ENVIRONMENT, HOUSING AND CONSTRUCTION

HC Deb 26 November 1976 vol 921 cc347-441

11.27 a.m.

The Secretary of State for the Environment (Mr. Peter Shore)

This debate gives the House a welcome opportunity to discuss in their broadest context the responsibilities of my Department—housing, the construction industry, the inner city problem and the environment generally. It is also an interesting occasion because, for reasons to which I am not privy, there has been a change in the Opposition spokesman, and we shall look forward to what he has to say. I am told that he was carried kicking and screaming to his new responsibilities. If that is correct, I well understand it, because I, too, some seven months ago, left the Department of Trade with extreme reluctance.

In congratulating the hon. Member for Henley (Mr. Heseltine) on his appointment as the main Opposition spokesman on the environment, I hope that he, too, will find a rich compensation in an area of absorbing interest and of great opportunity for serving the people today and in the future.

The wide-ranging economic difficulties which face this country have inevitably had consequences for the programmes for which I am responsible. We have had to face limits and ceilings on housing activities. My response to this is to recognise that it is all the more important to make sure that our priorities are right and that we are spending the resources which are available in the most effective and efficient way.

One key question that I had to decide in July was whether to impose across-the-board constraints on new public sector house building or to try more sensitively to distinguish areas of the greatest housing need from those where the priority was somewhat less. I decided on the latter approach, and I am sure that I was right to do so. In August, I announced a list of about 60 stress authorities whose new house building programme would be maintained at broadly the level previously planned.

I should add that we have made it clear that we have been ready to receive representations from other authorities which were not included in the list, and we shall be making decisions on these representations very shortly.

These authorities, therefore, receive first priority in terms of new house building. Second priority goes to dealing with pockets of stress in other areas—in some areas they can be very considerable pockets—and with other special needs. But we also recognise the needs of the "non-stress" areas.

There are two comments which I think follow from the exercise of identifying housing stress areas for new building. First was the lack of really extensive and comprehensive information on housing need and demand in each area. I think that we got the list more or less right. Certainly no stress list authority has come to me and asked to be taken off the list. However, there is no doubt that we would have been greatly assisted had there existed for each local authority a housing plan that identified its need and the way in which that need was to be met on a rolling programme basis.

Secondly, although we may all regret the constraints that have had to be imposed on housing expenditure overall, I do not believe that it was sensible, in principle, to continue a system in which we were fairly rigidly controlling, through Section 105 and in other ways, that which we were seeking most to encourage, namely, rehabilitation of existing and older houses, while no controls were imposed on new building which, where rehabilitation was a sensible alternative, we were seeking to discourage.

Nor was it sensible that various aspects of our housing programmes should have been so compartmentalised as they have been.

Further, as all hon. Members know, there is no simple homogeneous national housing problem. There is, rather, a series of interlinked and interacting problems. The nature of the housing need varies both qualitatively and quantitatively from area to area, as I discovered on the tour I made of our major conurbations in September. So, too, do the means to meet that need vary.

My conclusion from this is that what we need is a system of housing investment plans by local authorities matched by single capital allocations from central Government, within which local authorities would be allowed the maximum freedom to determine their own balance of priorities between new building, rehabilitation, municipalisation and so on and within which there would not be distortions in the system that acted as financial disincentives against the priorities which each local authority would wish to follow.

My intention is to introduce the new system of housing investment programmes and single capital allocations in 1978, and I shall be working this out in the current year. However, I want to make a start much sooner—in the next financial year —by allowing a much greater degree of flexibility—virement—between the different compartments which at present exist—new building, municipalisation, rehabilitation and so on.

Part of the purpose of the housing investment plans is to enable local authorities to plan their own housing programmes more systematically and to enable the central Government to make more sensitive decisions over the allocation of funds. But meeting the housing challenge in this country involves a partnership between the public sector and the private sector, and these plans can play a vital part in securing that effort.

Under the Community Land Act it is the duty of local authorities to look at the land needs of their areas on a comprehensive basis, public and private alike. Their assessments and proposals for ensuring that those needs are met will be set out in their land policy statements. These translate this assessment of the needs within the planning framework into actual programmes for assembling and making land available.

This involves establishing consultation machinery with builders and developers to ensure that both sides understand each other's needs and priorities. These statements can link in well with the housing investment plans of which I have just been speaking, and where authorities have not yet established the consultation arrangements I must urge them to do so.

Uncertainty does not do industry any good, and that is certainly true of the construction industry. Of course I do not for a moment underestimate the uncertainty caused by the present economic situation, but this makes it even more important that we, on both sides of the House, should not wilfully add to that uncertainty.

The problem of land values has exercised political thinkers for the past 100 years—perhaps even longer—and the cost of land, prohibitive in our urban areas, has impeded and stultified rational planning decisions. I therefore hope that we shall hear no more to the effect that on a change of Administration the Community Land Scheme would be scrapped.

Mr. Julian Ridsdale (Harwich)

Would not the right hon. Gentleman agree that land values in Britain today are very much lower than land values on the Continent and worldwide?

Mr. Shore

It is very difficult to reach a view on that matter. However, even if I were convinced, which I am not, that the evidence showed that land values in British cities were lower than they were in comparable cities in other countries—.I do not mean just this year, but over a period—I would not necessarily argue that those other countries had solved the problems of city planning and making the best use of land. I do not think that many of them would claim to have done so.

In my view, we cannot return to a free-for-all in land which in the end would bring good to no one other than a few individuals. I certainly have not discovered any constructive alternative that would begin to tackle the true problem of land supply, planning and land values.

I note that a number of influential and responsible people and organisations have recently taken broadly the same view as that which I am expressing. There is a profound change of opinion taking place in professional circles on this tormentingly difficult question. We have had years—indeed, decades—of gyrations and uncertainty in the land market, and that has certainly not benefited the planners, the house builders or house owners.

I believe that it would be quite irresponsible and damaging to the interests of the nation to state or to imply that there is to be a reversion to a free-for-all—at least until the next crisis—in land supply and prices.

Mr. Arthur Jones (Daventry)

Is the right hon. Gentleman prepared to name those institutions and prominent individuals who support his policy?

Mr. Shore

Yes, I am. I did not want to weary the House particularly. I noted a recent address by the President of the Royal Institution of Chartered Surveyors. I do not wish to quote it in detail, but the hon. Gentleman will find that it was broadly along the lines I have suggested. Indeed, there was a similar address by the President of the Royal Town Planning Institute. If the hon. Gentleman wishes, I will arrange for my office to send him copies of these speeches.

Mr. Hugh Rossi (Hornsey)

The comments of the President of the RICS were directed more to the development land tax and to the need for harmonisation between the views of those on the two Front Benches, which is a quite different matter. The right hon. Gentleman will surely realise that the Royal Town Planning Institute always supported the views of the Minister for Local Government and Planning, as he then was, in introducing a so-called planning background into the Act.

I was greatly interested in what the Minister said to the House just now about the need for co-operation and partnership between local authorities, developers and small builders. I wonder whether, in the context of those remarks, his attention has been drawn to the activities of the Greater London Council which is proceeding in a manner greatly to the detriment of the small builder and developer. Throughout the Greater London area, wherever a planning permission is granted by a district council, the Greater London Council is stepping in to take over that development itself. This is causing a great deal of difficulty at a time when the housing construction industry is facing a crisis. Will the right hon. Gentleman look into this matter and use his powers under the Act to ensure that this practice does not continue?

Mr. Shore

I am, of course, prepared to look at individual cases where there appears to be a grievance of the kind that the hon. Gentleman suggests, but I do not think it would be right for me to proffer any comment on the substance of his complaint since, frankly, I have not had it brought before me, and I do not necessarily accept all he said.

The Under-Secretary of State for the Environment (Mr. Guy Barnett)

One case.

Mr. Shore

My hon. Friend says that there has been one case. However, as I say, we shall look at any reasonable complaint. The speeches themselves are subject to interpretation and debate, but I put it to the Opposition that there is a considerable and interesting change of mood. To add just one further example, I noted what even the Estates Gazette had to say—basically, a plea that there should not be contemplated another major upheaval in an area where there has been too much upheaval in the past and where previous policies have not been as successful as we should all wish.

Housing need takes many forms, as all local housing authorities recognise, but its most acute and distressing form is that of homelessness—the need felt by those without a home or facing that imminent prospect or those who are so inadequately housed that a caring society such as ours would regard them as being virtually without a home.

On Wednesday, my right hon. Friend the Prime Minister said that we remain totally committed to bringing in our legislation on homelessness, and that we shall bring it forward at the earliest possible opportunity. There is not much that I can add to that. It is a matter of parliamentary time. There is certainly no question of any lack of intention and resolution on our part and I assure the House that, if the business of the House develops as we hope it will during this Session, we shall take any opportunity which is presented to produce a measure which will be acceptable and welcome, I hope, to the House as a whole.

As most hon. Members know, many of the worst housing problems are still to be found in the inner areas of our great conurbations. In some cases, particularly in London, there are still pressing shortages of accommodation, despite the dramatic decline in population which has taken place. In other such city areas, although there may not be the same glaring imbalance between demand and supply, the condition of much of the housing stock is very poor. Moreover, the greatest amount of homelessness is to be found in the inner areas.

Our policies, as I have explained, are designed to give the greatest priority in housing to areas of stress, but their housing problems are but a symptom of a much wider complex of problems. These include a high rate of unemployment, a great loss of manual jobs and migration of an all too rapid and unbalanced kind leaving inner areas with a disproportionate share of unskilled and semi-skilled workers, of one-parent families and of concentrations of migrant communities, as well as the overcrowded and inadequate housing of which I have spoken.

Concern about these areas is, I believe, widely shared on both sides of the House. Although I do not agree with all his analysis, I commend the careful interest that the previous Conservative Secretary of State for the Environment, the right hon. Member for Worcester (Mr. Walker), has shown on this question. The need to take action to arrest the decay is becoming urgent. As hon. Members know, a committee has been established under my chairmanship to identify ways of injecting a positive inner city priority into the whole range of Government policies. It will certainly call for closer attention to the employment aspects of policy than has been given in the past, and I am glad to see that inner urban local authorities are now beginning to adopt a more sensitive approach to the problems which planning and development decisions can cause to industry, and especially to small businesses, than they may have done in the past.

The House will have an opportunity in a few weeks to debate the Government's recent decision on the rate support grant. I just draw attention to the fact that the changes we agreed in the distribution formula of the needs element of the grant have been designed specifically to direct relatively more central resources to these areas. I know that this must be unwelcome to other areas which are not being treated in the same way, but I make no apology for this. Indeed, as the Tory Reform Group said in its recent pamphlet "Cities in Crisis", the problems of the inner cities must become a national priority". Our decision on the rate support grant was a mark of the priority which we afford this problem, and I hope that the decision will have wide support in the House.

I have spoken so far about the public sector, where our housing record is good. In 1975 we achieved 54 per cent. more starts than were achieved in 1973. The figures for this year show that in the months up to September we started 62 per cent. more dwellings than were achieved in the same period of 1973, and we completed 54 per cent. more. But it is our policy to improve the housing conditions of our people through the active encouragement of owner-occupation as well. Here, too, our record is good.

When we took office, private house building was deeply in the doldrums and, as a result, starts totalled only 105,000 in 1974, but they picked up to nearly 150,000 in 1975, and for 1976 they should be better still. I recognise that for 1977 the present uncertainties will have adverse effects, but it is our aim to sustain house building and renewal in both the private and public sectors at as high a level as we can achieve.

Having heard the laughter on the Benches opposite, I must say that I am less clear about whether the Opposition share that aim of increasing house building and repairing activity. Their previous spokesman on environment matters was always elusive on this question in our exchanges in the House, so I invite the hon. Member for Henley to say whether we are building and renewing too few houses or too many, and what effect he considers the massive deflation which his party appears to be seeking would have on the housing and construction industries. This is of crucial importance to those industries, because they are very much the clients not only of house building, both public and private, but of the whole range of public sector activities.

The industry is facing a most difficult time. In recent weeks I have had several discussions with its representatives, and, of course, my right hon. Friend is in constant touch with them about ways in which we might help. The decline of demand feeds through to its supplying industries, although they are, perhaps, in a better position than is the domestic house building industry to take advantage of new export opportunities. Indeed, I congratulate them on their achievements so far.

I look forward to a constructive dialogue with the industry about its problems, such as we have had in the past. I very much hope that the discussions will not be sullied by attempts by the Conservative Party to distort the legislation which we propose to introduce in respect of direct labour organisations. DLOs represent a very small part of the industry as a whole. In 1975 they undertook only 2 per cent. of all new building work and less than 5 per cent. of all new civil engineering work. In my judgment, provided they are efficiently run and the rules for tendering are fairly and rigorously applied, they pose no threat to the private sector of the industry. It is not part of our proposals to nationalise any part of that sector.

Mr. Michael Heseltine (Henley)

Will the right hon. Gentleman explain why the manifesto on which he was elected contained an express commitment to nationalise companies in the construction industry?

Mr. Shore

We have had to work out our programmes in the light of the circumstances and the timetable, in the light of what is possible in Parliament. We have reached the conclusions that I have stated for this Parliament.

Mr. Heseltine

I take it that the longterm commitment to nationalise com- panies in the construction industry still stands.

Mr. Shore

The commitments of the Labour Party are those which it sets forth in its manifestos. As far as we can, we honour those commitments. It is entirely up to the Labour Party to decide in its proper constitutional way whether this should be a priority and should be included in the next manifesto. Beyond that, I can help the hon. Gentleman no further.

The scope for the employment of DLOs is unnecessarily restricted. The reorganisation of local government placed artificial restrictions on the activities of some of the larger DLOs in the old county boroughs. For that reason, 25 specified authorities were permitted by order to undertake new construction work for any local authority within the former county borough concerned. But those orders are time limited. They expire next March. That is why the need for the legislation has arisen.

We shall legislate to remove these restrictions and provide greater flexibility in the scope of activities in which DLOs can engage. But our aim is to encourage fair practice and only the efficient DLOs. Therefore, an integral part of our proposals is to place the charging, accounting and tendering framework for DLOs on a much more comparable basis with private firms than at present. The proposals will enable the effectiveness of DLO activities to be clearly demonstrated and could well lead to the contraction of the inefficient operators. I have no regrets about that. We shall be very ready to listen carefully to the organisations representing the building industry if they wish to make representations about the details of our proposals on charging, accounting and tendering and to make changes that appear appropriate.

It is our aim to encourage home ownership, not least because central to our philosophy is the desire to give the people much greater control over their own lives, to free them from many of the bonds and impositions which have previously dominated their lives in the workplace and free them from the insecurity and lack of control that were common characteristics of the unregulated private rented sector. Nothing gives me more pleasure than to note not only the increase in public sector housing, which has gone up by 3.6 million dwellings in the past 25 years to represent 31 per cent. of all our stock, but the increase in the same period in the number of owner-occupied houses, which has gone up by 6.2 million to represent 53 per cent. of the stock. I want to see this grow.

Above all, we are concerned to find ways to enable first-time buyers and those with incomes at the lower end to purchase houses more easily. The option mortgage scheme, which a Labour Government introduced in the 1960s, has greatly helped—in 1975 it accounted for about 20 per cent. of all new mortgages— and so have the stabilisation arrangements which we made with the building societies in 1974. In the context of the housing policy review, a great deal of thought is being put into other more novel ways of assisting such purchasers.

