and South Kensington, where property values are rising not just by 30 per cent. but by as much as 50 or 60 per cent. in a year.
In Committee I referred to the fact—it was suggested that I was exaggerating—that Victorian terraced houses in Kensington were being sold for £40,000. The same houses are now being sold for between £45,000 and 48,000. This process is continuing, and it will continue unless the Bill is withdrawn.
Where a family are occupying one floor, the house is being regarded as worth £10,000 per floor. Some families are being squeezed into £5,000-worth of accommodation, and all they have is one bedroom and the use of a bathroom and lavatory on the floor below. The level of rent which will be fixed by the rent officer will be much too high for a working-class family to afford. Immense pressure will be imposed by landlords to get families out of the accommodation.
I am sure the hon. Member for Kensington, South will not dispute that 1672 much hardship is being experienced in North Kensington as a result of the activities of those who are trying to get rid of tenants so that those properties may be resold. Even the Minister will acknowledge that this is happening. However, the Minister brushes these difficulties aside by saying that if these properties are being improved for middle-class occupation and working-class families have to go elsewhere, this is a housing gain. The developments which are causing acute hardship to so many families are a direct result of the sharp rise in property prices, and this is a consequence of the Bill. I trust that even within a short period of delay the Government will think about the subject yet again and will review their decision.
I should like to see a longer delay before the Bill is implemented not only because it will affect the impact of house prices. We must also remember that not only Section 62(5) applications will be considered by the Department but that applications will need to be granted under Clause 20 and Schedule 3 of the Bill, which deal with the removal of the limits on rent allowances and rebates.
As the Bill stands, the maximum rent rebate is £8 and the minimum rent is 40 per cent. of the "fair rent". With the kind of rents that are likely to result in Kensington where properties are valued at £10,000 per floor, a maximum rent allowance of £8 will be totally insufficient to bring these rents within the reach of families on ordinary incomes. It will be essential in many central urban areas for the Minister to use a wide discretion in terms of Clause 20 and Schedule 3.
§ Mr. Ronald Brown
Is my hon. Friend aware that the Minister has already stated during preliminary discussions that he expects people to be turned out of such expensive accommodation and moved into poorer accommodation?
§ Mr. Douglas-Mann
I was not aware that the Minister was glorying in his expectation of it, and I trust that this is not so. I am saying that this is an inevitable consequence of what is being proposed in this Measure. But I know that the view has been expressed by the leader of the Kensington Council that the poor will have to move out, and that that was said before this Bill was even presented.
1673 Obviously the Bill will make it more likely that the poor will have to move not just out of North Kensington but out of all the central areas of our major cities. With the Bill and the level of expectation of returns on property we are creating a situation where property values are changing so fast that it is a great concession when a landlord continues to allow working-class families to remain occupying premises in city centres, and landlords will not do it if they can help it. We are getting to a situation where the poor will be evicted forcibly by pressure from landlords, by financial pressure and by the absence of adequate rent allowances and rebates, and obliged to move out of central city areas.
This is a consequence of the Bill, and I believe that the immense increase in property values is not just one of the consequences but one of the major purposes of the Bill. It is not to save the £100 million or £150 million in subsidies that we have the Bill. We have it to ensure that property values rise so that the distinction between the two nations is perpetuated, the two nations in this case being those who own property and those who do not, those who have to pay a rent which increases year after year and those who own property the value of which increases year after year.
We have 8 million families who own houses. I am very glad that we do. Those 8 million families have seen the value of their assets go up in money terms by 30 per cent. in the last year. That 1674 is of no benefit to a family owning one house. But it is of immense benefit to someone who owns a great deal of land, a number of houses, or property shares. It is of no benefit to anyone who needs a house in which to live. An increase in property prices of 30 per cent. represents a transfer from those who are paying rent to those who own property. That is a consequence of the Bill, and I believe that it is one of the purposes behind it.
I hope that during the period of further delay that we wish to see the Government will think about this yet again and take steps to ensure that we do not have a further escalation in the rate at which middle-class families are colonising the working-class areas of our cities.
The decontrol provisions in the Bill coupled with the increasing level in council rents will have the effect of drastically increasing property values. We have provisions in the Bill which enable landlords to carry out improvements against the wishes of tenants. We have the automatic provision for decontrol. All these will create differences between the two sections of society. I believe that it is the intention of the Conservative Government to do this. This is the effect of the Bill. I trust that even at this late stage, when right hon. and hon. Gentlemen opposite are seeing the consequences of so many of their other policies blowing up in their faces, they will have further thoughts.
§ 10.15 p.m.
§ Mr. Julius Silverman
The hon. Member for Kensington, South (Sir B. Rhys Williams) referred to the words of Samuel Johnson to the effect that nothing concentrates the mind of a man who is going to be hanged more than knowing that he is to be hanged in the next hour. "Hanging" is just about how tenants and councils feel about this Bill. Certainly it is opposed by tenants and by the Association of Municipal Corporations. They look upon its provisions with considerable apprehension.
However, concentration of the mind does not necessarily provide the services, the accountancy and the municipal servants necessary to do the job of bringing this very complicated Measure into operation. That is why we are opposed to the Bill being rushed through the House. We believe that the Minister should seriously consider delaying it.
I draw the Minister's attention to an article in the Local Government Chronical of 14th July this year by its financial editor, Mr. George Forster, in which he suggests postponing the operation of the Bill. This is not a political journal; it represents the considered views of local authorities. The article suggests that the operation of the Bill should be postponed for 12 months. It gives two reasons. One is the present economic situation. The article states:The economic difficulties which have supervened, with the removal from the pound of the strong support given by a fixed parity, the record high level of salary and wage settlements in the public sector, the dangerous inflation, the continuing high level of unemployment, have all clouded the sky and sharpened differences. This is not the atmosphere in which to force through so drastic a measure as the Housing Finance Bill, however justified its provisions on economic and fiscal grounds.Mr. Forster, whose does not necessarily oppose the provisions of the Bill, points out that many local authorities are saying that now is certainly not the time to do it when the Government are supposed to be fighting inflation.
Secondly, the article points out all the practical difficulties, which are formidable indeed. If a local authority has to give notice of its increases on 1st September, consider what it has to do. First, it has to decide whether to put in an application 1676 for the Minister's consideration under Clause 62(4). I should like to know more about this matter from the Minister. Clause 62(4) does not make it necessary for a local authority to make an application. It is the Minister's job to consider these matters.
Has the Minister examined the accounts and rents of all local authorities? He has not so much time to do that if the Bill is to be effective from 1st September when the rent increases come into force. Has he decided which should be accepted under Clause 62(4)? We should like to know more about this matter. We already know that 50 local authorities have made or are making applications under Clause 62(4).
§ Mr. James Hill
I must correct the hon. Gentleman. Only 34 out of between 1,200 and 1,300 housing authorities have applied.
§ Mr. Silverman
I am talking about those which have applied or are applying. No doubt there will be many more when the Bill comes into operation. No application can be considered by the Minister until the Bill becomes law.
It is the Minister's job to decide, application or not, whether a local authority should or should not be accepted. Obviously, the local authorities will do their utmost to bring that matter to the Minister's attention. How far has he proceeded with that? Will he be able to complete his consideration before 1st September and be in a position to inform every local authority whether it comes within the provisions of Clause 62(4)?
I know something about the Birmingham correspondence. It is not an application under the Clause, because the Bill is not in operation. I have seen correspondence not between the council and the Minister but between the director of housing and this Mr. Ulrich who has been mentioned. Having examined Clause 50 fairly closely, I find it difficult to understand on what criteria Mr. Ulrich is operating. The definition in Clause 50 hardly comes into the matter at all. To what extent will average wages in an area be considered? To what extent is gross value a predominant factor, and how does Clause 50 comes into the matter 1677 at all? We do not know what the criteria are, even after all the correspondence.
There has been some reference to the fair rents Bill introduced by the Labour Party. There has been some talk about differences in procedure between that Measure and this one, but the main difference between the two is not one of procedure. The object of the Labour Government's Bill was to keep down rents, and to some extent it succeeded, thought not as much as I should have liked. The deliberate object of this Bill is to put up rents. The difference is, therefore, not procedural. The whole object of the operation here is different.
It is true that as a gimmick the Government have used the same sort of formula, but the formula does not seem to matter in the way that it is being operated. Local authorities are entitled to know before 1st September what criteria the Minister will use in operating Clause 62(4) and when he applies Clause 50 in the public sector, because I do not know how the rent scrutiny board would operate in deciding what a fair rent would be in the public sector, where there is no market at all, if there were a balance of supply and demand.
I do not know what that means, and, clearly, neither the Minister nor Mr. Ulrich knows what it means. How can anybody decide the matter in the public sector where there is no question of supply and demand? There is no yardstick to enable anyone to decide what would be a fair rent, or what a fair rent would be likely to be if there were a balance of supply and demand. Nobody has worked that out. Neither the Minister nor his civil servants have worked that out, and, naturally, that creates difficulties in interpreting the Bill. Local authorities are entitled to know what criteria will be adopted.
Ever since the Birmingham correspondence was published that is what local authorities have been trying to find out from the Minister, and so far they have not got very far. Because of the Amendment there will be only a couple of weeks alter the Bill becomes law before the Minister must disclose what the criteria are and decide which councils will be excepted and to what extent they will be excepted under the provisions of Clause 1678 62(4). I hope that the Minister will be more forthcoming about what he will do.
Birmingham has been told by the civil servants involved that it will have to put up its rents by an average of 65p. That is all very well, but it still imposes upon the local authority, after the Minister has made his final announcement under the Bill, an obligation to decide how that 65p is to be allocated. Let me explain what I mean.
At present Birmingham City Council does not believe that there should be any increase in its rents. It believes that the present rents are fair, and it advances various arguments for that. The most impressive argument is that there is a surplus in the housing revenue account of £3½ million, and, that being so, there is no need to put up rents. In this respect the Labour Party is not alone, because Sir Francis Griffin agrees with that view. He is on the housing committee, and he says that there should not be an increase at all, which means that the present rents are fair. Mr. Ulrich, however, has decided otherwise but he has not given any clear reasons for his decision.
If the council decides that rents should be increased by an average of 65p, it will then have to decide how that sum is to be allocated between the various kinds of houses. The council owns about 150,000 houses. There are pre-war purpose-built houses, early post-war houses, Parker Morris houses, and flats. The local authority has received no guidance from Mr. Ulrich as to how the 65p is to be divided among the various classes of tenants. The local authority will be faced with the problem of deciding not only which rents shall be increased and which shall not be but whether some shall rise even above the fair rent level. So far we have no guidance from the Minister. There have been vague references to Clause 50 but that is not applicable.
In addition, the introduction of the rebate scheme by 1st October involves a great deal of preparation. The eventual form of the rebate scheme will depend upon the level of rents. It is no good the Minister's saying that local authorities knew that the Bill was to come into operation and should have made preparations. During the discussion on industrial relations earlier we heard a great deal about the rule of 1679 law, but it is an extraordinary constitutional doctrine that people are apparently obliged to begin to implement an Act before it is on the Statute Book, and if they do not do so they are in serious trouble. Apart from the fact that is not a constitutional doctrine, it makes no sense, because no one can say what the final form of the Act will be until it is on the Statute Book. The Bill has already been substantially amended. A local authority which implemented it upon the basis of the original provisions might be in considerable difficulties.
In the time allowed after the Bill becomes an Act it will not be possible for local authorities to do all the necessary work. There will be enormous chaos in town halls, even in those local authorities which desire to obey the law and co-operate with the Government in bringing the law into operation however much they disapprove of it.
It is claimed by some hon. Members opopsite that if the Bill is postponed all the benefits deriving from it will be postponed. I do not think that there are many benefits under the Bill. Rent allowances have been mentioned. Birmingham introduced by a Private Bill a rent allowance scheme which has been in operation for about 20 months. About 250 people benefit out of an estimated total of 60,000 private tenants.
Although we support the principle of rent allowances, we would mislead the public and private tenants if we gave the impression that great numbers of people would get large benefits, and that is leaving aside the question of the inapplicability of the provision to furnished tenancies. The number of people who will benefit under the rent rebate scheme will be very few. For the vast majority it will be a contribution to meet the higher rent they must face. Therefore, I am not unduly disturbed by the fact that if the operation of the Bill is delayed these benefits will be delayed. Council tenants and others are prepared to wait for the benefits.
We believe that the Bill is a mistake and that now is in any event the wrong time to introduce it. There is every reason for delay. Like other hon. Members, I hope that the Minister will have last-minute thoughts. We deplore the way in which the Bill is being rushed through.
§ 10.30 p.m.
§ Mr. Clinton Davis
I am a little sorry that the hon. Member for Kensington, South (Sir B. Rhys Williams) is not in his place. He is nothing if not an optimist if he believes that the Bill will be smoothly implemented. I do not imagine that even the Minister believes that. Perhaps the hon. Gentleman would have been better advised to go to the Isles of Scilly, where it will be smoothly implemented since it does not apply there.
The Government and their supporters are deluding themselves and the country not only about that but, as my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) said, about the effect of rent allowances in the private sector. They will be rent allowances on steadily escalating rents. This is the purpose of the Bill. It is a Measure designed to assist the property speculator. It is not designed to assist the poor. The idea of the rent allowance is just another part of the camouflage which the Government are seeking to lay across this scheme and so much of their other legislation, as we heard in the earlier debate today.
The hon. Member for Aylesbury (Mr. Raison) said that there was no need for delay and that the Bill should be brought in swiftly because of the vast benefits which would accrue to a number of people. That argument, too, was totally exploded by my hon. Friend the Member for Aston.
I should have expected the Minister to welcome further delay. It is not as though the Government have done sufficient research. If the right hon. Gentleman had spent in applying himself to the machinery of the Bill one-tenth of the time he devoted to insulting my hon. Friend the Member for Salford, East (Mr. Frank Allaun), the country might have been better served. We have had little or nothing constructive from him; yet he has laid into the Opposition with insult after insult in characteristic fashion.
Has the Department done any substantial research into the projected rise in rents? This matter has been raised with the Prime Minister time and again, and at last he was persuaded to say that he would—we do not know when—publish details of the Department's research into this question. We want to know now, not on the last day before 1681 the House rises for the Summer Recess. Presumably, the information is available to the Minister, if he has done his homework. What is the projected rise in rents, taking into account rebated and unrebated rents and the increases which have been made by some local authorities since last April?
Shall we be told tonight? If the Minister has not had time to investigate these matters, is there not every reason for delay? This goes to the root of the Bill. If we cannot judge the financial effect of the Bill, how can it have any credibility with local authorities and the people concerned? How are we to judge the Department's own manoeuvrings in relation to Birmingham, Newcastle, Hammersmith and all the other local authorities? What is the rationale of the Government's thinking on these matters?
The machinery upon which the Bill depends for its effective implementation has just not been prepared. It has not been set up. We have heard nothing from the Under-Secretary of State today to offer us any new thoughts on the matter, for he spoke for only two or three minutes. How many people are to be entitled to rebates? We do not know. What do the Government intend to do about the appalling level of take-up which persists in all our social services today?