But the current economic situation is exceptionally difficult. I deeply regret the increase in the building societies' mortgage rate to 12¼ per cent., although I am sure that higher rates are preferable to a large-scale mortgage famine, which would otherwise be inevitable.

In the July measures we had also to reduce the total of local authority lending by £155 million. I was determined to see whether the building societies could fill the gap. I am encouraged that they have expressed their wish to try to do so. We are now discussing how this can most effectively be done. I hope to make an announcement about detailed arrangements for 1977–78 in January.

One aspect of building society practice which has been widely criticised, and about which local authorities of all political persuasions have made representations to me, is that of red-lining of districts in urban areas. These representations have been the subject of much discussion with the building societies. I am glad to say that they are now making every effort to help in the purchase of lower-priced houses in urban areas.

On the subject of housing, I should like finally to say something about the two reviews currently being undertaken within my Department, on housing policy and the Rent Acts. The housing policy review is seeking to establish a new, longterm framework for housing and housing finance in both the public and private sectors. The timetable has been delayed, and for that I apologise. But the subject is complex, and the job must be done with thoroughness. However, I have identified parts of the review on which I think action could be taken independently. I have already indicated our intentions on a number of them. They include the new system of housing investment plans, about which I spoke earlier, and a tenants' charter for council tenants more clearly to define their rights as well as their obligations under their tenancies, and, hopefully, to give them proper recompense when they carry out improvements to their homes.

The aim of the Rent Acts review is to simplify and improve the present legislation on the private rented sector, which all of us recognise is much too complicated. But we are basing the review on facts, not assertion, so the Office of Population Censuses and Surveys has been carrying out a major survey of the attitudes of existing landlords and tenants. We shall shortly issue a consultation paper to invite the views and comments of interested organisations and individuals.

With one exception, we have taken no decision on the outcome of the review. We are ready to look at new ideas or ideas that have been rejected in the past. The one thing we do not intend to change is the general principle of security of tenure of the tenant in his home. Security of tenure has, I hope, come to be an objective shared by both sides of the House.

I have spoken mainly about housing and construction and related matters because I understood that they were the areas on which the Opposition wished to concentrate. But the Department's responsibilities go much wider. In the past year we have been much concerned with the water industry and water supply, and we shall again be concerned with those matters during the coming Session. We had the emergency measure just before the Summer Recess, and a water equalisation measure is to be considered during this Session. I shall say no more about that except that we hope during the next few weeks to be able to present a White Paper indicating our general views—drawing upon the experience of the past year and the consultation document that we sent out—about the future organisation and strengthening of our water supply industry.

Mr. Heseltine

Will the right hon. Gentleman confirm or deny the suggestion that the measures he has in mind include the nationalisation of the privately-owned water companies?

Mr. Shore

The hon. Gentleman had better wait until he sees what comes out. I cannot anticipate the contents of a White Paper.

Mr. Stephen Ross (Isle of Wight)

The Secretary of State said that he would be issuing a White Paper on the future of the water industry. Will it include proposals about sewerage charges, which are worrying so many people?

Mr. Shore

Certain aspects could be covered. We know that there is a close relationship. The central purpose of the White Paper will be the future organisation of the water industry.

I have mentioned water. In the broader environmental area, for which my Department is responsible, the Government have continued to make significant progress. Regarding pollution control, we have been able to build on the foundations laid by previous Governments. We can be proud of the work which has been done by successive Governments to improve the machinery for the control of environmental pollution. The gradualist approach which has been adopted is, I am sure, the right one for dealing with emission standards.

We must also be conscious of the possible dangers to the environment inherent in the rapid changes in our society. I am particularly conscious of the number of new toxic chemicals coming on to the market each year. We are committed to efforts to improve the monitoring and assessment arrangements.

The House will know that I am currently considering one of the most important planning applications ever regarding the development of a major facility at Windscale. I have not yet made my decision. I know that the House will not press me further today. However, I shall report to the House as soon as I have made my decision, as I promised on an earlier occasion.

Mr. David Ginsburg (Dewsbury)

My right hon. Friend mentioned Windscale and his forthcoming statement. In view of the importance of the operation to the national economy, may we have an assurance that the statement will be made before the Christmas Recess?

Mr. Shore

It is probable that it will be made before the Christmas Recess. However, my hon. Friend will understand if I do not put it in more definite terms than that.

There are other areas of great significance for which my Department is responsible and about which it has not proved possible to speak today. However, I cannot close without mentioning my concern with regional planning and, hence, all the English aspects of the Government's devolution policy. This is a subject on which the House will have ample opportunity for debate during the present Session. As promised, a Green Paper will be published soon dealing with the English aspects of devolution. Similarly, the Layfield Report on the possiblity of reforming the local government financial system is a topic which should be discussed in detail, but certainly not on this occasion.

These and the other matters upon which I have touched are of great interest to the House and to the people we represent. Therefore, despite the pressure on parliamentary time, I hope that we shall have opportunities for further debates during the current Session.

12.4 p.m.

Mr. Michael Heseltine (Henley)

I share the Secretary of State's awareness of the importance of the work of the Department of the Environment just as much as I shared his fascination for grappling with the complex problems of the regeneration of British industry.

I sincerely thank the right hon. Gentleman for the courtesy of his welcome to me at the Opposition Dispatch Box on this occasion.

One certainty that emerged from the right hon. Gentleman's speech was that there will be plenty of opportunities to debate the consequences of many of the proposals that have been promised.

I should like to talk about three items in the Gracious Speech—direct labour, housing and water reorganisation. I should also like to talk briefly about the rate support grant, because it is central to the Government's economic strategy as outlined in the Gracious Speech.

The broad facts of the rate support grant are not in dispute. Local government expenditure is to rise by £1,256,000 —an increase of 12.01 per cent.—and the Government's support is to fall from 65.5 per cent. to 61 per cent. The Secretary of State's view is that the difference can be met by the use of local authority reserves and by increases in the rates paid with an annual average increase of 15 per cent. across the country.

The House will realise that the use of the average is in itself extremely misleading. Such calculations as I have seen show that the figures will vary from authority to authority: 25 per cent. in Cumbria and Oxfordshire, 24 per cent. in West Sussex, 8 per cent. in Manchester and 7 per cent. in Rochdale.

The Secretary of State has used his discretion, as did his predecessor last year, to switch the reduced percentage of available resources from country areas and some counties with less concentration of urban problems to the big cities. No one questions the grave urban crisis there. There is no question that resources will have to be found to cope with that crisis. But we question the theory that the money needed to cope with those areas should come disproportionately, year after year, from ratepayers in other areas.

One of the underlying anxieties that have dogged the rate support grant calculation of the right hon. Gentleman's predecessor—indeed, the same suspicion lurks in this annual award—has been that the latest growing element in the needs and resources has been the need of the Labour Party to defend what majorities it has left in some of the inner city areas.

The second issue is that the rate support grant is spread in an even fashion among authorities regardless of whether they have made attempts to reduce expenditure. The fact is that the system is designed to punish more seriously those authorities which have supported the Government's calls for economy than those which have flaunted their indifference to calls for restraint. It is no argument to say that because the villain is standing in a crowd the crowd must be punished. Instruments are needed to single out those authorities —largely Labour-controlled authorities— which have thumbed their noses at the calls made by central Government for public expenditure restraint.

Mr. Shore

I should like to know what evidence the hon. Gentleman has for suggesting that those authorities which have, on the face of it, overspent are predominantly Labour-controlled. I advise him to look carefully at the facts before continuing on that particular line.

Mr. Heseltine

We shall look at any evidence that the Secretary of State cares to produce. But the authorities which have made the greatest virtue of their unwillingness to reduce public expenditure are conspicuously associated with the Labour Party. The Secretary of State knows that, if he thinks of Haringey, to name one of the more obvious authorities.

Mr. Michael Morris (Northampton, South)

Will my hon. Friend note that we have persistently asked the Secretary of State to provide us with a list of the overspenders? Perhaps this would be a good opportunity for him to do so.

Mr. Heseltine

That is an admirably constructive suggestion. It would enable the Secretary of State and myself to resolve our apparent disagreement on interpretation. I should be delighted to read the report when the right hon. Gentleman produces it, as, I suspect, would many people in local authorities and in this House.

The Secretary of State's central assumption is that local authority expenditure should rise, as he forecast, and that rates across the country should rise by 15 per cent. on average to meet it. However, we know that this average hides increases of between 6 per cent. and 25 per cent. in varying local authority areas.

These assumptions take a false view of what our country needs and what our people want. They did not, this year, want a Secretary of State to reach a settlement based on potential expenditure in creases and consequent rate increases of the size that has been agreed. They are sick to death of the ever increasing rate burdens. If we are to expect pay restraint, we shall have to act decisively to keep, down the costs associated with public expenditure. On this occasion, the public will not be satisfied that the Government have acted with the firmness required.

Everyone has had the chance to see the reactions from the local authority associations—the Association of District Councils and the Association of Metropolitan Authorities—and the reactions of the unions principally involved. They have all claimed that the Government's policies are designed to enforce compulsory redundancy among local authority staff as well as the familiar and more acceptable technique of staff reduction through natural wastage. The Secretary of State knows that those assertions are right, and he should say so and explain why there is no choice for the present Government.

When the Labour Party was in opposition and was faced with the traumatic crisis of 1973, Labour Members sought, with a cynical opportunism, to exploit every grievance, at whatever cost to the country. It is because they did that so ruthlessly and built up expectations so falsely that, as a Government, they are now the most discredited of modern times. I have no intention of playing a part in that process. I believe that the Secretary of State would have carried more conviction if he had said in clear language what everyone in local government knows. He has created a situation in which only unacceptable increases in rates can offer an alternative to reduction in staff numbers.

People in many parts of Britain will find rate increases of this sort wholly unacceptable, and it is the duty of Government, endlessly urging the need to reduce inflation, to break into the vicious circle wherever they can. It is the sickness of political language that Ministers will glibly talk of switching resources from the public sector to the private sector but will avoid like the plague telling people that that means that more of them will have to work for wealth-producing companies and fewer for wealth-consuming authorities. People will have to make that change, and the economic policies of the Government do not permit that change to be carried out on a wholly voluntary basis.

If the stark choice has to be made between rate increases, on the one hand, and reductions in services and in some public service jobs, on the other, most people would choose to hold the level of the rates. The fact is that under the present Government we have actually the worst of all worlds. We have compulsory redundancy, reduced services, increased charges and soaring rates.

It is wholly misleading to present an argument for holding the rates as increasing unemployment. It is, in fact, the reverse. The existence of increasingly unbearable burdens of local and national government overheads is destroying jobs every hour of every day. But it is destroying productive jobs in the private sector in order to preserve for a little longer non-productive jobs in the public sector. Even in the public sector the cuts are tending to hit capital investment in order to protect public consumption.

The levels of commercial rate increases are contributing to the highest level of bankruptcy among small and medium companies ever known since records were first kept before the First World War. Small shopkeepers are being driven from evermore expensive urban centres, thus diminishing services and choice. The levels of interest charges necessitated by the present level of public expenditure at local and national level are destroying jobs every day in manufacturing industry. Those people in local government service who will have to change jobs are also ratepayers and taxpayers. They know as clearly as the rest of us that the present climate cannot last. Every one of them has as much interest in restoring the strength of the British economy as those employed outside the public sector. Many of them have skills and talents that are urgently needed in our industrial activities. Many of them know more accurately and immediately of the duplication and waste that are of such public concern.

The Secretary of State has misread the mood of the nation. It is crying out for the truth and for the measures that everyone knows are needed. By setting targets of 15 per cent. average rate increases he has only delayed the day when that public cry will be heard.

My hon. Friend the Member for Hornsey (Mr. Rossi) will be spending much of his speech on critical subject of housing. On that subject, therefore, I want to be brief. The Government's housing policy is in ruins. I quote a single graphic sentence from the speech on 17th November of Charles Mitchell, the President of the House Builders Federation. He said Indeed the outlook for private house builders is more threatening now than at any time since the house building programme got under way again after the war. He went on to forecast that next year, in both the public and private sectors, output would be down by one-third.

I doubt whether any hon. Member would disagree that housing is the most important of the social services. It can determine the ability of people and families to provide for themselves under their own roof, the only alternative to which is that they become increasingly dependent on one State organisation or another. A nation well housed will be happier, healthier, better educated and more orderly than one that is not.

It is not possible to overestimate, therefore, the tragedy of the collapse of the house building programme. As I have said in this speech and on many previous occasions, no one blames the present Government for the traumatic events in the world economy in 1973—certainly there were bound to be impacts on this country—even if the Labour Party sought every opportunity to suggest that they were the fault of the then Government and failed to recognise the international complications. But the Government cannot escape the blame for the decisions that they have taken that, as a consequence, have so seriously worsened the house building situation.

I am grateful for the Secretary of State's advice to the next Conservative Government on what they should do about the Community Land Act. I share his conviction, as it appeared from what he said, that it will be a Conservative Government who will have to make the decision. We have made it clear that we shall repeal that Act. I want to tell the Secretary of State the underlying attitude that we have on this subject.

The first requirement to build houses is land. The Government's Community Land Act and the confiscatory tax system has reduced the flow of land coming on offer. In order to increase the flow of land, one will either have to offer the incentives for it to appear or find the resources in the public sector to buy it compulsorily. There are not any prospects of there being sufficient resources in the public sector. Therefore, there is no choice but to offer the incentives that we believe will produce the land required.

The second necessary requirement is that builders should have the confidence to build. The Government have created a situation in which in Britain, virtually alone of the world's major countries, it now costs 18 per cent. to borrow money to build houses. The House must clearly understand that a modestly priced house today can cost, in interest charges alone, more than £1,000.

The third requirement for house building is a customer. Young people cannot save for their first deposit. There is not a sufficiently imaginative range of opportunities and incentives to give them the chance to get that deposit—opportunities that we, as a party, shall introduce. There are too few people who can face the consequences of an over 12 per cent. mortgage interest rate. It is not enough for the Secretary of State to say that he is awfully sorry, and what a shame it is. The reason why we have an over 12 per cent. interest rate is that the building societies must compete with the rapacious appetite of the Government, who are borrowing on an unprecedented scale. The only way that we shall get mortgage interest rates down is for the Government requirement for funds to be reduced, which will lead to a reduction in the minimum lending rate.

The only alternative to the free enterprise provision of houses is local authority housing. Here the wheel of crisis has come full circle, because local authorities have no longer the resources to build on a scale which could match what the private sector would once have done.

It is for these reasons that the international crisis, which certainly played its part, has become a tragedy in the housing field over which the present Government now preside.

I turn to the Bill to extend the powers of direct labour organisations, first, into specified public sector trading and, secondly, by order, into any building activity.

Mr. Shore

The hon. Gentleman made a number of points which I shall study later with great interest, but he did not answer the question which I put to him a little earlier. I do not wish to embarrass him on his first appearance at the Dispatch Box in his new rôle, but do I understand that his overall aim would be to maintain the present overall level of new house building? Obviously, he would have to shift the composition of that activity, but I am sure that he would want to maintain the present level of more than 300,000 houses a year. Unless that happens, there will be no comfort for the building industry.