The Government say that local authorities must advertise in the way they consider most appropriate in order to get at the people who will be affected by rebates. That is dealt with in Clause 24. Does he consider that local authorities have had enough time to consider the nature of their advertising campaign? Does he consider that they have had enough time to work out the terms of that campaign, when none of the basic facts upon which it must depend has been worked out? No local authority has enough of those essential elements before it which would enable it to conduct a meaningful advertising campaign. No Bill of such enormous implications has been introduced with such inept and inefficient groundwork by any Government. Therefore, it is important that the Government avail themselves of more time. If they do not they will debase still further not only the work of local authorities but our own institution 1682 of Parliament and the law upon which eventually everything must depend.
Local authority after local authority has expressed its grave disquiet about its comprehension of the Bill. That is hardly surprising, because it is clear from the Minister's own contributions that he does not understand the Bill. We have muddle and confusion, which will be catastrophic unless local authorities are given more time.
§ Mr. Raison
Will the hon. Gentleman consider the point that the Bill requires that each authority shall furnish the statutory particulars of its rebate scheme in writing and in convenient form to each of its tenants? That is a form of advertising which seems to me to be likely to be highly effective. It is different from family income supplement matters and so on, when it is not known to whom one is appealing. In this case, direct notice goes to every tenant.
§ Mr. Davis
Many local authorities did this to advise furnished tenants of their remedies, however limited, under the Rent Act. Anyone representing a housing stress area in London knows that only a small minority of tenants understand the position, and that Act has been in operation for a number of years. All sorts of tragedies occur because of that. The hon. Gentleman represents Aylesbury, which is not a housing stress area. He knows nothing of the problems that those of us who represent such areas have to face day in and day out. They are tragedies affecting the lives of thousands of our people. In Hackney we have 10.000 families on the housing waiting list. They live in the most appalling conditions, and their lives are blighted as a result. They will not be assisted by the Minister's cavortings about the Bill.
My hon. Friends have pointed out that by 1st October all rents are legally required to go up by £1, unless a council can satisfy the Secretary of State that that would put tenants above fair rent levels and he agrees on a lower provisional rise. Councils have to work this out. There has been no guidance by the Minister. He has failed in his responsibilities not merely to the House—that does not matter—but to those local authorities which are totally dependent on him for that guidance. Local authorities are required to provide notice of rent 1683 increases. It must be served by 1st September. There are local authorities which by next week will not even be functioning effectively. Certainly their elected representatives will not be functioning. They are entitled to a month's holiday, and they will go on holiday. It is unreasonable for the Minister to expect that major political decisions should be made during that time. Yet political decisions must be made if notices of increase are to go out by 1st September. The Minister knows that it cannot be done but he is pretending that it can.
We have heard much about the great benefits that will accrue to so many people as a result of fair rents, and we have effectively dealt with those claims. But which criteria will govern fair rents in the Bill? Is the Minister satisfied with the criteria which the rent scrutiny boards will apply. Who will constitute the rent scrutiny boards? We have speculated about that, and I do not want to dwell on the matter. I hope it will not be a sinecure for a number of Conservative Party loyalists because that would surely bring the law into disrepute, although the Government are quite prepared at times to do that. When are the boards prepared to undertake their work? When will they be ready? All this indicates that the Government have no coherent plan.
There was a very interesting statement by the borough treasurer of Hemel Hempstead as reported in the Sunday Times of 23rd July, 1972. It was contained in a report which read:Only 274,000 of the tenancies covered by the 1965 Act, less than a quarter of the total, registered 'fair rents', and many of these are not independently assessed by rent officers.One leading expert on housing finance, Henry Aughton, Borough Treasurer of Hemel Hempstead, says: 'I would not expect that even a tenth of this small number are even remotely comparable to council houses. Yet on this tiny fraction of the housing market it is proposed to erect a structure for five million public sector houses.'That man has no axe to grind. He is not a member of the Labour Party, as far as I know. Does the hon. Member for Hemel Hempstead (Mr. Allason) suggest that this man has a political axe to grind? I thought I saw the hon. Member nod. I invite him to say if he is asserting that.
§ Mr. Allason
The borough treasurer of Hemel Hempstead has a remarkable affinity with the arguments of the Labour Party.
§ Mr. Allason
I have stated that he has a remarkable affinity in his arguments with the arguments of the Labour Party.
§ Mr. Davis
That is a remarkable statement. The hon. Member is saying that the borough treasurer simply agrees with the criticisms that have been made not only by the Labour Party and others in the House but by Shelter, by the Child Poverty Action Group, and by all sorts of housing associations and independent bodies about the unprepared ness of the Government to deal with the problem and about the political bankruptcy of their proposals.
The hon. Member for Hemel Hempstead is prepared to stigmatise his own borough treasurer because the hon. Member does not like what he says. That is not a very pleasant attitude to adopt.
The burden of our case is that the Government need time not only to put their house in order on this matter but, much more important, to deal with property speculation, about which they are doing nothing. They need time to offer rent allowances and security of tenure to tenants in furnished property. Such matters could still have been dealt with in the Bill, if the Government had not been so determined to press ahead with it with such rapidity. They need time to offer guidance to local authorities on how to deal with the amazing increase in land prices. Any responsible Government would need time to do something about the private rented sector.
Virtually the whole Labour Party recognises that in the stress areas in London and other cities private landlordism has failed. It cannot answer the crying need of the thousands of tenants of the inner London boroughs. It needs to be replaced, and any responsible Government would be thinking in terms of a substantial housing Bill to bring about the rapid municipalisation of all rented property.
§ 10.45 p.m.
§ Mr. Ronald Brown
I congratulate my hon. Friend the Member for Hackney, Central (Mr. Clinton Davis) on his argument and I support him in the sense that we both have areas in the London Borough of Hackney. I have frequently said that nothing in the Bill will help the homeless families in Hackney, or do anything to aid housing there.
My hon. Friends have demanded this evening, as they have often demanded, to be told how rents are to be set. In my part of Hackney rents will be set by three groups of people. Two of the groups have no relationship with the area. Those two are the Greater London Council and the City Corporation. Both are classified as local authorities able to set what they regard as fair rents. The third group is the London Borough of Hackney, which will also have a duty to set a fair rent, or rather an economic rent.
The Minister must explain how these three authorities can come together to determine what they regard as an economic rent for the area, for we have no houses in private occupation in the area with which to make a comparison. The only houses in private occupation are awaiting slum clearance and those owned by housing associations such as the Peabody Trust, the Sutton Buildings and the Guinness Buildings, built in about 1911.
I am anxious to know how rents are to be set. I know how the City Corporation will decide. Its members have never seen the property in my area. It takes along time to get repairs done on behalf of tenants, and members of the City Corporation are too busy making money in the City to bother about people in my area who have to resort to the social services of Hackney rather than be provided for in the City of London. Members of the City Corporation will try to push up the economic rents as high as they will go, with no relevance to anything in particular.
The Greater London Council has been Tory-controlled for a long time; how will it set about fixing rents? It is already charging £3 a week for a two-bedroom flat with a bath in the kitchen. It is true that there is a board over the bath so that it may be used as a dining table 1686 when not being used as a bath. But that great Tory bastion still charges£3 a week for that sort of property and regards that rent as a reasonable standard. The only remotely comparable places are the scruffy places that are to be pulled down under slum clearance.
The Minister ought to tell us how he is asking authorities to set rents. It is a nonsense to say that authorities are to take account of the age and character of the house and so on. That is done when assessing gross value, and I have been rowing with his Department for eight years about the absurdities of differences of rateable value in Islington and parts of Hackney. The area is so close to the City that rateable values have to tail off gradually, and so the rateable values of council properties in my areas are very high, much higher than those of people living further down the borough in a desirable maison with four bedrooms and a garden front and back. A council flat with two bedrooms in my area has a higher rateable value than that. It is important that the people in my area should understand how the Minister proposes to set economic rents.
The Minister shook his head when I intervened and suggested why the cut-off was included. It was originally £6 for London and £4 for the provinces—
§ Mr. Raison rose—
§ Mr. Brown
The hon. Gentleman has intervened many times. He has no knowledge of these things, so perhaps he will forgive me if I do not give way. After pressure, the Minister increased the cut-off to £6 in the provinces and £8 in London. The reason he gave for the cut-off was that it was unreasonable for tenants to occupy expensive accommodation at other people's expense. He talks about people being in possession of documents they should not have, but he knows that is what he said. He knows that the cut-off means that councils must turn out tenants who are in receipt of rebates of £8 or more. Let him honourably say that is what he has in mind, instead of shaking his head to imply that is not what he means or what he said. He not only said it but put it in writing. He expects local authorities to have pressure boys forcing people into cheaper accommodation so that the authorities will not have to pay the high rebates he sets.
1687 I have frequently asked the Minister to define what is meant by "reckonable expenditure". It is not sufficient to say in Clause 4(11) that it means what the Minister wants it to mean at a particular time. That is gobbledegook, and he knows it. He should tell us what he means by "reckonable expenditure"; all else flows from that. His hon. Friends talk about the vast opportunity there will be for people to have subsidies, but the whole subsidy system depends on reckonable expenditure.
If the Minister reduces the size of reckonable expenditure, as he can, to a small amount, within a short period every local authority will be in surplus, and 50 per cent. of that surplus will come to him. Long before the Bill was introduced I asked the Minister to tell us what he meant by reckonable expenditure, and this he has wilfully refused to do. If he again refuses to answer this question tonight, I must assume that he intends to reduce reckonable expenditure to the lowest possible figure to ensure that the local authority will be in surplus.
The success of the Bill depends on the people who will have to implement it. Every local authority association in the country is against the Bill. The Association of Municipal Corporations has written to me saying that the Minister has been informed that a resolution was passed by the association asking him to withdraw the Bill in its entirety. This is the local authority association representing every local authority in England and Wales. How can the right hon. Gentleman ask local authorities to implement a Bill when every man jack of them is against it? It is no good the Minister saying that that is 20th July, 1972; that it is Labour-controlled. When it was Tory-controlled in 1971 it was still saying the same, that it was a bad Bill. Even in the consultative stage it was telling the Government that they were trying to do too much too quickly.
I am urged by the AMC to ask the Minister, at this late hour, to listen to the local authorities and not pursue this Bill. It makes a cogent case, pointing out that it will be impossible for authorities to deal with the Bill and handle local government reform at the same time or deal with water and sewerage reorganisation. There is a vast 1688 amount of reorganisation involving the membership of local authorities. In addition, they will have to attempt to set and justify economic rents and all the other things outlined here. This is a disgraceful Bill; it is the worst possible Bill affecting local government. The right hon. Gentleman must know only too well that a Bill of this nature can only divorce those responsible for local government from the centre.
We keep asking the Minister to tell us how the rent scrutiny boards will be made up, but he wilfully refuses to do so. I believe he knows. I have little doubt but that if this Bill becomes law by the first week in August we shall have the names of the first rent scrutiny board before the end of that month. If rumour is true I could offer a couple of names that are being sounded out. Perhaps the right hon. Gentleman will tell the House how it is that he is sounding people out about this job, yet he will not tell the House who they are? We are entitled to know whether they have the judgment and perspicacity which he claims the boards will have. It is up to the House to make a judgment, not for him to make the pretence that he has not thought about this yet and, as soon as we go into recess, announce all these things—what he means by reckonable expenditure, rent scrutiny boards and who these faceless men are to be. Let him do it this evening. He must know.
An hon. Friend talked about the increase in rents from April and said that under Clause 62(4) authorities could make application, saying that they had already spent the money. The Minister was very cunning. Some of us like to see any Government standing by a certain standard of honesty. What he was not able to do was insist that the 50p in April was part of the rent towards the fair rent. What he has to do is say that when an authority put on the increase of rent, it would have to call it an increase in basic rent. Therefore, after October any increase will be an increase in rent towards fair rents. Local authority councillors are getting fed up with this sort of nonsense. It is dishonest.
This is a bad Bill. It is of no real help to housing, certainly not in the Borough of Hackney, and I support my colleagues in hoping that we shall have it withdrawn.
§ 11.0 p.m.
§ Mr. Freeson
When this Bill was first announced, a long time ago, last year, following the preliminary announcement in 1970 that it was on the way, it was welcomed, so far as I can recall, wholeheartedly. [Interruption.] I do not know whether the Government Chief Whip wishes to intervene in the debate.
As I was saying, with deference to the Government Chief Whip, when this Bill was published a long time ago, I recall that the whole of the Press, including the specialist Press in local government, welcomed it, virtually without reserve: the Guardian, The Times, the Sunday Times and all the other newspapers.
As time has gone on and the Bill has gone through its various stages, the mood has changed somewhat. Various editorials, feature articles and reports have appeared at least bringing into question the wholehearted welcome which some newspapers gave the Measure when it was first published.
The most recent description which we have had from a newspaper which had supported the Measure when it was introduced last year was by the Sunday Times last week, which had a heading on an editorial on the subject: "Housing sham". That is what we have; it is a sham reform.
During the wide-ranging debate which we have been allowed on this Amendment—and we are speaking basically of Amendment No. 102 dealing with the question of the timetable in a rather narrow way—it has been argued by most spokesmen from the Government side that to delay the Measure, as has been argued by the Opposition and by people outside the Chamber, would be to delay a number of worthwhile reforms included in the Bill.
For the most part the changes in the subsidy system are inadequate and far too unnecessarily complicated. Much was made, for example, of the slum clearance subsidy. This will turn out to be, for most local authorities, a sham reform, One or two, which I can name if necessary, will benefit on purely fortuitous grounds as a result of land and property purchases over a number of years, but the majority will not have slum clearance benefit by this Measure of more than a few thousand pounds. I know, for 1690 intance, of no London borough which can say that it will benefit by more than a few thousand pounds, when millions require to be spent.
Liverpool is the most notable authority which this subsidy will assist.
Similarly with other subsidy reforms: they are inadequate and unnecessarily complicated.
Apart from this, it has been overlooked by hon. Members opposite who have so argued that even if those aspects of the Bill to which they have referred, excluding reference to rent policy changes which are the central feature of the Bill, had been acceptable reforms and perfect measures of improvement of housing subsidy, rent rebates and rent allowances, there is a section of the Bill, not before us, which was introduced by the Government in the Lords in a most obscure fashion. This gives the most wide-ranging powers to the Secretary of State to defer whatever provisions in the Act he so chooses, concerning any dwellings in any housing revenue account. This was Clause 105. It would be possible for the Government to accept our arguments without affecting by one iota the other measures incorporated in the Bill, whether they be valid reforms accepted by both sides or not—and, clearly, they are not accepted by us. But even if we did accept them it would be possible for the Government to use Clause 105 to defer the operation of automatic progression to the so-called fair rents, which is the main point at issue.
Future rent policy is the central aspect. We have objected to the automatic rents charges, to the confusion over the criteria to be adopted by local authorities in fixing so-called fair rents, to the timetable, and to the inflationary impact of the rent policy central to the Bill. The Labour Party is not alone in its criticisms. They have been voiced also by the local authority associations, by local government officers and professional associations and by the CBI. I challenge the right hon. Gentleman to tell us of any professional organisation concerned with local government which has done other than question and criticise this central aspect of the Bill.
We have come a long way since 1970 when the first announcement was made of impending reform and the saving of £200 1691 million of Government money on the subsidy by 1974–75. We have come a long way since the Bill was introduced—indeed, a long way since Third Reading in this House. As the Sunday Times has said, the Government have decided that the form of the Bill must be maintained but its contents and practice changed.