Mr. Heseltine

The Secretary of State has not taken on board the full implications of a rate of inflation of the order of 15 per cent.—a rise that is incompatible with the survival of our nation and the existence of a free society, as we know it. That is the first priority in seeking to deal with the problem. There will be consequences that will have to be faced, but if we do not deal with them and solve that economic dilemma, it is no use discussing what kind of house building programme one wants, because the downward trend will continue—exactly as next year, under a Labour Government, there will be one of the most catastrophic reductions that we have seen in modern times. If we wish to break out of the vicious circle, we must take a central change of direction in the national economy, as the right hon. Gentleman well knows.

I turn to the Bill to extend the powers of direct labour organisations into specified public sector trading, and, by order, into any building activity. The Minister's argument was that this amounted only to fair competition between the public and private sectors—in other words, a little local matter that we did not need to take seriously. But, as we listen to Labour speeches in this House, we know that the situation is far different; indeed, nothing could be further from the truth than that argument.

Anybody who has read the consultative documents about the rules for direct labour accounting and tendering will recognise a charter for competition without discipline. Any commercial organisation has the sanction of failure to ensure that its budgeting is careful and its margins adequate. A contract misquoted will produce its consequences within months of the work commencing.

The only constraint on town hall building activities is that perhaps at an unspecified time, years after things have gone wrong, if a Secretary of State is so minded—and then only in a form prescribed by the Secretary of State—the Government may change the rules of competition within the private sector. The Secretary of State must understand that that course will not restore to existence private sector companies which will have been driven out of business as a result of that unfair trading. It will do nothing to create jobs in the private sector that are lost as a consequence. Anybody who has spent any time studying the way in which nationalised industries carry out their statutory financial duties, in practice, will regard as the most hollow assurance of them all what is set out in paragraph 7 of the consultative document, which reads: As regards the financial objective direct labour organisations will be expected to avoid making a loss on their activities overall. I do not know of one nationalised industry in which that kind of discipline and target is not inbuilt statutorily in the Act establishing it, yet hardly one such industry, consistently over any period of time, has earned the kind of return that one associates with private sector industry.

Mrs. Millie Miller (Ilford, North)

Does the hon. Gentleman agree that in the last few years one reason why nationalised industries were not able to act in the way the hon. Gentleman suggests was that the Conservative Government conducted a policy of keeping down prices to the public?

Mr. Heseltine

The hon. Lady will know that I have frequently said that both parties have intervened in the nationalised industries. If one gives power to politicians to intervene, it is expecting much too much of those politicians to take the view that they will not do so. That has been the experience in Governments of both political complexions. The answer is not to give politicians those powers to intervene.

The statutory discipline imposed on public sector trading has been a fiction. Anybody who has any doubt on that score should read the recently published NEDC report, whose authors had consulted unions, management, civil servants and politicians about the results of 20 years' experience in the nationalised industries. The nationalised industries were panned by all those who were consulted, yet there is to be another attempt by the Government to extend their activities into commercial trading in a way that is wholly against what the public want, as we know from recent events. I warn the Government that in the view of my party the prospect of the Government's getting this legislation on the statute book depends on their ability to hold every Labour-held by-election for the rest of this Parliament.

I turn to the proposals in regard to the water industry. One of the more intriguing statements by the Secretary of State came when he was asked whether he proposed to nationalise 26 companies in the private sector employing 9,000 people, supplying 12½ million consumers, and handling a capital expenditure of £350 million. His answer was that we must wait and see.

Has the right hon. Gentleman ever considered the impact on trading concerns carrying out their duties in all honour, and with great competence, when they are told that the Government are having a row behind closed doors about whether they want to nationalise water companies? What impact will it have on international bankers, who are now crawling over our nation's books to see whether they will lend us more money to impose Socialism on Great Britain, to find that the Secretary of State who is responsible for the water industry has not the capacity to answer a question of that nature.

Mr. Arthur Jones

The Secretary of State will know that his colleague the Minister of State for Sport and Recreation has announced that private water companies will be nationalised.

Mr. Heseltine

I quarrel with only one part of my hon. Friend's intervention. I have come to the conclusion that no Minister in the present Government knows what any other Minister is saying. That reveals the dilemma of the water companies, since the Secretary of State appears not to know whether the Government are to nationalise those companies whereas the Minister for Sport and Recreation seems certain that they will be nationalised. It is a classic example of why working for British industry has become a nightmare at the hands of a Socialist Government. They are in the last resort a party of dogma, and in the end they always move towards extending the power of the State into every industry over which they have any prospect of obtaining control. We shall fight the nationalisation of the water industry, if the Government are unwise enough to introduce such a measure. Such a move is widely opposed by users, employees and experts in the industry, and will not serve this country's interests.

I remember clearly the early years of the Department of the Environment in which I had the privilege to serve. Its creation was without doubt one of the most exciting and imaginative acts of the Conservative Government. But the improvement of the environment must depend on a nation's capacity to generate resources for that purpose. There is now a need for great determination and imagination.

One has only to travel through our large cities, such as Liverpool, Glasgow, Manchester, Newcastle and Birmingham, to see everywhere the symbols of our national bankruptcy. There are vast declining twilight areas, tracts of bulldozed land owned by impoverished local authorities, out-dated industry starved of the funds for its own modernisation, and a planning mechanism experienced more in moving people out of the cities to destroy the green fields around them than in the sympathetic re-creation of an urban environment.

We must shake ourselves free from the attitudes of the past. We must build new council houses and sell existing council houses. That is why we shall give millions of council tenants a right to buy their council homes. To attract capital into the cities we must attract the savings of the British people by offering the institutions a share of the present local government monopolies in land. To help young couples, we must find imaginative schemes to get them on to the first rung of the ladder of home ownership.

I would have been less critical of the Gracious Speech if there had been a hint of the resolve and imagination that we need in grappling with our environmental problems. Tragically, beneath all the fine words, we have dogma and dullness. It is Socialism in its most characteristic pose.

12.29 p.m.

Mr. Jim Callaghan (Middleton and Prestwich)

The Queen's Speech states on page 5: My Government, following their widespread consultation on transport, will bring before you proposals for developing a transport policy best suited to economic and social needs". It is with economic and social needs paramount in mind that I shall be referring to the development of the public transport system in the North-West.

The rapid growth in the ownership of private cars is bringing personal transport within the reach of most people. It gives them access to a wider range of amenities and is tangible evidence of an increasingly prosperous society, but not all of our larger towns and cities can accommodate the consequent growth in car journeys, especially in peak hours to and from city centres. Even if resources were unlimited, it would be physically impossible for larger cities to provide for maximum car use. In other towns and cities, to attempt to do so would involve redevelopment, a change of character and a loss of buildings—some of them architecturally and historically important—on a scale that most people would find unacceptable.

Despite road building and increased traffic management, congestion is spreading. It causes delay and frustration for the traveller, and it brings increasing environmental damage for others as drivers try to avoid clogged arteries by threading their way through side streets and residential areas. However, even by the 1980s many people will still be dependent on public transport for some or all journeys. A continuing decline in public transport services will lead to inconvenience, or even hardship, for these people and will weaken the efficient functioning of our towns and cities.

In the North-West, one metropolitan public transport authority believes that this is a critical point in the changing fortunes of public and private transport and that efforts should be made to reverse the decline in public transport before it goes so far that all our options will be closed. The authority in question is convinced of the need for an early, conscious decision to devote more resources to public transport. Although large sums are spent nationally each year on road improvement, and great ingenuity is devoted to new techniques and devices for improving road safety, nearly 20 people are killed and more than 200 seriously injured on our roads every day.

The transport authority in the North-West to which I have referred has since early 1974 tried to combat accident rates by subjecting 43 accident black spots to an analysis involving a detailed breakdown of individual accident reports in order to assess accident patterns and to eliminate future accidents. Conscious of its responsibilities, the authority has about 70 employees in 10 districts dealing with road safety. Additionally, six local road safety sub-committees have been set up to discuss in detail road safety matters in their own areas. This authority knows that each accident is to be deplored in retrospect as an avoidable tragedy. Accidents arise in multiple, complex ways, but they can be reduced only by simple, practical measures.

Knowing of that authority's effort to provide a viable, speedy, efficient, safe form of public bus transport throughout the region, I was surprised to receive a letter expressing great concern that many of its public transport vehicles are allowed on the road with malfunctioning speedometers and heater-demisters which could cause very serious accidents. Had the letter not been sent by an honorary secretary of the Transport and General Workers' Union, I should probably have consigned it to the waste paper basket. I took up the matter with the region's transport director-general and was more than astonished when I received his reply. His answer was astonishingly frank and honest, and for this he must be congratulated. It seems that the TGWU secretary had highlighted one of the most difficult areas of vehicle maintenance which is causing this North-West transport authority and the public transport industry generally considerable difficulties.

On a typical modern vehicle there are six heater-demister motors, and it appears that these units are not as reliable as could be desired. The motors—it is astonishing that they are the only ones available in Britain—are derived from a unit fitted to motor cars. They are not really suitable for the continuous operation involved in a bus service and, as a result, the failure rate of the motors is such that they have a short life of only about two years. This authority has a fleet of 3,000 vehicles and the number of defective heater-demister units totals about 9,000 a year. If we multiply that by the number of major transport authorities throughout Britain, we certainly have a problem.

I am told that there is considerable difficulty in identifying that the units are defective and in allocating sufficient labour to keep the vehicles satisfactorily maintained. The latter problem has been discussed with the TGWU joint negotiating committee in recent weeks. It has been agreed that a campaign of action will be undertaken before the winter to try to remedy these problems. Obviously the legality of operating passenger service vehicles with defective heater-demisters is open to question, particularly in winter. The director-general of this metropolitan transport authority also informed me that the chief engineers of all the major transport operators in the country have been pressing the heater motor manufacturers to produce a longer-life motor to avoid the tremendous incidence of failure. He went on to say that his executive had a new heater motor which, unfortunately, is not made in Britain, but that consideration is being given to the fitting of such motors.

Speedometers are electrically operated and their transmitters are manufactured by the same company which makes the heater motors. They are also unreliable because of the inadequacy of design. It is, I am told, a less significant problem than the difficulty with heater-demisters. Unfortunately, the authority experiences 1,500 failures a year. It is said that in the North-West the number of defective speedometers is minimal, but by my reckoning 1,500 defects in a vehicle fleet of 3,000 is not by any standard minimal.

I find the position stated by the director-general incredible, amazing and alarming judged by any standards, whether those of safety, cost or efficiency, and whether on a local, regional of national basis. I should therefore like to ask my right hon. Friend the Secretary of State for Transport whether he is aware of these astonishing facts.

Can my right hon. Friend enlighten us about the legal position regarding taking buses on the road with malfunctioning heater-demisters and speedometers, particularly in winter? Can he say whether any accidents have been caused injuring drivers, passengers and pedestrians because of such malfunctioning? Has he any idea of the total national cost of the repair bill for faulty heater-demister units and speedometers? Can he give the cost of keeping the vehicles off the road while repairs are being carried out?

Can my right hon. Friend say how far negotiations have gone between the chief engineers of our major operators and the heater motor manufacturers to produce a longer-life motor? Can he say what would be the total deficit to our balance of payments if foreign motors were purchased? Can he give an assurance that this totally unsatisfactory state of affairs will be investigated immediately?

12.41 p.m.

Mr. Arthur Jones (Daventry)

The hon. Member for Middleton and Prestwich (Mr. Callaghan) has dealt with a significant problem in terms of local authority responsibilities and the responsibilities resting on central Government in relation to the policies of the new Department of Transport. I have been closely associated with such problems, representing as I do, in contradistinction to the hon. Gentleman, a rural area where public transport facilities are seriously adverse to the local community. I echo many of the misgivings that the hon. Gentleman has expressed.

I wish to refer to a matter of current considerable interest not only in the House but outside, namely, the announcement on the rate support grant made this week by the Secretary of State for the Environment. The document is full of platitudes, and from what the Secretary of State has said this morning, it is far removed from the harsh realities of the limited expenditure that the country can now fund. In the document the right hon. Gentleman deals at length with the relevant taxation consequences for the ratepayer and the taxpayer, but much of what is said in it and much of what the right hon. Gentleman said this morning is a continuing cover-up for the extension of Socialism and an increasingly high level of local and central Government expenditure.

The Secretary of State's attitude over the question of direct labour confirms that view. He said that direct labour departments would do much to improve building methods and the efficiency of the building industry. That is not a view with which there will be general agreement. In fact, the evidence is to the contrary. We are reading the stage at which it is beyond the ability of the country to support local government services. The Government are gradually beginning to recognise this, although I hope to show that the recognition is inadequate in terms of policy decisions and firm guidance to local authorities.

There is no advice in the document about the savings which local authorities should try to make or in what sectors they should make economies. The Government may well say that such matters are up to locally-elected members in local government, but in the main the duties of local councils are those placed on them by the central Government in terms of consumer protection, housing, transport and expenditure across a vast field. Therefore, local authorities are at a singular disadvantage if they are asked to institute economies and are given no guidance on how they should be made effective.

The responsibilities and duties laid on local government by legislative authority of this House need to be fulfilled, and that is properly the case, but have no suggestions been made to members of the Consultative Council on Local Government Finance, for example, about where economies should be made? I have heard it said that there is a suggestion that expenditure in planning departments should be reduced and that the preparation of local plans should be held back. Can the Minister confirm or deny that? If he denies it, diminishing economic activity in the country must have a significant effect on planning departments. Are the Government prepared to advise local authorities in this respect?

Clearly the Government are not advocating that existing levels of public services should be reduced, and yet they are not prepared to find the resources to maintain them. That means that the responsibility for meeting much higher levels of expenditure will be passed to the ratepayer, and yet in his statement the Secretary of State deplored the fact that increased rates are inevitable in the context of next year's local authority expenditure. It does not sound a very sincere expression of sympathy for the ratepayer, when no suggestion is made about how expenditure on existing services should be reduced, to say that services must be maintained at their existing level and yet the Government reduce the support grant that they make to local authorities.

The Government's attitude seems to be full of serious contradictions. The Secretary of State said in the announcement on the rate support grant that the social services could not be improved. Why does he not be honest and say that we cannot afford to maintain them at existing levels? That was implicit in what he said this morning. With inflation rising at 15 per cent., we cannot afford to maintain them, and yet he is covering that up by allowing local authorities substantially to increase their rate demands. He says that the increase must be on average 15 per cent., but inflation will be at 15 per cent. and, therefore, the ratepayer will, in effect, underwrite inflation. That is presumably what the right hon. Gentleman expects ratepayers to do.

In the consultative document on the rate support grant the Secretary of State asked how we had got into our extremely grave economic position. As my right hon. Friend the Member for Henley (Mr. Heseltine) said, the failure of Government policies has led to a situation in which local authorities are having to fund their expenditure at about 15 or 16 per cent. That is a penal rate for local authorities to fund in the short term. This is a measure of the failure of Government policies.

The Secretary of State said in his statement that no settlement in the present economic situation can be anything but severe". It is humbug for the right hon. Gentleman to talk in those terms. The country is looking to the Secretary of State and the Government to find a way out of our difficulties and to recognise that we cannot afford to maintain services. I do not blame the right hon. Gentleman entirely for the levels of services which have been built up—that has happened under successive Administrations—but, if the Government fail to provide the necessary resources to maintain them, I ask him to come clean and to say that they cannot be maintained and to indicate in which sectors economies should be made.

In his statement the Secretary of State also spoke of strengthening our manufacturing industry. That statement in the context of the rate support grant must mean that there must be reduced levels of staffing in local government so that available competent personnel can be shifted into manufacturing industries. There cannot be any other good reason for the statement appearing in his announcement. We recognise the upheaval which that must mean, not only for individuals in local government but for the departments there in the continuity of their work.