The Government have changed their mind for a variety of reasons, partly because of our political campaigning, partly because of the objections raised by the local authority associations and professional bodies, partly because of the inflationary situation, partly because of the pressure of Conservatives in local government and partly because inside the Ministry it was never very clear what precisely the Government meant by "fair rents". In Committee we attempted to define the procedure and criteria for the local authorities but failed to get answers.
What are the criteria of the Department? I have read what I can of the letters sent out. In one or two instances I have read the letters in full, and in other cases I have read the essential elements of letters that have been published or to which I have had access. I tell hon. Members on both sides of the House that in my view a criterion is being used by the administrators in the Department that was not even mentioned in Committee. Those who have read the Committee proceedings will recall the detailed arguments and debates that we had about different kinds of criteria that the Labour Party thought should be used to assess rents in the public sector. Each criterion was rejected by the Government. We went on to probe, question and challenge the Government to define more closely what they meant by fair rents in the public sector.
One thing became clear; it was argued that local authorities should fix rents by selecting typical rents of equivalent properties in the private sector and putting alongside them rents in the public sector, then putting them into line. When we raised the question of using gross values it was said, "Well, in some circumstances, perhaps, but it is marginal; we could do this much more effectively and properly by consulting the rent officers and getting lists of rents." I do not think that I have misrepresented the position.
1692 What is the most significant element coming from the letters sent out to the authorities which have made submissions under Clause 62(4)? It is a rather slick exercise. It could be argued that it is in line with the principle of comparability, but in practice it is not. In practice, when the Department receives these applications it considers the number of registered rents irrespective of the age of the property. It takes the latest number of properties registered in 1971, takes into account the relationship between those rents and the gross rateable values listed and says "The relationship is twice the gross value"—or 2.5 times the gross value—"That is the multiplying factor to be used, and that is the way in which you should compare your rents."
It does not say "Take the cash figures and put the rents alongside them": it merely says "Take as the multiplier gross values which have no direct relevance to the rents of local dwellings that are at issue." That is underlined by the fact that there is no singling out of equivalent properties—namely, those properties built in the private sector since 1919—because that is where we must compare the private sector with local authority housing. Few local authority houses were provided before 1919, and most of those that were were bought on the market, although a few were inherited by the old Charity Trust.
Why are not they being singled out? The Prime Minister told us that information would be placed in the Library giving future projections, following certain studies. Since last November I have been trying, week by week, through the Library, to get lists of registered rents for post-1919 dwellings, region by region and borough by borough, and to this date the Library has not been able to get this information from the Department, because the appropriate officials say that it is not available—at least on the scale for which I have been asking; there are merely some examples here and there.
One of my hon. Friends asked what research had been carried out by the Department. It does not even have comprehensive information of registered rents in the private sector nine months after the event, never mind before it published the Bill; never mind before it published the White Paper seeking to 1693 establish this policy. The Department has not got the information. I checked in the Library today. Have the Department given up trying to get this information? Either somebody is misinforming the Library or the information is not available. I do not believe that the civil servants who have been contacted by the House of Commons Library have been misrepresenting the position or not telling the truth. Therefore, I must assume that the information is not available to be analysedin the Department. Yet the Department is telling local authorities throughout the country to use this information, which is not available, to fix their rents. It is because the information is not available as it should be that the Department, on the applications which are being received, is having to do a little sidestep and use a somewhat different procedure from that indicated in Committee. It is using a criterion, a method, to decide upon these applications which was not mentioned by any Minister in Committee.
I challenge the Minister to bring clarity not only to us in this Chamber but to local authorities. What is the procedure to be adopted by local authorities? What is the procedure being, or to be, adopted by the Department in deciding on these applications? From my reading of these letters, the Department is ignoring Clause 50 even as it stands. Whatever our criticism of the Bill, the Department is ignoring Clause 50 which presumes to lay down the definition of fair rents.
§ Mr. Freeson
Perhaps the right hon. Gentleman will answer that question, too. We shall be putting a number of questions to him, because this is our last opportunity on the Floor of the House to try to get clarity not only for our benefit but for that of local authorities throughout the country. Does the Minister see these letters? Does he see the assessments which are made prior to the letters going out? Is the criterion used in these letters of doing a multiplier of gross values in the private sector for registered rents as a basis for rent fixing in the public sector acceptable, and will the rent scrutiny boards use it? If 1694 the right hon. Gentleman says that it is, then I come back to the point that this is to ignore the terms of Clause 50, thatregard shall be had…to all circumstances (other than personal circumstances)in determining a fair rent for a dwelling.
I will not weary the House—there is not time, because of other matters we wish to discuss—by quoting from articles appearing in independent quarters on this matter. I trust that the Minister and the civil servants who are concerned with the Bill have read the article by Frank Othick in the latest issue of Local Government Review of 1st July—not a polemical article—which is headed,Valuation—not guesswork in fixing fair rents for council dwellings.Throughout the whole article, but more particularly in column 2, Mr. Othick discusses the factors that a local authority should use in arriving at what it considers to be fair rents. I see no reference whatsoever in the correspondence that has been sent from the Department to the local authorities which have made applications under Clause 62(4) to any of the methods he suggests. This man is highly respected, probably pre-eminent, in the valuation world. Are the views of this professional man to be ignored?
I could quote other articles which have appeared. George Forster's article in the Local Government Chronicle was quoted. Henry Aughton has also been quoted. They put forward ways in which one should seek to get clarity in this area which has not been forthcoming from the Department. I think the Government knew what they were doing when they first put forward these proposals in the Bill months ago. That is why they have been fudging and shuffing on it in recent months and weeks.
On a number of appropriate occasions the Leader of the Opposition has asked the Prime Minister what the impact of the Bill would be, taking account of rent rebates and other provisions in it, in terms of a percentage increase in rents throughout the country, bearing in mind in particular the CBI policy, which the Government have endorsed in pretty militant terms in certain of the speeches of the Prime Minister referred to by my right hon. Friend. The Prime Minister has not been forthcoming, for the simple 1695 reason that the Department has not attempted any kind of projection. It has not done so, but others have.
I realise that these figures are limited, but they are the only figures which the Department has put to the public of cases which have been submitted and been approved either in whole or in part under Clause 62(4). They show average increases of 12½ per cent. to 15 per cent. It is no use the Minister laughing. Would he care to check the papers in the Department showing the increases proposed by his officers for Brent? They show an average increase of 12½ per cent., and the other figures show similar increases.
The fact that there are rent rebates is neither here nor there, because the rebates are not subsidies from the housing revenue account. They are subsidies to the general rate fund. We are talking about rent levels. The vast majority of local authorities have not put in applications under Clause 62(4) for less than a £1 increase or for less than 50p next year. I am speaking moderately when I say there will be increases of 12½ per cent. to 15 per cent. for local authority dwellings throughout the country.
If the Minister does not agree with that assessment, will he please arrange, as the Prime Minister undertook to do this afternoon, to publish in the Library, or, better still, in Hansard, the projections by the Department of what rent increases will be—region by region rather than as a national overall percentage—at the start of the operation of the Bill and by the time it becomes fully operative within the next three or four years?
It is no use the Minister saying that the information is not available, because time and again in Committee—
§ Mr. Freeson
No. That is for the rent scrutiny board to decide. I base my case on the figures provisionally approved by the Department of Clause 62(4) applications. I realise that they will vary from one estate to another, and from one part of the borough to another, but this is an average of 55p. on an average overall rent of £4 to £4.40. In Hammersmith, with an average rent of £4, the increase will be 75p. Birming- 1696 ham, with a £3 million surplus, is to have a 65p increase on what I believe is an average rent of £3 a week. What kind of percentage is that?
Am I still being laughed at by the Minister? Would he care to work out the percentages on the two or three figures that I have given? Never mind the hundreds of people who will not get a reduction in the automatic increase in October because there is no question of an application being considered for them or of a direction being considered by the Department under Clause 62(4). I hope that the Minister will not be too quick to laugh again. If he thinks that my figures are wrong, let him publish his own.
In Committee the right hon. Gentleman challenged our use of the Department's original figures of rent increases. There was the famous purloined document, which was published in goodness knows how many journals. The right hon. Gentleman said that the figures were out of date and that he had up-dated information. Can we for the last time with some hope of success ask the Minister to publish the up-dated information in the Official Report in accordance with the undertaking the Prime Minister gave today?
Our objection has been twofold. It has been to the requirement, notwithstanding the applications which have been considered under Clause 62(4), for automatic rent increases of either £1 or 50p this year, next year and the year after that, varying from one authority to another. Our objection has been also to the timetable and to the undue interference with local government.
In Committee we argued that we do not stand by ourselves in our opposition to the Bill. There is not one association which does not agree with our criticism of the timetable. None of the local government associations and none of the professional associations is in agreement with the Government. The Government will not accept any commitment to the views put forward in the Amendment. However, the matter does not end with the Amendment. When the Bill becomes law, there is the obscurely introduced Clause 105, which gives the Minister widespread powers to do what he wishes with any provisions in the Bill in regard to any local authority dwelling. We hope 1697 to have time to discuss this later in our proceedings.
Even when the Bill becomes law, it is possible for the Government to take account of the strongly held views being put to him, not just by the Opposition, but by people in local government throughout the country who have no party point of view to advance but who are united in asking the Government to defer the operation of the automatic rent increases and of the rent assessment procedures, giving time for further examination and a definition of what an assessment of fair rents should be. There is time for the Government to change their minds and to make clarity central to their statements instead of confusion, fudge and mess and a sham, such as the Sunday Times described the Bill over the weekend.
§ Mr. Amery
The debate has, naturally, ranged wide, as was to be expected in what is, perhaps, the final major discussion on the Bill before it becomes law.
I will deal, first, with the criticism of Lords Amendment No. 102 and of the timing we have proposed. The Amendment brings into force those parts of the Bill which relate to local authorities two weeks after enactment. If precedent be a guide, I say at once that so short a delay is by no means unprecedented. It is common for an Act to come into force one month after Royal Assent. There are many cases of this—examples are the Countryside Act, 1968, the Rent Act, 1968, and the Housing Act, 1969. Some Acts come into force on a day appointed by the Minister concerned, under a commencement order or orders. This was the case with the Transport Act, 1968. Substantial parts of this Act, which was passed on 29th October, 1968, were brought into force on 18th November, 1968, barely a fortnight later—
§ Mr. Amery
I am saying that there is is nothing particularly unprecedented about implementing an Act of considerable importance after a fairly short period.
The hon. Member for Kensington, North (Mr. Douglas-Mann) says that two weeks is a long time in politics, and I agree; and I know the source of his quotation. But in considering the Amendment we must first ask ourselves, regardless of our views on the merits or demerits of the Bill, whether bringing forward the date of implementation helps or hinders the local authorities in the discharge of their duties.
The hon. Member for Islington, South-West (Mr. George Cunningham) said, if I understood him aright, that it was despicable to expect local authorities to make preparations ahead of enactment. But local authorities, through their associations, have been very closely following the progress of the Housing Finance Bill through Parliament. The Institute of Municipal Treasurers and Accountants has issued a number of explanatory documents as we have been going ahead. It has kept local authorities fully alive to what has been going on. My own daily contacts with local authorities suggest that they are well aware of the action that they will be required to take if and when the Bill becomes law. Indeed, inquiries received in our Department show that most authorities, including a good many which do not entirely agree with its principle, are already preparing to implement the Bill.
Any local authorities that are uncertain whether they could obtain a direction about rent increases under Clause 62(4) have for months been in a position to seek an informal indication from the Department. A number of authorities have sought and received such an indication. Some 40 authorities have written asking for an indication. Some 17 have already been given the requisite information, and others are being considered, and as soon as we can we shall be replying to them.
§ Mr. Leonard
The Minister will know that under the Bill it is not incumbent on a local authority to make an application to the Minister but that it is a question of the Minister using his own judgment. 1699 The right hon. Gentleman says that there have been 40 applications. Can he say in how many local authority areas he has considered making an order under the Clause irrespective of the fact that the local authority had not applied? In particular, I should like to ask him why the GLC, the levels of whose rents are higher than those of London boroughs which have made an application, has refused to make an application.
§ Mr. Amery
It will be the duty of the local authority to propose the fair rent. A difficulty arises in the sense that the rent scrutiny boards are not constituted until the Bill becomes law, and so cannot be expected for some months to take decisions. Therefore, if a local authority considers that it is close to a fair rent it approaches us for a provisional opinion before the rent scrutiny board can give a decisive opinion one way or the other. This is where we come in—
§ Mr. Crosland
This is an obvious and very important point, and there must be a misunderstanding. We are discussing Clause 62(4), and the very relevant point made by my hon. Friend the Member for Romford (Mr. Leonard) is that under the Clause it does not depend on the local authorities to make an application but depends on the Minister's decision. My hon. Friend was therefore asking why the right hon. Gentleman had not decided to direct the GLC. What is said is that if it appears to the Secretary of State that the amount of any increase would bring the authority above the ceiling there is an application by the local authority. My hon. Friend asks how many times it has appeared to the Secretary of State that the Clause comes into play, apart from his having been written to by local authorities.
§ Mr. Amery
Only the local authority has the information. If the local authority makes it apparent to us that there is a requirement for a direction, we shall of course consider it, as we have been doing. It is not possible for us, however, without the local authority's advice and opinion, to give a direction of this sort. Indeed, it would probably be improper for us to do so.
§ Mr. Crosland
May I put one more question to the Minister? If he is now interpreting the Clause as saying that an application must always come first from the local authority to the Minister and not the other way round, why on earth was not the Bill so drafted?
§ Mr. Amery
I think the implication of the Bill is perfectly clear because it sets out categorically that it is for the local authority to propose—[Hon. Members: "No, it does not."]—a rent and for the rent scrutiny board either to accept it or disallow it. But in the period before the rent scrutiny board comes into operation—[An Hon. Member: "He does not understand it."]—the Department is prepared to give a provisional opinion, always subject, of course, to the final determination by the rent scrutiny board subsequent to receiving an application from the local authority. [Interruption.] This is implied in the whole character of the Bill.
§ Mr. Amery
—to give a direction without an application, but I do not see how we could put the necessary information before those who have to make the judgment unless the local authority had first supplied the information. I do not see how the right hon. Gentleman could think that we possibly could.
§ Mr. Amery
It seems to me perfectly clear that it is not practical for the Department of the Environment—[Hon. Members: "What about the tenants?"]—or the Welsh Office to give an opinion about what should be a fair rent except on the basis of information supplied by the local authority, who alone is in a responsible position to give that opinion.
§ Mr. Crosland
It is extremely important for local government that this should be cleared up. The Minister has said that, in effect, only the local authority could make an application under Clause 62(4), but it says nothing of the sort. Why is it not possible for an opposition group, for example on the Greater London Council, or a tenants' organisation, as my hon. Friend suggests, to write to the Minister and say "It appears to us under Clause 62(4) that more than 2 per cent. of rents will be brought above the ceiling of £1 a year. We hope that it will 'appear' to you"—using the word of the subsection—"Will you kindly tell us whether it does appear to you?"