The Secretary of State is overlaying the realities of the situation with a good deal of humbug. In his statement on the rate support grant his theme does not add up to the realities of his decision-taking. I emphasise this point because it comes out again when he says help for areas with severe social problems, such as the majority of urban areas. I entirely agree that this should be done. This matter was considered at great length in the context of the new towns programme and the need for resources in inner city areas. But what the Secretary of State is bringing about by this rate support grant arrangement is the fact that ratepayers as a whole will be required to make a contribution to the problems of inner cities.

Mr. Shore indicated assent.

Mr. Jones

The Secretary of State nods his head, but I ask him whether it is fair to place on the ratepayers at large this burden when they have no responsibility for the conditions in the inner cities, and they will get no benefits from their contributions. Despite this, they are still required to foot the bill.

I suggest that it would be far more equitable and reasonable for specific grants to be made available from the central Government as an alternative rather than to impose the charge on ratepayers generally. Many ideas have been put to the Government in this respect, and one of these was the realisation of the vast assets which exist in commercial and industrial properties in new towns. If these assets were disposed of to institutional investors, pension funds and so on, vast resources would be made available in capital terms which would be applied to the renewal of inner city areas. It is fundamental to Socialist policy that the Government are not prepared to give up any of the vested interests which the Labour Party has in these vast new towns. If they would face realities of the shortage of financial resources and use them in the way which has been reasonably suggested, that would be much more equitable than putting the bill at the ratepayers' door.

I am sure that this situation does not come as any surprise to the Secretary of State. Although he is a recent corner to the Department of the Environment, he has been closely connected with the formulation of Government policy. I am sure that he is not in the same position as the right hon. Member for Huyton (Sir H. Wilson) who said that he had not anticipated the sterling crisis. I am sure the Secretary of State recognises that there is a crisis—and a growing one—in terms of the rate demand. Just as the overseas creditors have called a halt to this country's borrowing, the Secretary of State should call a halt to the expenditure of resources which the country cannot afford in terms of local government services. But he does not face up to this issue. He still hopes to get by, and that is why we get this throw-away line in his announcement about the re-creation of wealth-producing industries.

The Secretary of State deplores the rate increase, yet he and his colleagues must have anticipated it when requiring a vast extension of the services and expenditure of local government. It ill becomes him to regret the increase, as he does in paragraph 9 of the rate support document: The settlement is therefore in accord with the Government's earlier declared intentions and it takes a realistic view of the resources available to authorities. With the best interpretation in the world, that statement does not take a realistic view. All it does is to impose vast increases in the rate demand on communities—an average of 15 per cent.—and, generally sneaking, this will fall most heavily on non-metropolitan counties. It ill becomes the Secretary of State to try to overlay the commitment, which I suspect he has done personally, to a high level of public expenditure, both centrally and locally, in treating the matter in this way.

The resources available are only ratepayers' money and taxpayers' money. This is what is meant by resources, unless, of course, the Secretary of State is also referring to the vast borrowings which enabled him to continue with his so-called policy. But the Government's failures and irresponsibilities here have led to borrowings at rates of interest of up to 16 per cent. This has led to a capital demand from borrowing over the past three years which amounts to £500 for every man, woman and child in the country. How can we as a country go on with that load of debt? These borrowings must be funded for the rest of this century at 16 per cent. in some of the recent Government issues. This is indeed the cost of Socialism, which places immense burdens on this and future generations.

Mr. Deputy Speaker (Mr. Oscar Murton)

Before I call the next speaker, I remind the House that time is limited. A considerable number of right hon. and hon. Members wish to speak, and it is in hon. Members' own interests to be as brief as possible.

12.58 p.m.

Mrs. Millie Miller (Ilford, North)

The hon. Member for Daventry (Mr. Jones) rightly said that too much expenditure is forced upon local government by central Government decisions. It is interesting that he should remind us of that, because the many problems that face the Secretary of State today do not originate from anything that was done today or yesterday, or even at the start of the Labour Government. I have gone back into the records and have found that many of the public expenditure increases have resulted directly from action taken by the previous Government and also by their predecessors.

I refer particularly to the increased administration costs which have resulted from successive so-called reorganisations of services in the public sector. In the London Government Act, which was introduced after the Herbert Committee closely investigated the situation of local government in London, the expenditure of local government went up from nearly £86 million in the first year of the new authorities to almost £100 million the following year. No one could say that the rate of inflation in the early 1960s could have been responsible for such an increase.

The Conservative Government introduced local government reorganisation. In the year of its introduction, £835 million was spent on the administration of local government. By the following year this had increased to £982 million. A similar picture emerges in the case of the National Health Service. Although this is not the responsibility of my right hon. Friend the Secretary of State for the Environment, it is relevant to refer to the matter here. In the year following NHS reorganisation, expenditure on administration rose from £121 million to £172 million.

I should have liked to give comparable figures for the water industry, but, unlike the Electricity Council, the National Water Council does not provide an overall picture of expenditure. Perhaps that is due to some of the things we have heard about the Thames Water Authority, for example, in the way that it has behaved so irresponsibly in relation to trips overseas by its members and officers and their wives and to expenditure on properties and on expensive motor cars. Within these factors are the seeds of the growth in public expenditure forced on local authorities by the wrong decisions of the previous Government, who were warned of what would result through every level of local government.

My primary concern today is with the problem of housing. Much as I appreciate the statement by my right hon. Friend about maximum incentives to local authorities and a greater degree of flexibility in their housing policies and programmes—and probably local government will appreciate that statement too—it lacks the necessary degree of urgency to deal with all the problems, including homelessness.

The Government have said that, given time, they will introduce legislation on homelessness, but that is not good enough. Possibly they would be prepared to support an hon. Member who was fortunate enough in the Ballot to introduce a Private Member's Bill on the matter. Even that would not be good enough. In inner and outer London and in all the major conurbations, people are living without adequate and proper housing facilities. Even where local government provides those people with some kind of roof over their heads, in many cases the conditions in which they exist are deplorable.

The local newspaper in the area which I represent has carried a report about only one of the hostels for the homeless. We are informed that 31 people there are sharing two bathrooms and three toilets in miserable, deplorable, rundown conditions. What control can the Minister exercise over authorities which, in the name of providing hostels for homeless families, provide them with accommodation which is quite unfit? How can we say that we are concerned about housing when there are still as many empty houses as there are families in dire need of housing?

Having asked about the matter on so many occasions in this House, I had hoped that we might hear something of how my right hon. Friend proposes to bring those unused properties into full occupation by the families which need them. I had hoped for a suggestion from him which would not involve further capital expenditure, possibly by the licensing of properties and using them temporarily pending further construction. Whatever my right hon. Friend may say today about greater flexibility for the construction industry or local government, we know very well that from the moment of planning until the final entry of a family into a new home takes many years.

In the area of the authority upon which I was previously active—Camden —there is a report only today of a private building company which, having worked on one site for four and a half years, has now gone bankrupt. That is about four times as long as it should have taken to complete the development. High interest rates may cause many problems today, but it cannot be said that four and a half years ago a large private enterprise company was prevented by that factor from starting and completing a scheme of rehousing which was vital to the people of the district.

I feel deeply concerned that during the lifetime of this Government we have not yet had a full housing policy statement. I am deeply worried about the long-drawn-out delays and consultations over matters on which there is already a good deal of knowledge. I am worried also about a matter which is not directly and primarily the concern of my right hon. Friend but which will come to concern him. It is the problems that will arise from devolution.

On Wednesday, when he opened the debate for the Government, my right hon. Friend the Prime Minister spoke of how the Bill to bring devolution to Scotland and Wales would introduce greater accountability by some of the appointed bodies which exist in those areas. But there are many appointed bodies within the general remit of local government in England for which much greater accountability is required, where services have been made undemocratic by the Conservatives and where a return of democracy is urgently needed. The water industry is one such example.

I do not know whether my right hon. Friend intends to propose the nationalisation of the water industry. If he does, I hope that the whole question of public accountability and participation in water services will be looked at as a matter of urgency. We are now dealing purely with appointed members who hold office for four-year terms and over whom the public have no control.

The whole subject of the devolution of powers to the regions also comes within the remit of the Secretary of State. Although London suffers very badly from money being fed into other areas, it is not the only area so to suffer. There are very serious and deep-rooted problems which can be dealt with only if someone's finger is pulled out of the stopper and housing is treated—here I agree with the hon. Member for Henley (Mr. Heseltine)—as the most urgent social problem of our nation.

1.9 p.m.

Mr. Reginald Eyre (Birmingham, Hall Green)

The hon. Member for Ilford, North (Mrs. Miller) made a good point about the relationship that exists in the problems facing the inner and outer areas of the large cities. These problems are so interrelated that they cannot possibly begin to be solved unless all the factors are taken into account.

Throughout their life the Government have pursued wrongheaded doctrinaire policies, and it is now clear that their economic policy has collapsed. The penalties for the failures of policy are being suffered most severely in the large towns and cities. The Labour Party manifesto of October 1974, written after six months of government, contained the clear declaration: We are not making any promises that we cannot keep. That clearly establishes the Labour Party's assessment of the situation at that time. A number of the promises set out in that manifesto are now being ignored. The result is that disastrous consequences have struck the key productive areas of Britain.

In Birmingham and practically every similiar industrial centre unemployment has more than doubled to record postwar levels, and a particularly frightening situation has developed over jobs for young people. Because of economic failure, resources for hospitals, schools and housing—which are so essential for the older, rundown areas of our cities—have been reduced. Standards and conditions are declining in many services which affect the living conditions of people living in these crowded areas. Is it any wonder that working people are disillusioned and feel that they were misled? Is it any wonder that there is a malaise and a sense of hopelessness? That is why so many sensible, ordinary people are now saying that we cannot go on. The continually accelerating rate of inflation shows that they are right in their judgment.

It is clear from the inadequacies and omissions in the Gracious Speech that the Government are disabled by internal strife and do not have the will to deal with the problems. People realise that delay in getting to grips with the problems costs the country more every week and increases the further penalties that will have to be paid.

The Gracious Speech refers to the serious problems of the inner city areas. I agree with the hon. Member for Ilford, North that the problems are desperately serious in the inner areas, but they must be seen in the context of the town or city of which they are part, because there are so many services—hospitals are an example—which serve the whole population of the town or city. Further-more, since the planners made great mistakes in the post-war period and since we have used the bulldozer too much, and many older areas have lost their established communities, priority should be given to housing improvement and rehabilitation.

Many people from those central areas have been transferred to the outer areas. We must therefore bear in mind the services and conditions of those outer areas where local authorities sometimes have to struggle to provide adequate services to cater for the needs of an increased population.

Schools in outer areas which have to cater for a larger population often find it difficult to cope with the extra demands. In my constituency, at Yardley Wood School, a former secondary school which is now comprehensive, any fair observer will realise that the services and premises, and the courses provided, are inadequate to cater for the needs of the children in the neighbourhood. I hope that the Secretary of State will bear those facts in mind when allocating resources. Many of the social burdens which existed in the inner wards have been transferred to outer wards. In fairness to the people there, we must realise that we have a long way to go towards providing services that are of a standard suitable to present-day needs.

I am glad that the Secretary of State made a fleeting reference to a tenants' charter. There is a prime need to establish such a charter for many housing estates. A tenants' charter would set out suitable terms for the people living on those estates. We must deal with the unreasonable restrictions which apply to many estates and which affect everyday life. Many restrictions are more appropriate to the system of serfdom. We must be determined to move towards an improved status for those estates and to create services that take account of the dignity of tenants. Tenants should have more to say in the management of their estates.

Many hon. Members will know from their surgeries that the lack of transferability causes a problem. They will know that the system is not sufficiently sensitive to deal with the needs of families. It does not adequately relate to places of work or to changes in family circumstances. We must be more sensitive when dealing with transfers, particularly when there are difficulties in the mobility of labour.

It is difficult enough for a tenant in a city such as Birmingham to get a transfer from the south to the north of the city, but it is almost impossible to get a transfer to Leicester or Newcastle if one is offered a job in a different region. These matters must be sympathetically examined and a better system developed to meet the needs of tenants.

These are powerful grounds for the arugment that all tenants should have the right to purchase their houses. People have a great desire to own their own bit of land and home. They take great pride in improving the houses that they have bought. One of the best ways of spreading wealth and creating family assets which are of benefit not just to this generation but to the next is to put greater emphasis on the sale of council houses. I hope that the Secretary of State will move his Government to take a more positive view of the need for expanding home ownership. Thought must be given to ways of reviving the inner areas. There is also a need for a better mix of housing by way of more private development, if possible. We must recognise the need for leisure and play areas for children, and be sensitive to the style of housing.

We must recognise how important small manufacturing businesses are to the Midlands, London and some other parts of the country. We do not pay enough attention to the provision of suitable sites to encourage the development of small businesses. They make an important contribution to the provision of jobs in those areas.

It would be helpful if we could provide incentives to help these companies to modernise their factory premises. That would assist the building industry, which will obviously be in dire straits so long as the present economic climate continues. It is essential for incentives to be given to the small companies that are fighting to survive. Their tax situation, especially with capital transfer tax, needs sympathetic consideration.

There are other aspects of policy relating to large towns in respect of which the Government should review their priorities. Funds for local authority mortgages have been reduced, and there has been a substantial fall in the number of improvement grants available for the modernisation of older houses. The qualifying rateable value should certainly be increased.

Both these factors have damaging social consequences, particularly for the chances of young couples wanting to take their first step on the ladder of home ownership. They often do so by buying older villas, so local mortgages and improvement grants are very important to them. Because of the present fantastically high interest rates, the building societies will find it difficult to attract sufficient funds to service their present borrowers. Although they can try, I do not think that they will be able to do much practically to help the lower end of the market, which is so important in the cities, to young couples and in social terms.

The Government should review their priorities and think of using their resources sensibly for improvement grants and local authority mortgages, rather than wasting so much money on the Community Land Act, which will stifle development and create a land famine.

The Government should also question the use of resources for continuing municipalisation, which certainly does not add to the housing stock and can be a waste of resources in our present desperate circumstances. In these ways—by giving incentives to small companies to modernise their premises, thus improving their appearance as well as working conditions, and by reviewing the priorities for improvement grants—the Government could help the construction industry.

That industry is now being brought to a dangerously low level. It needs to be helped to survive and to continue to recruit and train the apprentices who will make up the future skilled work force on which we shall have to rely. It is now so low that there is a drain overseas of skilled talent—architects, construction engineers, and so on. We should be very concerned about this, as it affects the industry's future chances.

Because of the Government's mishandling of the economy, we are desperately short of resources with which to tackle the grim problems in our towns and cities. How can it be right or moral for the Government to continue an immigration policy that allows for accelerated arrivals, so that more than 60,000 extra immigrants will be admitted next year? Do the Government realise that almost every one of those immigrants will settle in no more than 18 established immigrant reception areas, sited almost entirely in the large urban areas, including Birmingham, Manchester, Bradford, Leicester and parts of London?

Do the Government realise that these areas are badly run down—the very areas in which conditions are lowest and where local authorities have enormous responsibilities in providing health, education and housing? In these reception areas there is continuing anxiety about the state of employment and the fact that so many young people are unemployed while other young people are arriving to add to the problems.

The Government do not match the cost of all these services in these areas, and they are now reducing their contribution to local funds through the rate support grant. Thus, an entirely unfair burden falls upon the citizens of these towns in covering part of the cost of the Government's national policy. In fairness to the families in those crowded areas, the Government must dramatically and urgently review their immigration policy. They must understand the unfortunate fact that this has increased the range of problems in areas where conditions are so poor.

At a time when unemployment is so great and vandalism and violence are increasing in these areas, when the very fabric of society there is endangered and the country simply cannot provide the necessary resources to maintain decent conditions, it is grossly irresponsible to continue to add to these burdens as I have described.

The situation is now desperately dangerous. The Government have not been frank today about the consequences. The people in these large towns have very low morale. They are very worried about their future, about conditions for their families, about their jobs and about the whole future of the country. The Government must do much more to explain the circumstances, to tell people the truth of the situation and to develop realistic policies to show that we can work our way out of it.

I ask the Secretary of State particularly to agree that it cannot be right to go on increasing these burdens. He should particularly take into account the housing matters that I have described, the relationship of the inner areas with the outer wards, and the need to maintain decent standards. That will help to create more confidence in these cities and to give local authorities, which have such great responsibilities, the chance to tackle the enormous problems in the inner areas.

1.28 p.m.

Mr. Stephen Ross (Isle of Wight)

I congratulate the Secretary of State on still being with us after two hours of debate. I welcome his decision to give greater flexibility in housing finance to local authorities. That is a step in the right direction. I wish that it could have been taken when more money was available. Nevertheless, I am sure that the move to give local authorities far more choice in how they spend their money on housing is right and proper.

In the building land game—that, unfortunately, is how it has developed over the years—I support the Secretary of State's call for a common approach. I supported the Government over development land tax because I thought that they had listened to the advice of people who should know a great deal about this complex subject and that they had taken on board many of the suggestions made —particularly by my professional body, the Royal Institute of Chartered Surveyors.

I did not support the Government on the Community Land Act, which is an albatross, but it would be silly to throw it out without serious consideration. It can be made to work in certain circumstances, and certainly some of its side effects which do not accord with good planning could be overcome. Local authorities will tend to purchase agricultural land rather than take land which has already been scheduled for development and which has already changed hands at substantial prices, so that they can get the reduction in the tax, which comes direct to them.

I therefore do not think that, as at present constituted, the Community Land Act helps very much, although I welcome the schemes that have got off the ground with private developers. There is a great advantage in this sphere for joint schemes with the local authorities providing the land and private developers being brought in to provide their expertise.

I was saddened by the comments of the hon. Member for Henley (Mr. Heseltine). I do not think it would be wise to return to the situation that obtained three or four years ago. If we have to have a change consequent upon a change of Government, I ask the hon. Gentleman to consider the benefits of land value taxation, a proposition which has been ignored by both parties in the House for about 40 years. Moreover, I was interested to see that Lord Rothschild, who was formerly in charge of the Government's Think Tank, came out in favour of some sort of land value taxation, at least on derelict land. That is a move in the right direction. The suggestion should be studied closely. It would be much more simple to operate than what the Government propose. It would have the effects that we all want to see.

I welcome the Secretary of State's decision to delay making a decision about Windscale. This matter should be right at the forefront of discussion at the moment, but unfortunately our economic plight has rather dimmed or put into the background the whole question of the future of atomic energy and the throw-off from it. I should have preferred the Secretary of State to have had a planning inquiry commission, even if that meant a further delay. However, at least he is giving further consideration to the problem, and I welcome that.

The Gracious Speech tells us that the Government will pay special attention to housing and the needs of inner city areas. It goes on to promise that a review of housing policy will be presented to us. This obviously refers to the Department's housing finance review which the Secretary of State mentioned and which, I am sure, all of us are very anxious to see, because I am certain that all MPs are continually being alarmed by the increasing problems that beset housing.

I hope that that document will be published soon. The fact that it has not yet been published has been the Government's excuse for lack of action in some spheres for far too long and the sooner we can debate this matter and agree on policies which cross party lines, the better. If ever there was a time for political parties to settle their differences and chart a sensible and consistent course for the future, this is it.

This must mean some relaxation of existing Rent Act legislation. It is a pity that these two documents are not to come forward at the same time. We are apparently promised a consultation paper. I welcome that. The whole effect of the Rent Acts has been to dry up housing which could otherwise be available.

I do not wish to throw security of tenure out through the window, but there are areas in which the situation could be eased, thereby bringing into use many houses which are lying idle throughout the land whilst waiting lists in many areas, certainly in my area, are getting longer. Waiting lists will continue to lengthen with building society mortgage rates at 12¼ per cent. or 12½ per cent. I am paying 12½ per cent. The biggest building society in the country charges an extra ¼ per cent. This is an enormous increase in monthly payments for those with a substantial mortgage.

I fully support the extension of home ownership, but I believe that it cannot be right at this time to persuade those in the lower income brackets to saddle themselves with a mortgage while such punitive rates prevail. We had experience of an unfortunate policy four or five years ago when building societies rather threw their money around and many people took out mortgages which they could not afford to repay. There were repossession cases and some families broke up. We do not want that to happen again. It is wrong to force people to purchase property at some of the rates of interest that now prevail. People must be able to see their way to meeting the monthly repayment.

I ask the Secretary of State to try to do something about the cost of buying and selling, that very complicated process which is obscured by the lawyers and which—I have to admit it—is taken advantage of by many people in my profession. Buying a house for the first time is a complicated procedure. It always seems to be far too expensive. The first Government who manage to introduce some simplification will earn the heartfelt thanks of the majority of home owners.

The Prime Minister referred to the question of the homeless. The Secretary of State said today that he hopes that time will he found to introduce legislation to make it clear that it is the housing authorities which are to deal with this growing problem.

I suggest that that is not good enough. We want a firm commitment. The absence of a firm commitment in the Gracious Speech has caused great concern amongst those whose daily task it is to deal with these problems. I know that there are local agreements in some areas—I think that we have them in my constituency—but not everywhere, unfortunately. The Government must legislate. I remind the Minister for Housing and Construction that he gave an undertaking in December 1975 that legislation would be brought forward. I greatly hope that this will happen.

If the Secretary of State had accepted a Private Member's Bill introduced by the former Member for Cambridge, Mr. Lane—a Bill of which I was proud to be a sponsor—under Clause 6 of that Bill we would have got exactly what we are asking for now. That was an excellent Bill because it did not ask the Government to go back a great extent on their present policies. It would have released into use certain areas of accommodation. I am sure that they will eventually come round to doing that. Had that proposal been accepted, it would have been done by now and we should have been able to deal with some of those who are now looking for homes. The recent case in Dorset, which must cause concern to the Secretary of State's Department and to the social services, has shown that there is great urgency.

Finally on housing, I wish that the Government would accept that the problems are not confined to the inner city areas. I know that there are enormous problems in those areas. I have read the speeches that the Secretary of State made on his tour last autumn. Many smaller provincial towns and rural communities are also facing increasing problems. The arbitrary allocation of funds to certain stress areas is bitterly resented by authorities which have been excluded. I greatly hope that we shall see a widening of allocation when the Secretary of State announces his further decisions shortly.

Charitable housing associations, if given encouragement and limited funds, or even cheap loans, can play an increasing role in bringing into use the many short-life homes that now lie idle waiting for a new road or redevelopment scheme that is not now likely to take place. Generally speaking, they can get on with the job and do it much more cheaply. This is a field to which much greater attention should be paid, and by so doing the community would be encouraged to do more for themselves, which is what we must all do in the present economic situation.

Incidentally, that would reduce the widespread squatting in inner urban areas. Presumably the law relating to conspiracy will cover this subject. We agree that legislation is necessary, but surely it should be accompanied by other measures to free more accommodation for use so that the problem can be overcome. Then perhaps we would not face this or a similar problem in the future.

I want to refer to the question of tidying up the countryside. I do not have the gift of description of the hon. Member for Henley, who described the squalor of large parts of our cities in such graphic terms. A proud country keeps its streets and open spaces clean and well cared for. In recent years we have become a rather dirty nation. Waste land has become a dumping ground. Anyone who takes a trip out of Liverpool Street or Birmingham New Street will see all the mattresses and rubbish which have been tipped over the railway embankments on what used to be allotments.

Cannot an effort be made to tidy up our country? If one lives in a clean country, whatever one's economic problems, life is that much better when one has pleasant surroundings. Attention should be paid to this in advertising in the Press and on television, and steps should be taken to get the voluntary bodies involved. Once again, the tax on derelict land suggested by Lord Rothschild might help, although most of the land in question is often owned by local authorities or by British Rail or other statutory bodies.

Unfortunately, the Gracious Speech contains a passage telling us of the Government's intention to extend the practice of construction work by direct labour. In my view, it should be forgotten. At one time when I was in local government, about four or five years ago, I could, I admit, have been persuaded to support the idea. That was at a time when it was virtually impossible to find a builder who would give a tender for a job. That was our situation in 1972–73, and on several occasions when we had to go out to tender, more than once we found that we finished up with a "cow-boy". This sort of thing has cost local government a good deal. We have seen reports of many examples in the Press recently showing how much expense has been necessary to put things right.

But that time has passed. The "lump", for example, has largely been dealt with. Today, skilled men in the private building trade are crying out for work, and tenders are very competitive, as I know from personal experience. Why, therefore, choose this moment to extend the bureaucracy? I give the Government notice that we shall join the official Opposition in opposing that intention tooth and nail.

I turn next to the vexed question of sewerage charges. The Gracious Speech tells us that legislation will be introduced to provide for greater equality in charges made by water authorities. I had an Adjournment debate on this subject a little time ago, as did an hon. Member on the Government side. I drew to the Minister's attention many glaring examples of inequality and untenable situations.

Since that time, many more cases have been brought to my notice. For example, the proprietor of a holiday camp in my constituency has to pay not only the full sewerage rate for that part of the property which is connected to the main sewer but a further thumping great charge for emptying cesspits at other points in his camp which, because of differing levels, cannot be drained to the main sewer. He brought in the valuation officer in an effort to get the charges split, but the valuation officer refused because it is all one hereditament. The water authority says that it cannot amend the charges unless it is given sole responsibility for levying the charges in the first instance.

I shall not quote it now, but I draw to the Minister's attention the evidence of the Southern Water Authority in response to his consultation document, in which it said that it considered it essential that the water authority should take over the whole question of costs for sewage disposal and the sewerage rate, the water authority doing it entirely itself and taking over from the local authority.

I believe that that is the only way to settle the matter. If the Government do not do something soon, there will be real trouble. I fear that people will decide to take the law into their own hands and refuse to pay these iniquitous charges—and who could blame them?—because we have had a half-promise that something would be done. It must be done soon in the proposed Bill.

The Gracious Speech is strangely quiet about Layfield. Presumably the Government are in a dilemma. If they have dropped any intention which they may have had to charge the domestic rate on the recommended basis of using capital values, I congratulate them, because I do not regard that as the way to go about it. I do not think that that is an equitable method. With many local authorities suggesting rate increases of 20 per cent. or more, I visualise a return to the situation we experienced three years ago, when exceedingly angry ratepayers descended upon this place. We are already getting letters from ratepayers' associations.

If the burden is seen to fall fairly on those who benefit from public services, people will have less cause to complain. I accept at once that they will have good cause to complain in any case, but they will at least have less cause. Surely, therefore, we must switch to some form of taxation. It is not particularly popular at the moment to suggest that we should put up taxation when we ought to be trying to cut it, but we all know that the domestic rate system is unfair. There will have to be cuts in public services, and there will undoubtedly be rate increases, because people always shout whenever public services are cut. That is the dilemma. But if nothing is done there will be trouble. We are to have a debate on the rate support grant, so I leave the matter there at this stage, emphasising that the charges must be seen to be fair.

Finally, may we have an assurance that we shall have a debate on transport? It has already been put off twice, and we ought to have it before very long.

Mr. Deputy Speaker (Sir Myer Galpern)

May I reinforce the appeal from my predecessor in the Chair that speeches should be brief? Several hon. Members are still anxious to take part in the debate, and there will be the two winding-up speeches before we conclude.

1.44 p.m.

Mr. David Ginsburg (Dewsbury)

I agreed with a good deal of what was said by the hon. Member for the Isle of Wight (Mr. Ross), including some of the views of his party about the taxation of site values. The hon. Gentleman mentioned the views of Lord Rothschild. For my part, I commend to my right hon. and hon. Friends some of the views of our late colleague. Richard Stokes, at one time Member for Ipswich. I hope that the Government will think about those matters in due course.

I disagreed with the hon. Gentleman, however, when he urged the Secretary of State to go slow over the Windscale project. I see great dangers here, and I hope that my right hon. Friend will soon give his conclusions to the House. This is not a matter on which the country should procrastinate. The project is one of the few really successful developments arising out of all our nuclear expenditure over many years. In both aviation and nuclear energy the nation has spent an enormous amount of money—unhappily, not always with very great returns—and here we have a development that should bring this country very sub- stantial trade and employment, and it is supported by the trade unions in the area.

Notwithstanding some of the understandable anxieties regarding amenity, I hope that the Government will not let the opportunity go by. I warn them that if they allowed that to happen some other nation—probably France or the United States—would step in and seize this extraordinarily lucrative business, which we ourselves could develop.

Both housing and construction, the subject matter of today's debate, face a bleak prospect unless the nation solves its economic problems, because, as other hon. Members have said, one of the factors bedevilling housing and construction as a whole is the present high level of interest rates. As I see it, a successfully negotiated IMF loan at comparatively low rates, coupled with the recent developments in the United States—the talks taking place between the President and the Chairman of the Federal Reserve Board and the signs that the United States is, one is glad to see, moving to an even cheaper money policy—ought to give the Government and the country the necessary breathing space to bring about the reduction of interest rates which is essential for a successful housing and construction policy.

I listened with interest to what my right hon. Friend the Secretary of State said about housing stress areas, and I noted what was said on that subject by the hon. Member for Birmingham, Hall Green (Mr. Eyre). My constituency suffers from some of the problems adumbrated by the hon. Member for Hall Green, resulting from overcrowding, immigration, old buildings, and so on. I therefore re-emphasise to my right hon. Friend the Minister for Housing and Construction the understandable claim which we have to be considered in the review of stress areas now taking place, during the course of which his ministerial colleague showed great courtesy in receiving a deputation from my local authority.

However, my object in speaking now is to go rather wider than today's subject matter and to convey a message of support to the Prime Minister. The crisis confronting the nation is still of great gravity. Its dimensions are such that if we are to overcome our problems the policies that we pursue will need to command substantial backing in the House and in the nation as a whole. Political differences in the House will inevitably continue, but so long as the Government place as the central objectives of their policy the restoration of the nation to economic solvency, a return to full employment, economic growth and the abatement of inflation, they will merit our support and, I even venture to say, support from their opponents. The present direction of policy gives the nation prospects of a greater unity than it has had.

I do not accept the argument put forward on Wednesday by the Leader of the Opposition, and to some extent today by the new Shadow spokesman for the Opposition on this subject—the hon. Member for Henley (Mr. Heseltine)— that Socialism is by definition inimical to freedom. I do not know whether the hon. Gentleman actually said that, but the right hon. Lady certainly did. I agree that excessive increases in the power of the State are inimical to freedom, but democratic Socialism as it is understood on the Government Benches places great emphasis on free trade unions and co-operatives, and is founded on institutions—employers' organisations are in the same category—which are, of their essence, independent of the State. Democratic Socialism, which believes in building up these two types of organisations, is directly opposed, in a sense, to any undue expansion of the power of the State.