§ Mr. Amery
Any group is free to make representations to us—the right hon. Gentleman could make them—but I think it fair to say that the ones which we should regard as authoritative would be those coming from the elected local authority. [Interruption.] I judge them as 1702 elected, whichever party it be, and I do not think that the right hon. Gentleman should have too much cause for complaint on that score at the present time
The argument which I was trying to develop is that a number of authorities, in spite of the information already available to them, are still waiting, quite naturally, for the Bill to become law. In these circumstances, I submit that the sooner the Bill comes into force the longer will authorities have to discharge the duties which they are required to discharge by 1st October. To bring forward the coming into force of the Bill can thus only help the local authorities.
The hon. Member for Romford (Mr. Leonard) was a little worried, I think, about his chairman's holiday. There was a time when the House of Lords was embarrassed about rising later than 12th August. That does not happen nowadays. We have moved on, and perhaps chairmen of local authorities should have the same generous perspective which is now adopted in the other place.
§ Mr. Amery
I was asked by the hon. Member for Shoreditch and Finsbury (Mr. Ronald Brown) to define "reckonable expenditure." For the purpose of rising cost subsidy, this is any expenditure debited to the housing revenue account which is determined by the Secretary of State in accordance with methods and principles settled after consultation with the local authority associations. One example of reckonable expenditure is expenditure within the housing cost yardstick.
The Opposition wish to postpone the enactment of the Bill, I understand, by about 12 months. I see the logic of their argument. They dislike the Bill. They would wish to repeal it—they have said so—and, if they cannot defeat it now, they would like to postpone it. I should be the last to underrate the strength of feeling against the Bill among right hon. and hon. Members opposite and their supporters in the country. Housing is a basic issue, particularly in this country, where the family is the basic unit of society, and it cannot be taken out of politics, although there have been moments in the long 1703 watches of the Committee when I could dearly have wished that it might be.
Yet, despite our heated debates on the subject—we have had a number over the last 12 months—I venture to suggest that there is more common ground between us than many outside observers would recognise or than we ourselves would readily admit. I think that there is a general consensus oncertain points, though not on all. The hon. Member for Willesden, East (Mr. Freeson) accepted, although he did not think it went anything like far enough, that the slum clearance subsidy is a step forward for certain authorities. Liverpool, I understand, will have about £1 million more out of it. The hon. Gentleman himself mentioned Liverpool. Others will get more, where there are major slum clearance problems, just as they will out of the rising cost subsidy.
Until now, local authorities have not been able to get any subsidy for slum clearance as such. They have been able to have a subsidy only where they built council houses on the site which was cleared. Now they have a new incentive. They can clear without having to raise rents, and if clearance leads to a deficit they know that three-quarters of their deficit will be met by the Exchequer. That was not the case before. The situation is exactly the same with regard to the rising cost subsidy.
§ 11.45 p.m.
§ But this is why I have said more than once—and I have been taken to task for it once or twice by the Opposition—that there is no reason, given this new subsidy, why local authorities should not clear our slums within a decade from now. All the latest figures seem to bear out this contention. The 1971 survey shows that 700,000 slums still exist in our potential clearance areas and a further 400,000 outside them. We are now clearing at the rate of 70,000 a year, and have been doing so for the past three or four years. We do not have to gomuch over a clearance rate of 100,000 a year to clear the lot within 10 years. There is a further consideration, that the decontrol of the privately rented sector should go quite a long way to prevent what are still fit houses from becoming slums.1704
§ Mr. Frank Allaun (Salford, East)
But will the right hon. Gentleman admit that this slum clearance subsidy is a very poor substitute for the 4 per cent. loans which local authorities are getting now? They will be worse off, not better off, and, therefore, less able to rehouse people from the slums than they were before.
§ Mr. Amery
The hon. Gentleman is entirely wrong about that. Not only does the slum clearance subsidy make clearance much easier but the rising cost subsidy means that there is no longer any financial obstacle not only to tackling the problems of overcrowding and homelessness, which are very important and close to the hon. Gentleman's heart, but also to rehousing those displaced by slum clearance. There is still a problem of land, but money is no longer an obstacle. I do not believe many Opposition Members would quarrel in principle or in detail with the slum clearance or the rising cost subsidy.
The Bill also enables housing associations to play a much bigger part in providing rented accommodation. This will be welcomed by most hon. Members. I recognise that some housing associations fear that the rising costs of building may make it difficult for them to undertake new building schemes, because cost rents may rise faster than fair rents. But the new building subsidy under the Bill will meet 100 per cent. of any deficit for the first three years and up to 90 per cent. of the deficit for the next seven years. Of course, there is still the problem of how to find the 10 per cent. still remaining. That is why I have urged housing associations to merge into larger units or to co-operate more closely.
I turn now to the human side; not the bricks and mortar but people. Here again there is a wide measure of agreement. The Labour Government exhorted local authorities to introduce rebates, but they provided no subsidy for them. The Bill obliges local authorities to provide a rebate and provides a subsidy, a subsidy more generous in the public sector than has existed before. More significant still, perhaps, in the private sector we have introduced an allowance where there has never been one before outside Birmingham. The right hon. Member for Grimsby at earlier stages in our discussions has 1705 acknowledged the importance of this. It means that no tenant need be homeless or live in overcrowded conditions or be badly housed for lack of cash. The Bill enables him to afford to live in a decent home. If he can afford nothing, his rent will be nothing. I do not think Keir Hardie would have dissented from that. I doubt whether many Opposition hon. Members would disagree that at any rate what we are doing for rent rebates and rent allowances is a good thing. Some might wish that we had gone further still. Some may regret that they did not do it themselves when they had the chance.
I accept at once that, as the hon. Member for Kensington, North said, we have left a gap in the Bill where tenants of furnished property are concerned. We are in discussion with the local authority associations about this. I can report that the discussions are going well, and I shall report in detail as soon as I can.
§ Mr. Douglas-Mann
Does the right hon. Gentleman contemplate that rent allowances to tenants of furnished property will be available at the same time as the other increases will come into effect and when the other rent allowances become available?
§ Mr. Amery
I have already said that I do not think it will be possible to introduce any scheme for these tenants, assuming we can settle on a scheme, before Easter. The rebate scheme comes into force on 1st October and the allowance scheme for tenants in unfurnished private accommodation on 1st January. We do not believe that local authorities can be asked to undertake a furnished sector allowance before about Easter. I cannot add to that at the moment because I have not yet received the final reports of the discussions with the local authority associations.
There is one other point concerning allowances. The hon. Member for Merthyr Tydvil (Mr. Rowlands) referred to the danger of inflation contained in the Bill. In one respect at least the Bill is positively disinflationary. One of the big difficulties in wage negotiations is how to satisfy the very reasonable claims of lower-paid workers without increasing the whole structure and without interfering with long-established differentials. The rebates and allowances mean that hundreds of thousands of 1706 lower-paid workers will have little or no increase in their rents.
§ Mr. Rowlands
Will the Minister now give a categorical assurance that the net increase in rents will be no more than the 5 per cent. level to which the CB1 has agreed?
§ Mr. Amery
I am sorry I gave way. I am coming to that. In many cases tenants will have a reduction in their rents, which will be more helpful to them.
No one will disagree with what I have said about slum clearance, the rising cost subsidy and rebates or allowances. All these things are a considerable step forward, and I would not want them to be postponed for 12 months. There are many hon. Members on the Opposition side who feel that these undoubted improvements are too dearly bought, that the country will be paying too much for them by the rent increases also proposed in the Bill. It may be that there is a genuine difference of opinion between us here. If there is, it has been greatly magnified by misunderstanding. A number of hon. Members and their supporters have given the impression in the heat of debate or in the local elections that every council tenant will pay £1 a week more in rent from next October. It is not so. About one council tenant in five will pay as much as £1 a week.