Many hon. Members and leader writers have commented on the fact that the Gracious Speech is only tangential to Britain's central economic problems. But its contents merit consideration on their own account. I repeat the comment that I made in last year's debate, that Acts of Parliament, however worthy and valuable, often have a bearing on the size of the bureaucracy and public expenditure. The implied criticism is not only of my own Government, who admittedly have legislated too much, but of their predecessors. The restructuring of local government and the health service has been extremely costly in terms of bureaucracy and public expenditure. The housing and environmental problems that we are discussing have been made more difficult by the legislation intro- duced by the right hon. Member for Worcester (Mr. Walker).

The fact that, in this Session we are, I believe, considering only 17 major Bills, is desirable in view of the present constraints of the British economy, but the smaller load of legislation is due partly to the claims on parliamentary time of the devolution Bill. One aspect of devolution that hon. Members are liable to forget is that, whether or not it is justified, it can have serious consequences in terms of growth of bureaucracy and of public expenditure. It may sound attractive to say that as we are proposing to grant a measure of devolution to Scotland and Wales we should have some kind of devolution in England, but I have great reservations about any reform that introduces a further tier of local government.

If I judge the mood of my constituents aright—and I have carried out some soundings—they are none too happy about the moves to devolution but they accept a certain degree of inevitability, especially in consequence of the strength of feeling in Scotland. But it would be folly for the Government to push the proposals through the House if it turned out that they were broadly unacceptable to the people of Scotland or of Wales as a whole.

I support the main outlines of the Government's proposals, but I hope that at an early date they will announce their commitment to hold a referendum in Scotland and Wales on devolution and the link with the United Kingdom. The Bill will have a far easier passage and far greater acceptance outside if that commitment is made.

There has been reference to water supplies this afternoon. I am glad to learn that the Government are to introduce a Bill to strengthen the national organisation of the water industry. I should like to hear more about it. I am not particularly frightened if it involves an extension of public ownership. I should like to hear from the Government that it will at least mean an end to the antiquated Private Bill procedures which used to bedevil our water affairs. The water shortage in my constituency in the summer was unquestionably exacerbated by a decision that we took in the House eight years ago not to proceed with the Calderdale Water Bill. A combination of amenity interests represented on the Labour Benches and a substantial number of Conservative Members voted against the Bill late on a Thursday night. Many of us warned at the time what the consequences would be. If the Bill had been passed, my constituents and people in neighbouring constituencies would have had reasonable reserves last summer, instead of facing a parlous situation. We only narrowly got by.

The Gracious Speech also refers to a Bill to provide a comprehensive reform of patent law and protection. Presumably that means the implementation of the report of the Banks Committee, which was set up by my right hon. Friend the Member for Battersea, North (Mr. Jay) when he was President of the Board of Trade. As an exporting nation, we live by skill and innovation, and patents are an important part of our living standards. Do the Government envisage in particular a longer life for patents? I should perhaps declare an interest, as one who works in medical market research. Will the Government implement the Banks Committee proposal to end the use of compulsory licensing for medicines under Section 41 of the Patents Act? That practice is injurious to Britain's overseas interests.

My right hon. Friend the Prime Minister mentioned in his speech the heavy claims of devolution on parliamentary time, and said that many vital projects could not expect to receive time for passage into law. Nothing has been said so far, although I notice that my hon. Friend the Minister of State, Department of Health and Social Security, is present in the Chamber, about abortion and the Select Committee's report. I believe that the Government have a commitment, which I hope they will honour, to provide time for the House to debate the report and come to conclusions. If the House endorses the Committee's findings, which seem reasonable to me, will the Government find time to legislate?

I hope that the Government will be sensible in this matter. If the Minister's predecessors had acted in 1974 to implement the Lane Committee's Report, which contained some very sensible findings, considerable political troubles would have been avoided. By acting along those lines my hon. Friend will avoid them in the future and succeed in modifying the law in ways which commend themselves to moderate and sensible opinion on both sides of the House.

There are many desirable objectives which do not find enactment in the Queen's Speech. Lack of parliamentary time is not the only reason. The overriding reason is the weak state of our economy. So much depends on first winning solvency and then the creation of wealth.

Many of us would like Britain's influence for good in the world to be stronger, but we must face the facts of our economic and military strength.

On Wednesday, the Prime Minister warned that while we were willing to help to achieve a settlement in Rhodesia, our capacity to underwrite it was limited. I was very glad that my right hon. Friend said that. I do not think that we have the resources or the logistics to get involved beyond negotiating and perhaps providing economic aid. We certainly ought not to get involved in any unwise military commitments.

In home affairs, too, scarcity of resources counts in many vital areas of social policy. Some pretty harsh justice will have to be meted out in the name of economy.

I am concerned about some aspects of the proposed Bill to restrict unemployment benefits. I am all for stopping abuses, but I think that we may be interfering with contractual rights.

I am concerned that, as a nation, we look like being over-rigid about the age at which the underground miner is expected to retire. Many years ago—in 1953—I visited the Dutch State mines. That was 23 years ago. At that time the Dutch miner retired at the age of 55. Therefore, I hope that the Government and the National Coal Board, notwithstanding the nation's difficult economic problems, will, in return for higher productivity in the mining industry, have a more sympathetic look at that problem.

If we wish to break out of the economic straitjacket that constricts all our social policies, we must improve the productivity of manufacturing industry. That must be the central message of Government policy. We often forget how narrow our industrial base has become. As a nation, we want and expect earlier retirement for the elderly. That is the common objective of all parties. We want better educational facilities for the young. We want greater leisure for those at work. We have a larger service sector than in previous years. The responsibility of a narrower industrial base for the economic fate of the nation is much heavier than it ever was.

As we face the IMF, the Letter of Intent and the harsh options with which it confronts us, we must never forget that, without foreign borrowings, not only is the existing level of employment at risk, but the capacity to re-equip and revitalise our industry is imperilled. I venture to emphasise that the conditions that the IMF will impose on our economy will be far less restrictive than the consequences of doing without a loan in terms of what would happen to employment and living standards. I therefore support the Government on their policies. I hope that the House will, as well.

2.4 p.m.

Mr. Julian Ridsdale (Harwich)

Once again in the Queen's Speech we have the promise of far too much legislation. We have the prospect of one Finance Bill—probably two—16 or 17 other Bills and devolution on top.

Not content with reintroducing the Aircraft and Shipbuilding Industries Bill, which the country has clearly shown it does not want by the results of the by-elections in Walsall, North and Workington, the Government, despite what the Secretary of State for the Environment said, are proposing a further measure of nationalisation—the nationalisation of the water companies. I am glad to see the Minister for Housing and Construction shaking his head, because he has called this measure the equalisation of water measures. Whatever it is, we have not yet had any clear indication about this matter. Perhaps what we say in the debate may indeed make the Government draw back from the brink of nationalising the water companies. I hope so. Certainly, such a measure is looked upon with grave disquiet in North-East Essex.

The private water companies have a long and distinguished record of management efficiency and public service and no valid case has been made out for nationalisation. The whole of my constituency is served, and served well, by a private water company which some years ago had the foresight to invest in a new reservoir. During the drought there was no shortage of water in my area. Now, in addition to paying the capital charges for its new reservoir, my area will, if the measure proposed by the Government goes through, have to pay for the inflated capital charges of other areas which did not have the foresight to invest in capital projects earlier, as was done in North-East Essex.

The consumers do not want this further nationalisation measure. They know what it will mean by way of increased prices. The parish councils and the district council do not want it. Indeed, the Area Water Authority does not want it.

When will this Government ever learn that the country is sick and tired of nationalisation and the increased prices which it always has to pay as a result? That will happen with water, just as it happened with all the other nationalised industries.

Alas, all this doctrinaire legislation means that the things which should have been done are being put aside. If ever a Government got their priorities wrong, it is this Labour Government.

Nothing is being done to reform local government finance, yet the system of subsidy to local government now being made is financially so complicated that one almost needs to be senior wrangler to understand the working of the rate support grant.

In 1976–77 the amount of rate collected, compared with that in 1972–73— a period of four years—has doubled. This increase is more than the defence bill of 1964. The amount paid in rates in 1976 is nearly three times the defence bill of 1964. The amount paid with Government subsidy through the rate support grant and rates for 1976–77 is seven times the defence bill of 1964. That is the price that ratepayers and the country are having to pay for Socialist measures.

The cut-back in the rate support grant this year will put a great burden on councils which have already cut back because of inflation. At a time when central Government are flinching from further direct taxation, because of what is happening, they are forcing further huge increases in the rate burden, especially in rural areas where many retired people live.

We used lightly to use the phrase that people will pay their taxes in sorrow and their rates in anger. We have a new version of that phrase today. People will pay their taxes in anger and their rates seeing red with anger. The Minister may look at me doubtfully, but I assure him that ratepayers in my area feel extremely angry about the burden that the Government are inflicting upon them.

The burden of inflated national charges, especially for education, is now larger than the defence bill. It is borne by retired domestic ratepayers, and indeed by ratepayers as a whole. The burden falls severely on property. As one goes round the countryside, one sees property falling into disrepair. It is a burden that results from Socialism which inevitably means rate increases. We see roads in disrepair, some of them looking like dirt tracks, instead of the good roads to which we have become accustomed. That is the burden placed on ratepayers because the Government have not been willing to cut back and to give Government guidance to others to cut back on expenditure.

Hon. Members were asked to make brief speeches, and as a result I have omitted a number of passages in my speech. Therefore, I end by underlining two important aspects which will have serious consequences for my constituents. The first is the effects of water nationalisation, and the second is the enormous rate burden about which we have had such hypocrisy from the Labour Government. The Government asked councils to cut back on their expenditure when the Government make no attempt to make similar cuts. I am certain that ratepayers will see red in anger when their rate bills arrive in the spring if something is not done by the Government to allay their fears.

2.12 p.m.

Mr. John Cartwright (Woolwich, East)

The hon. Member for Harwich (Mr. Ridsdale) said that ratepayers will soon see red in anger. I hope that they will also see red in anger when they realise what has happened as a result of the reform of local government brought about by a Tory Government, with its enormous impact on local government administrative costs.

The hon. Gentleman emphasised the public reaction to rates. I do not disagree with his basic premise that, by and large, people do not like paying the rates, but he should bear in mind the experience of many of us who have been involved in local government. We know that although some people intensely dislike paying their rate bills, they soon become vocal in their demands for better and higher services via their own pressure groups. As a council leader, I remember that pressure groups used to knock on my door asking for more money to be spent on pre-school play groups, housing, social services, leisure activities, and all the rest of it. However, when the rates have had to rise to meet the costs of the services demanded, those same pressure groups have objected strongly to paying the bills. We shall do ourselves a very great disservice if we give the impression that people can have better services without meeting the bill at the end of the day.

I welcome the indication given by my right hon. Friend the Secretary of State for the Environment that he will adopt a more flexible attitude towards controls over local authority housing activities. I support the view taken by the Association of Metropolitan Authorities that there is a strong case for some form of block allocation in local government housing expenditure. To have totally separate allocations for new building, rehabilitation, municipalisation and home loans involves too great an element of individual control. Successive Secretaries of State have said that there is no longer one overall housing problem. We are constantly reminded of this fact by the large number of regional and local housing problems. Therefore, it is reasonable that, in housing terms, we should give block allocations to local authorities which they may spend in the light of their own judgment of the circumstances in their areas. That will leave them to decide for themselves whether money is to be spent on new building, rehabilitation, homelessness or municipalisation. They will then be in a position to decide their own priorities.

My right hon. Friend the Secretary of State also said that he would examine the housing cost yardstick. I understand the need for the Government to exercise some control over housing expenditure, but my experience in local government allowed me to witness the frustrations and delays caused by the housing cost yardstick. A great deal of paper and plans shuffle backwards and forwards between town halls and Whitehall, with all the extra costs involved. That kind of frustration and delay offsets any gain to central Government as a result of controls.

In looking forward to the review of housing policy mentioned in the Gracious Speech, I hope that we shall see greater governmental support for co-operative forms of housing. I do not much care for the picture presented by the hon. Member for Henley (Mr. Heseltine), who seemed to suggest that there was no alternative to buying one's house or renting it from a local authority. I do not care for that prospect, and I believe that genuine co-operative housing can provide another alternative. If we want to do something to bridge the appalling gap that exists in many inner city council estates between council tenants and housing managements, we should seek to develop genuine tenant co-operatives in housing estates, which can undertake for themselves a substantial measure of responsibility for management and maintenance. I welcome what my right hon. Friend the Minister for Housing and Construction has done so far, and I hope that he will pursue that policy.

Mr. Heseltine

The hon. Gentleman raises an important matter. It was one that I might have embraced if I had had a little longer to prepare my speech. The hon. Gentleman may wish to know that I very much accept the role of the kind of organisation to which he referred.

Mr. Cartwright

I am grateful to the hon. Gentleman for that intervention. It demonstrates that co-operative forms of activity have a measure of support on both sides of the political argument. That is something very much to be said in their favour.

I was sorry to see no mention of homelessness in the Gracious Speech—an omission also mentioned by my hon. Friend the Member for Ilford, North (Mrs. Miller). I appreciate that this may have arisen because of the pressures of parliamentary time, but there are surely some items in the Gracious Speech which could have been given a lower priority than the question of settling, once and for all, responsibility for homelessness. I hope that the Government will take the earliest possible opportunity to make clear their view that responsibility in this respect should devolve on housing authorities and that, at the same time, the Government will provide the resources to go with that responsibility.

I also welcome the comments made by my right hon. Friend the Secretary of State about the problem of the inner cities. Many of us who represent London constituencies—I refer to both Labour and Conservative Members—have sought to argue for some time that the streets of London are not all paved with gold. There are massive problems still to be solved in London, and we welcome the encouragement given to the solution of these problems by the Secretary of State.

I support some of the comments made by the hon. Member for the Isle of Wight (Mr. Ross) about the way in which in many inner city areas, our lives are becoming eroded by vandalism, litter and a general rundown atmosphere. This problem should be tackled jointly by central Government and local government.

I welcome the commitment in the Queen's Speech to the relaxation of controls on direct labour organisations. I have never been clear why there is always such a doctrinaire reaction from Conservatives whenever direct labour is mentioned. I believe that the system has a tremendous practical contribution to make to housing programmes. I can draw from my experience of one of the largest direct labour organisations in Greater London. That department has had over 40 years' practical experience of direct labour and has made an enormous contribution to housing and to the infrastructure in that borough. I accept that there are some direct labour organisations whose efficiency record is not as good as it might be, but there are also some private building firms which are not tremendous models of efficiency. Some of us have experienced housing contracts which have fallen through when a building contractor has gone bankrupt, and we know all about the subsequent problems that are left for us to sort out. I hope that we shall examine the direct labour proposals on their merits, and that we shall hear no more doctrinaire reactions from the Opposition.

I also welcome the fact that in referring to devolution the Government have also made clear their intention to publish a document on devolution to the English regions. There is a tremendous case for devolving central power to the regions of England and for taking over the ad hoc agencies that now exist at regional level in England and providing some democratic control over them. However, if we do that, clearly there must be some change in local government.