I do not believe that hon. Members have understood, so I shall give a breakdown. They will be much less critical if they understand the point. There are 4.8 million council tenants in England and Wales. More than 2 million of them have already had their rents increased by 50p in April and will face no further increase until next April, when the average increase can be at most 50p and if they have already reached the fair rent level, or are near it, the rise will be less. Of the remaining 2¾ million, ¾ million are not personally affected because they receive supplementary benefit, and that aspect of their housing expenditure is catered for. Half a million will qualify for rebates and will, therefore, certainly pay less than £1, and in many cases a good deal less. A further ½ million will pay less than £1 increase, in many cases substantially less, either because the authority has had a direction under Clause 62(4), the Newcastle Clause, 1707 or because, as in the case of the GLC, it has already had an increase in rents in the second half of 1971–72. This leaves only about one council tenant in five paying as much as £1 a week increase in October.
§ Mr. McBride
The right hon. Gentleman refers to allegations about increases in rent. Swansea Council sees no reason to increase rents in the present fiscal year, or in the next fiscal year, circumstances being what they were before the Bill. Is there any valid reason why rents in Swansea should be increased when the council has decided—and I completely agree—that the present level of rents is fair? What says the right hon. Gentleman?
§ Mr. Amery
I was elsewhere in the building at the time, but I saw that the hon. Gentleman made a fairly lengthy speech. He has asked a question that is not directly related to the issue that I have been discussing and he will forgive me if I do not embark with him on a debate on exactly what a fair rent should be. It is a subject that we have debated at very great length. All I have been saying is that those who thought that there would be an increase in council rents in October of £1 have been wrong, and in so far as they have expressed that view they have misled others.
Misunderstanding is not limited to what is to happen in October. The hon. Member for Salford, East (Mr. Frank Allaun) led some of his hon. and right hon. Friends into talking about doubling rents, into saying that the Bill would double rents. It may happen in some instances, but it is already clear from the local authority applications for directions that we have received that they at least, after informal consultations with rent officers in their areas, expect that the difference between existing rents and the likely fair rents will be very much less than that.
It is worth remembering that once a fair rent is reached it will normally not be changed for three years or more. That is not so today. I doubt whether rents will go up as fast as they did between 1964 and 1970 when they rose overall on average by 68½ per cent., which, as this was an average, means that in many instances they must have doubled.
1708 The hon. Members for Merthyr Tydvil and Willesden, East mentioned the percentage and the relationship to the CBI's norm. Following a recent exchange at Question Time, the right hon. Gentleman the Leader of the Opposition asked my right hon. Friend the Prime Minister to let him have estimates of the extent to which council and private tenants would be affected over the next 12 months by increases or rebates as a result of the Bill. My right hon. Friend is writing to the right hon. Gentleman about this, but meanwhile he has authorised me to tell the House that, while no precise estimate is yet possible, the best estimate that can be made for the 9 million council and private tenants in Great Britain, after allowing for rebates and decreases in rents, is that over the next 12 months the net average effect of the Bill on tenants overall might be to increase rents by about 7½ per cent.
This is not quite within the CBI's 5 per cent., but it is not very far above it. It does not compare too badly with the annual increase in council rents in England and Wales during the six years of the last Administration. These varied from 7 to 11 per cent. They showed no change in trend even during the period of direct statutory control of rent increases under the Prices and Incomes Act, 1968, when the statutory limit for increases in wages and dividends was 3½ per cent., and the hope was expressed by the then Government that prices would not rise at all.
I know that some hon. and right hon. Gentlemen opposite have argued that we originally meant to double and more than double rents but that we were driven off this objective by their skill in debate. I ought perhaps to put the record straight. The Bill when first introduced provided for increases towards fair rents by prescribed amounts without allowing for modification before rents were determined. It merely provided for the refund of any rent overpaid if the rent exceeded the fair rent when the latter came to be determined.
Newcastle Corporation put to us the point that this could cause unjustifiable increases above the fair rents and, therefore, unnecessary refunds and unnecessary problems, because many of the rents 1709 proposed were believed to be at or near the fair rent, as seems likely to be the case. The Newcastle approach prompted us to move in Committee on 22nd February an Amendment containing the nucleus of Clause 62(4). Our original Amendment empowered the Secretary of State to give a direction allowing a lower average increase than the one prescribed in the Bill if it appeared to him that the rents of 10 per cent. of the authority's dwellings were likely substantially to exceed the fair rent.
When I moved the Amendment in Committee on 24th February I went a bit further and reduced the percentage to 2 per cent. Clause 62(4) involves no retreat by the Government. Our intention throughout has been to bring council rents to the fair rent level but not above the fair rent level
§ Mr. Amery
We do not know. The final determination on fair rents rests not with my Department but with the rent scrutiny board. We wish to ensure that there is no danger that an increase of £1 will take the local authority rent over the top of the fair rent. We do not wish that to happen, but it is in the last analysis for the rent scrutiny board to decide and nobody else. It is a matter not for the Government but for the board.
It is often argued by the Labour Party—it has recently been argued in a document put to the National Executive of the LabourParty—that more tax relief is given to owner-occupiers than subsidies to council tenants. I do not accept that tax relief is the equivalent of a subsidy, but I must ask the House to look at the figures. The figures in the recent Labour Party document—I realise that it is not yet endorsed by the Executives—suggested that relief on mortgage interest was £300 million and that housing subsidies were £160 million. These figures are wrong and do not compare like with like.
The sum of £300 million covers the whole of the United Kingdom, England and Wales, Scotland and Northern Ireland. The £160 million covers 1710 England and Wales and ignores the central Government subsidy for Scotland of £41 million. It ignores the £65 million rate fund contributions to England and Wales and the £40 million rate fund contributions to Scotland. If we add central and local government contributions together, the subsidies to council tenants for the whole of Britain are just about the same as the tax relief on mortgages.
To get the balance straight—and I am sure the right hon. Member for Grimsby will want to take those who produced this paper to task—we must take into account two other considerations. The first is the rent element of supplementary benefit to council house tenants totalling £95 million but only £15 million to owner-occupiers, so that there is £80 million on the council house tenant side of the ledger. Also mortgagers attract relief for a limited time, 20 or 30 years, whereas council houses go on getting subsidy for 60 years.
The paper went on to suggest that tax relief should be abolished for mortgagers who were surtax payers or had second homes, and proposed setting up an upper limit on tax relief at the standard rate I have looked into the figures. It looks clear from what the statisticians in my Department tell me that the maximum saving that this would produce on a £300 million bill is £12 million—perhaps good Socialist doctrine, but a doctrinal mouse
§ Mr. Amery
I have tried to set out the points on which we are agreed—slum clearance, rising cost, rebates and allowances. I have tried to dispel the misunderstanding, where it exists, about the effect of the Bill in October over the longer run and in terms of social justice between tenant and owner occupiers. I admit that even then there are still differences between us, about timing and the discretion given to local authorities and about the exact practical con sequences of the Bill.
I submit that these are differences of degree and judgment. I doubt whether they are differences of principle. They are certainly not differences that would justify breaches of the law or opposition to the will of Parliament.
§ Question put, That the House doth agree with the Lords in the said Amendment: —
§ The House proceeded to a Division; but no Member being willing to act as Teller for the Noes, Mr. Deputy Speaker declared that the Ayes had it.
§ Question agreed to.
§ Mr. Crosland
On a point of order, Mr. Deputy Speaker. Of the group of Amendments which we have been discussing, that on which we wish to divide is No. 102. I believe that we cannot vote on that at this time but have to wait until we reach its proper place in the Bill. In the next group we wish to vote on Amendment No. 56.
§ Subsequent Lords Amendments agreed to.