I do not believe that the people of this country will accept a third tier of government, with all the extension of bureaucracy involved in that. Therefore, I accept that if we are to have a regional tier, there must be changes in local government tiers under it. After the upheaval of the 1972–74 period, I accept that we cannot lightly and easily launch out on a further local government reorganisation. All that I say to my right hon. Friends is that I hope that we shall at least get clear our aim. If it is our final objective that we want a tier of regional government with, below it, a most-purpose tier of district authorities, we ought to settle that objective and ensure that in all our decisions and policies we are working towards the achievement of that objective.

What we want in regional and local government is not another reorganisation. We need a simplification—a system easier for people to understand, simpler to operate and, I hope, somewhat cheaper to run than that which we have today.

If we are considering local government and regional government structures, I hope that we shall not make the mistake of the Conservative Party and look at local government finance in isolation from structure. The point was clearly made in the Layfield Report. If we are looking at structure and finance, we have to make up our minds about what sort of local government system we want. Do we want genuine local democracy or local authorities that are merely acting as the agencies of central Government?

I suggest that the crisis in local government today is not just a financial one. It is in some ways a crisis of confidence, as people in local government and, I suggest, in this House have failed so far to make clear and to think through what sort of local government system and local government objectives we want to see.

All that I say to my right hon. Friends is that I understand their need to maintain overall economic management. However, I hope that in considering regional and local government structures and powers they will take every opportunity of trying to devolve more powers downwards from the centre to regions and local authorities to put local government on a more democratic basis than it is at present and to breathe new life into our local authorities.

2.23 p.m.

Mr. Julian Critchley (Aldershot)

I hope that you, Mr. Deputy Speaker, and the House will forgive me if I move away from housing to talk very briefly about some aspects of high politics as opposed to low politics. Those hon. Members who wish to stick with low politics will now have an opportunity to leave the Chamber and have an exquisite light lunch of the kind that we can always get in the House of Commons. We have very infrequent opportunities to talk of high politics, as opposed to low, in part because of the weight of legislation. Most of the important subjects are squeezed out of the calendar of debate, so I want to talk very briefly about the threatened Scottish and Welsh Assemblies, and about the prospect of the unity of Europe. I promise that I shall keep my eye firmly on the clock.

Many people find it very difficult to justify why the present Government should be spending the whole of the next year in having a debate on devolution at a time when the country slips slowly beneath the waves. The reason, perhaps, is that devolution is a device whereby the Labour Party hopes to hold on to its fiefdom in Scotland. Just as the EEC referendum was a constitutional innovation designed to keep the Labour Party united at the expense of the sovereignty of this House, so the whole idea of Scottish devolution is a device to keep up the strength of the Labour Party in Scotland at the price, perhaps, of the unity of the United Kingdom. I for one shall vote against the devolution measure step by step, and I hope that my example will be followed by our distinguished Front Bench.

Quite clearly, we suffer from far too much legislation. I cannot recall when the House debated the short list of important subjects I am about to mention. When did we have a debate about the threatened spread of nuclear weapons? When did we debate the MBFR talks in Vienna? When have we had a debate on SALT, the strategic arms limitation talks? Indeed, we have not focused on the need for a Euro-SALT, that is, a SALT concerned with strategic nuclear weapons in Europe, which ought to follow any signing of SALT 2.

Lastly, have we ever debated the extent to which the Soviets and others are complying with the Helsinki Agreement, Baskets I, II and III, on the freer movement of people and so on? In fact, the Nine and NATO are acting as watchdogs but the information that they have collected on compliance or non-compliance has been made secret. It is classified, and is not available to Members of Parliament. I know that life is one humiliation after another, but this is ridiculous. Parliament has become an assembly of eunuchs who have nothing to show each other save their scars.

I am no economist, and my hon. Friend the Member for Henley (Mr. Heseltine) knows that I am no moral philosopher, either; but seeing what economics and economists have done to this country, I feel no sense of shame whatsoever. I make one suggestion to our recast Front Bench. That is that were they to introduce into our policies the one simple proposal that income tax ought to have a ceiling of 50 per cent., as is the case in the United States of America, that alone would work a transformation in Britain over a five-year period. The aim and objective of the Tory Party, surely, is to make work once again worth while.

I return to the subject of devolution for a moment. Surely the idea of separation, of loosening the links within the United Kingdom, runs counter to what is supposedly the great theme of our time, which is the eventual unity of Europe. We in this House, on both sides, with some vociferous exceptions, are committed to that as a particular end of politics. Why is it that, despite all the rhetoric, so little progress is ever made? The reason is that humbug is the necessary lubricant of politics and public life and that there is no subject that suffers more from the application of humbug than the future prospect of the unity of Europe.

What is the reason for Europe's lack of self-confidence? Is it that we in Europe are unable to believe our good fortune? We all call ritually for European unity, but Europe plainly has all the unity that it wants. The calls we hear so frequently for new initiatives serve as universally acceptable substitutes for action that no one really wishes to take. The Europe of today is a confederacy rather than a union.

A united Europe would be a federation dominated by France and Germany, which is why, despite all our ritual incantations, few of us seek real progress. The small States of Europe wish European unification as a means of controlling the big States, and not as a means of magnifying their power. We should remind ourselves that the original motive for European integration was to control Germany, and, further, that that desirable objective could be achieved only by the involvement of the United States within Europe.

Thus, the debate on European unity has been as much about the relationship of Europe towards America as about the relationships of Europeans one to another. The question that has not yet been posed but must be asked is, how long will the existing relationship between United States and Europe last? No one can say when the United States will finally leave Europe, but neither can anyone seriously assert that they will not eventually leave. When that happens we shall have to be a "European" Europe—a thought which frightens many of us today.

What are the reasons for our fears? On one level there is fear of Russia, but, more particularly, there is fear of uncertainty. Deep down, we fear that the natural state of Europe is violence and political excess. We believe this still, despite the prosperity and stability of the past 30 years. In that period the United States have exempted Europeans from the need to think seriously, to pay the proper price, or to guarantee their external security. How can we, as Europeans, complain that Europe is weak and at the same time refuse to provide an adequate defence?

Our anxiety about the natural condition of Europe, which we suspect to be chaos, has led us into dependence upon the United States and reliance upon them for the solution of all our problems. America's sheltering presence in Europe not only has solved the Russian problem for Europeans; it has solved the German problem and the Oder-Neisse problem. Even now we wait, impatiently and apprehensively, for America to solve the Italian problem—will Communists be allowed in the Government?—the Spanish problem and the Portuguese problem.

So why are Europeans so hesistant and lacking in self-confidence? Every European who opens his eyes and looks about him knows that the major States of Europe are great Powers in all important respects—population, size and sophistication of industry, gross national product, education and the sophistication of our work force.

In many vital respects, Sweden, Germany, France and Holland are more modern societies than the United States. Britain and France as the third and fourth nuclear countries in the world both have a capacity for "assured destruction". Even in conventional warfare, a traditional military alliance of France, Germany and England adds up to an industrial and potentially a military force on the same scale as the Soviet Union. France and Germany together form an industrial agglomeration larger than the Soviet Union. The EEC possesses a combined GNP more than twice the size of Russia's, and we also have a larger population. We have nothing like the military forces of Russia but that is because we spend, on average, 2.5 per cent. of GNP on defence each year while America and Russia spend five times as much.

One reason why Europe does not do more to secure itself is that we do not believe, deep down, that the Soviet Union poses a serious threat to us. Since the Americans are still in Europe we can excuse ourselves from worrying over the consequences of being "wrong". In turn, we wish to change nothing in Europe because a unity of sorts already exists; there is a commercial unity and a moral unity derived from what European civilisation has survived in this century. We have no wish to break the spell.

The real issue for Europeans is how to accomplish the psychological transition towards unity and how to rid ourselves of a transatlantic dependence which cannot be sustained for ever by either Europe or America. Despite all the hyperbole, Europe has preferred its security to its unity. It will only be when we are obliged to ensure our own security that we shall make any progress towards the achievement of political unity.

2.35 p.m.

Mr. George Thompson (Galloway)

The hon. Member for Aldershot (Mr. Critchley) spoke about high and low politics. I am glad to be able to assure him that I intend to speak on one matter of high politics—devolution—at the end of my speech and another matter—the disposal of nuclear waste and the environment—which he might be inclined to regard as high politics and which is certainly chronologically distant politics.

I wish to contrast two approaches to nuclear waste and call them, for ease of reference, Tombs and Flowers. I mean no disrespect to Mr. Francis Tombs, Chairman of the South of Scotland Electricity Board, or to Sir Brian Flowers, who chaired the Royal Commission on Environmental Pollution, which has reported on nuclear power and the environment, but these descriptions will make for easy reference. Flowers should come before Tombs, because if flowers come after they are not much use to the people who have been entombed. But logic compels me to tackle this matter the other way round.

I draw the attention of the House to a speech made by Mr. Tombs on 10th November in which he took some hefty swipes at people whom he called the antinuclear lobby. Among other things, he said that he was against generalised statements. I am not a logician, but I should imagine that if one makes a generalised statement which is based on soundly-argued particularised statements, it cannot be laughed out of court. For instance, the close and particularised arguments of Michael Flood and Robin Grove-White in "Nuclear Prospects" cannot be written off even though they may result in generalised statements.

Mr. Tombs also says that he is against emotion. I say to people who decry emotion that it is a powerful factor in human action. Who has ever done noble deeds without properly-directed, well-ordered emotion which is ordinate to the end being pursued?

Does Mr. Tombs exhibit any emotions? Of course he does. He exhibits superb confidence, almost verging on hubris. Yet this confidence is muted by flashes of honest uncertainty. He says that fusion which does not produce long-life radioactive waste may one day be used instead of fission but that the day is not yet within our reach. If we tackle his assertions fairly and squarely we are bound to start asking how he knows.

He says that wave and wind power, solar energy and domestic refuse cannot bridge the energy gap and that it is irresponsible to suggest that they could. How does he know? Mr. Tombs is very fond of the word "well". Everything is well guarded, including the reprocessing plant and the fuel in its containers. Development is well advanced to incorporate long-life radioactive material into glass. Waste would be buried in well-chosen geological formations. Well, we shall see how well guarded and how well disposed of these things are.

Let us contrast Mr. Tombs' self-assurance with Sir Brian Flowers' probing thought. In paragraph 364 of the report, speaking of intermediate waste, he says: We have been unable to discover any clearly formulated policy for the future disposal of this waste. Going on to deal with high-level waste, he says: We have no reason to think that the operations at Windscale are not conducted with every intention to safety. Nevertheless, it is important at such a plant that the highest standards of general housekeeping should be employed and we feel bound to say that we did not gain the impression that this was so at the time of our visit. Paragraph 381 states: The delay in bringing the vitrification process into commercial production stems from a long period on inactivity in the 1960s when no further development work was carried out. It is strange in retrospect that a matter so important for the safe development of nuclear power should have been delayed for so long. I could go on, but I wish to turn to the question of Windscale.

I notice from today's Press that the plant at Windscale is being referred to as "our nuclear dustbin". As someone who resides in and represents an important constituency in the Solway area, I want to know what goes into that dustbin, what goes on inside the dustbin and, most of all, what comes out of the dustbin and where its contents go. If Windscale is "our nuclear dustbin", it seems that Galloway runs the risk of being one of our nuclear coups. I should explain the term because an hon. Member mentioned "a senior wrangler" in his speech and, unfortunately, I have to admit that I do not know what a senior wrangler is. It may well be that some hon. Members do not know what a coup is. In fact, it is a municipal refuse dump.

I say to the Government that, so far as in me lies, I shall not allow Galloway to become a nuclear coup. What reason have I to suppose that it might do so? I have the answer given by the Department of Energy to my hon. Friend the Member for the Western Isles (Mr. Stewart) on 18th November. It says, among other things: It is expected that it will be possible to dispose of such vitrified waste to the deep ocean bed or to deep stable geological strata on land or under the ocean". Note the superb confidence of the word "expected". From Flowers, one would gathered that all one could say was "It is hoped". The reply went on to say: The areas to be studied are some crystalline rocks in the Highlands and Islands of Scotland; crystalline and hard sedimentary rocks in the Southern Uplands; some ancient rocks in North-West England; and some mudstones and rock-salt deposits in the Cheshire-Welsh border area".—[Official Report, 18th November 1976: Vol. 919, c. 747-8.] Hon. Members from all those areas will be taking a long, hard look at this.

May I put two questions to the Minister? If the Secretary of State is to announce his decision on Windscale before Christmas, will he undertake to press the Leader of the House for a full day's debate on the Flowers Report before he makes his decision? Surely it cannot be acceptable to the House that the debate on the Gracious Speech should be the only chance that hon. Members have to debate the matter before we are set further along the road which leads to the plutonium economy. How will the Secretary of State know the view of the House if he does not consult it and persuade the Leader of the House to provide time for a debate?

My second question is based on paragraph 408 of the Flowers Report, in which it is said: We have no doubt that the Institute of Geological Sciences must do the work"— that is, the work of probing the rock deposits— but in such a way that they retain their independence of judgment". What steps are being taken to make sure that the IGS retains its independence of judgment?

If foreign nuclear waste is to be deposited ultimately and irretrievably in the land of Scotland or in our seas, we need more than ever to have our own Parliament and Government vested with our full ancient sovereignty and possessing sovereign control over our land and national resources. I know that the proposed devolved legislative Assembly will not have such sovereign power. That is why I know that the Assembly will be inadequate for the needs of the Scottish people in the long run. That is why I know that the Scots will move forward from the Assembly to a fully sovereign Parliament, just as I know that this House will revert to being the sovereign Parliament of England.

Only in that way can the Scots people have control of their own land, their own seas and their own resources. Only in that way can we protect the interests of the generations yet unborn.

2.45 p.m.

Mr. Ivan Lawrence (Burton)

I want to speak about the grave, demoralising, increasing and almost wholly unnecessary problem of homelessness in our society. Particularly, I want to speak of the contribution that could be made to the elimination of that problem by increasing the spread of home ownership and the sale of council houses.

The Gracious Speech hinted at some action by the Government on the housing front and the Minister has put some skin on the bare bones, but it is clear that there will not be much flesh to fill that skin. There is to be no immediate Bill on homelessness, and there are certainly no plans to spread home ownership or the sale of council houses.

I wonder whether Labour Ministers ever pause to wonder why the record in housing of successive Labour Governments has been one of almost continuous failure. Do they really not understand that their whole approach to the provision of adequate housing is based on a misunderstanding of what motivates people to action? Was that fundamental misunderstanding not made startingly clear 25 years ago by Mr. Aneurin Bevan who, having failed after six years to achieve his own housing targets, attacked the Conservative promises in the 1951 election campaign as an unachievable attempt to bribe the British people? How dare they, he said, promise 300,000 houses a year? Not only dared they, but they performed. At the end of the so-called 13 wasted years, Conservative Governments, by a determinded application of will, had achieved an average of over 300,000 houses a year.

Today, are the Government genuinely proud of their housing achievement? Astonishingly, the Secretary of State appeared to be so. But what is the situation? There are 30,000 homeless families, and that figure is based only on those in temporary accommodation. Other informed views say that there are 100,000 homeless families, and certainly that would be so if one took the Secretary of State's definition as meaning anybody virtually without a home. That figure is growing.

There are between 20,000 and 30,000 squatters. There are 1.8 million properties unfit for human habitation—an increase of 600,000 in the past five years. There are 670,000 empty properties and 750,000 more houses than households. How can the Secretary of State pretend that all is well for house building when the National Federation of Building Trades Employers said, only this week: The downturn in both local authority and private house building is now very apparent… No region, or size group of firm, is escaping what has become one of the worst setbacks the construction industry has experienced this century, with the likelihood of even more serious problems to come in 1977"? What hon. Member does not know what it is like to sit in his surgery week after week and hear a monotonous and depressing tale. We hear such statements as "We cannot afford to buy a house. We cannot find one to rent privately, and we are too low down the council housing list to get a house. Where shall we go? What shall we do? We are living in a hovel. We are under the doctor. My marriage is breaking up. My children are getting out of hand. Why cannot the politicians do something to help us?"

The answer to that question is that most hon. Members opposite are so blinded by their party political prejudices that they are incapable of seeing what more could be done to help to relieve the situation. What they could and should be doing is to extend the private ownership sector of housing, not only because there is a growing demand for it—although that might well by itself, in a democratic society, be considered sufficient justification for such a policy—but because to do so would make good sound economic sense, since there would be a considerable saving of public funds and a liberation of resources to help the really needy.

Lest I should presume too much on the time of the House, I shall confine my remarks to the sale of council houses. There can be little doubt that the sale of council houses would make a significant contribution not only to achieving a freer society but to eliminating homelessness. This is because council housing is so expensive to provide that the public purse is just not being used to help as many of the 100,000 homeless as it could. Taking the average cost of a new house as £12,000, and a local authority having to borrow at, say, 13½ per cent., it costs £1,620 a year to borrow the money and a further £80 a year to maintain the house. With an average income of £7 a week from rent, the total cost is over £1,300 to subsidise each council house. Yet the tax relief on the interest payable on a mortgage for such a house is only £300. In other words, the public purse will subsidise four owner-occupiers for the same amount as it costs to subsidise one family in council housing. That is a most substantial balance in favour of selling council houses.

Even this ratio may be an overestimate of the true cost of subsidising owner-occupiers, because the State takes more in taxation from the building societies under the composite tax arrangements as the building societies do more new busi- ness. So the less money a local authority has to find to subsidise its existing council tenants, the more money it has to provide bungalows for old people or new accommodation for the genuinely homeless.

Such sales of council houses would allow people to take in lodgers, which they are not able to do now, and this would provide more money for the households and at the same time relieve more of the homeless. Such sales normally are financially beneficial to the local authority, and therefore to the ratepayers, because the mortgage repayments are usually higher than the rents previously paid. If a building society provides the mortgage the council receives an immediate lump sum to help those lower down the waiting lists. It is little wonder that local authorities which encourage people to stay on in council housing, and whose children are encouraged to stay on, have fewer vacancies for the genuinely homeless.

Then there is the very substantial advantage for local authorities which sell council houses, in that they are spared the cost of maintenance, which runs at about £80 a year per house. These local authorities also are often spared the cost of vandalism. How much vandalism does one see on private housing estates, compared with council estates? The fact is that where people take a pride in the ownership of their property they do not tolerate marauding Banes of their own children, hell-bent on destruction.

Nor can it be argued that selling council houses is difficult. In 1973, before Labour Circular 70/74, warning local authorities that it was wrong to sell council houses, 33,720 were sold to sitting tenants in England and Wales, and the recent successes in local government elections where the sale of council homes was to the forefront of Conservative platforms may be seen as an indication of the widespread desire of people to buy their houses if possible. Of course, incentives must be offered, but the cost of these incentives need be minimal. Just as a private house is sold below the market price if it is sold to a sitting tenant, so could a council house be sold at 20 per cent, or 30 per cent below the market price. If the house is old, that incentive will cost the council nothing at all.

Of course there should be restrictions on sales—perhaps they could be restricted to tenants of more than three years' standing, and a council should have the right to repurchase at the sale price if the house is to be resold within a short time. But these restrictions would not inhibit sales.

Are such sales unfair to those on council waiting lists? In practice, no. Although such a policy might benefit some council tenants who decide to stay on but who otherwise would have moved away. The wide experience is that purchasers are those who want to stay on as tenants anyway The waiting list would certainly be relieved by releasing money to build new homes. The advantages of selling council houses are so staggering that we must ask why Labour Governments deliberately avoid this way of helping the homeless.

The Secretary of State pretends to have a sympathy with private home ownership, but the action of earlier incumbents of his post have consistently belied this. How does it help the homeless to destroy, or even to continue to destroy, the private rented sector? Why are there hardly ever any steps taken by Labour Governments to encourage owner-occupiers? Why have council house sales always been resisted by Labour Governments? The truth is that Labour Governments, both nationally and locally, have consistently failed to provide adequate housing for the nation.

There are two reasons for this. First, they have always been bold in word but feeble in deed, because they only half-heartedly believe in private ownership. Even if those on the Right of the party believe in it, those on the Left do not, and the Left has to be pandered to. I hope that the Minister will not insult our intelligence by pretending otherwise. Does anyone not believe that if only 25 per cent. of the nation were owner-occupiers, instead of the present 52 per cent., Labour would not long ago have launched a full frontal attack upon private home ownership? Political necessity may oblige them to pay lip service to owner-occupiers, but they would far rather dismantle tax reliefs on mortgage interest and move faster towards the Marx and Engels ideal of complete State ownership of land and housing.

The second reason leads on from the first. Labour politicians must be well aware that once a citizen is made independent of the State, once he has property to cherish, once he is made more utterly self-reliant, why, one is far more likely to have created a Conservative than Socialist. What justification is there for the relentless attempt to extend municipalisation? What justification is there for the hundreds of millions of pounds always set aside for ever more council houses? Is it not the cynical belief, unhappily proved only too true in practice, that if one has cities and towns full of council houses with heavily subsidised cheap rents, one can redistribute the wealth of the private owner and, at the same time, buy the votes of the council tenants?

The council tenant seldom bothers about the justice of paying a fair economic rent. He bothers about paying as little rent as possible, and he knows that a Tory Government, with a fair rents policy, probably will increase his rent. That is why Labour has consistently held on to power in the cities and big towns—by literally bribing council house tenants. This is as cynical as it is depressing, all the more so because when Labour comes to power it also proceeds to increase the rent. What other justification was there for orchestrating the hysterical opposition to the Housing Finance Act? Labour Members fought like demons to stop that measure, which should have gladdened the hearts of the purest Socialist idealist.

We are told that the Socialist ideal is "From each according to his means, and to each according to his needs". That means taking from those with the means to pay a fair rent and giving cheap housing to all who are needy. Yet that Act had to be destroyed, lest too many council house tenants, being called upon to pay a fair rent, decided to buy their own property instead and become Conservatives.

Had the Act been allowed to take a hold on the nation's housing, Labour support in the country would have been wiped out. So, for the sake of pure party political dogma, coupled with the understandable but hardly justifiable desire to remain in political power, the Government have resisted improvements in national housing which they must know could have been achieved.

Their policy has been directly responsible for a far higher degree of homelessness than might otherwise have occurred This is a part of the real price that we have had to pay for Socialism in housing, and the homeless should know at whose feet that blame should squarely be laid.

Council housing there must be for those in our society who are unable, by virtue of old age, infirmity, large families or small incomes to buy their own homes. There should be a tenants' charter in order to eliminate such serfdom as exists in council estates. But there can be no justification in a free society for proliferating council housing, which is so economically wasteful, inefficient, unjust, debilitating in its suppression of independence, infuriating to so many in its bureaucratic restrictions, and socially divisive. Nor can there be the slightest justification for not giving council tenants the right to buy their own homes and avoiding the step which would reduce the appalling number of homeless.

But we shall wait in vain for the Government to take any step, however beneficial, which will weaken its support on council estates and inevitably create more Conservatives. For that step the nation and the homeless must wait for a Conservative Government. Mercifully for us all, the election of that Government may not be too long in coming.

3.1 p.m.

Mr. Michael Morris (Northampton, South)

Members on both sides of the House recognise that there is still a major housing job to be done. We would be unfair if we did not admit that the Government have more inquiries in train on housing than there have ever been before. The sad point is that the Opposition parties are united in the view that we are about to see the greatest failure of housing policy since the war.

I wish to concentrate on those areas where that policy has failed. The Government would say that planning delays are being reduced, but it is actually the number of applications that is being reduced, not the length of time taken to process them. At King's College there has been some interesting work on land use recently by Miss Alice Coleman. If the Minister is not familiar with her work, I urge him to look at it. The conclusions are frightening. They are that we are eating into our good agricultural land at an unprecedented rate. Equally worrying is that the amount of waste land created in the last 10 years has been increasing.

If those conclusions are correct, and the evidence is that they are, we need to think seriously about what is happening in planning. I understand that the Department of the Environment has not exactly responded with enthusiasm to Miss Coleman's research.

The Minister knows that all hon. Members are worried about unemployment in the construction industry. Of all the sectors of employment, the building industry has the highest level of unemployment in the country. The figure is nearly 250,000 men and women. A good half of that number are skilled men who will be totally lost to the industry unless action is taken.

Let us consider the professions, particularly the architects. Half of them are under-employed, yet the only response from the Government is to propose a direct labour policy which will cause more unemployment for the industry. I suggest that the Minister should revise his consideration of that matter and examine the extraordinary situation in the GLC in which more than 3,000 people employed in the architect's department are producing no more than about two dwellings each per annum at best, and for which the ratepayers are now being landed with a bill of about £38 million for shoddy work.

The Secretary of State tried to suggest that public sector housing achievements were roughly on course, although there was some minor difficulty. As the right hon. Gentleman knows, however, at best 90,000 units will be created in the public sector in 1977. The right hon. Gentleman is continually castigated from the Left of his party and is harassed by somewhat dubious surveys from organisations such as Shelter. I share the right hon. Gentleman's concern that no survey of housing need is available. Leaving aside sheltered accommodation which is needed, there are few areas where there is a need for more ordinary family council accommodation.

During the recess I visited the North-West, and I was impressed with what I saw in Liverpool. That council has deployed an initial concept, created by the Conservatives, developed by the Liberals and now run on a joint basis, of homes for sale. It is selling not just hundreds but thousands of homes. If the Minister for Housing and Construction, who is frowning, has not seen the papers, he should get them and examine them. He would then know that the council has 4,000 units which are planned as homes for sale. The concept is working and should be examined seriously as a possible scheme for areas such as London, Manchester, Newcastle and Birmingham. If the Minister is sceptical, I urge him to look at the scheme. He should turn his attention not to the private accommodation which is lying empty but the hundreds and thousands of empty council houses in our urban areas, many of which were bought up, we were told, in order to house the homeless.

If the Secretary of State is to tackle inner city areas, what will he do about the tower block crisis? Housing management in Liverpool is at its wits' end. Many tower blocks are being vandalised. The Secretary of State should go and see "The Piggeries", where there are 210 flats which are 10 years' old and completely vandalised. He should go and see Oak and Eldon Garden in Birkenhead, which is to be demolished after being totally vandalised. We must have some initiative to solve the problem.

If more attention is to be paid to inner city areas, what is the new towns policy? The Government are slowing down development in the new towns. If that is so, would it not be better to give the new towns a revised assessment of their role? Some of the new towns are run by good teams, and it would be better to redeploy them in the inner city areas. Dockland in London and other areas needs to be revitalised, and experienced teams are required to do that.

If we want to keep people in the inner areas why on earth is the Location of Offices Bureau still carrying on a campaign to move offices out of London? That campaign should be stopped. It is nonsense when we are trying to keep jobs and people in London.

The Government say that they are in favour of young couples buying their own homes. Rut that must have a hollow ring for young couples when they find mortgage rates going up and mortgages becoming increasingly difficult to obtain. I hope that my hon. Friend the Member for Hornsey (Mr. Rossi), when winding up the debate from this side, will draw the attention of the House to some of the latest evidence of hardship.

Hon. Members should examine the housing association movement. It was built up well, and I congratulate the Government on getting the scheme moving. But they should not cut it off just as it is beginning to move. It is being cut off before it has come to fruition. Improvement grants have declined almost every month since the Government came to power. Yet they have taken no initiative to remedy the situation. On top of that we have had the 1974 Rent Act, and we have seen what has happened in the private rented sector.

We have seen no sign of new thinking or initiatives by the Government. We could understand this complacency if we were getting somewhere on any one policy, but we are not. We have terrific unemployment, increasing homelessness and record rent arrears. The number of new units is collapsing, grants are collapsing and derelict land is abounding everywhere. The only record I see is one of complacency on the Government Front Bench.

3.11 p.m.

Mr. Hugh Rossi (Hornsey)

It is with great pleasure that I follow my hon. Friend the Member for Northampton. South (Mr. Morris), because the thoughts that he expressed are very much the ones that I want to express.

One sentence in the Gracious Speech seems to leap out and greet the eye: Proposals arising from My Government's review of housing policy will be brought before you. What a delightful turn of phrase—such modesty, such classic British understatement. What the Gracious Speech should have said is: My Government are busily rewriting their housing policy because that upon which they entered office is now in a complete state of collapse. That would have been much nearer the truth.

As my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) reminded the House, when the Government sought election in October 1974 they produced a detailed manifesto dealing with housing and land problems, and they said: We are not making any promises we cannot keep. Such a great promise to the people of this country. Yet if one examines what they promised and what they have done to keep their promises, one sees a remarkable situation.

I should like to remind Labour Members of some of the promises which they said they would keep. Perhaps I might start by quoting the February 1974 manifesto. Admittedly, they did not say in that that they were not making promises that they could not keep, but I am sure that they did not make any promises with the intention of not keeping them.

In that manifesto, the Labour Party said: We shall take steps to ensure a steady supply of mortgage funds at reasonable rates of interest to those wishing to buy their own homes. What a hollow laugh must come from the thousands of young couples now seeking to buy their own homes, or the many hundreds of thousands of people with mortgages, who do not consider that mortgage funds are available to them at reasonable rates. Where has that promise gone?

My hon. Friend the Member for Henley (Mr. Heseltine) analysed the reason that mortgage interest rates are so high today and related it directly to the economic policy of this Government in seeking more and more public sector borrowing, with the result that interest rates are inevitably driven up. I will not go into that argument: my hon. Friend has already proven the case on that. As a result, the Labour Party's promise of mortgage funds at reasonable rates has meant dwindling amounts of mortgage funds at record interest rates—at 12¼ per cent., which, for a young couple, means about £7 per month extra on the average mortgage on a new purchase. Today's headline in the Evening Standard is Up to 30 per cent. cut will hit builders hard. Home loans cash slashed. Where is the promise to secure a steady supply of mortgage funds in the context of that headline? The report goes on to say what a catastrophic effect that will have upon the building industry, which will have no outlet for its products.

What else did the Labour Party say about mortgages? In its October 1974 manifesto it said: Local councils' lending will be expanded so that they can play a major part in helping house purchasers…. Where is that promise?

Indeed, the whole record of this Government has been consistently to slash back the amount of mortgage money available through local authorities. It is an unequivocal promise that has been shamefully broken. In 1975–76 mortgages were cut by one-half of the level reached in 1975–76. A further cut of £52 million was announced for 1976–77 for England. In fact, of the remainder only 85 per cent. has been finally allocated for this year because of overspending on rate fund contributions to housing revenue accounts; so not even the cutback figure has been made available to home buyers through local authorities. We are told that for 1977–78 local authority loans are to be cut by £142 million.

Thus we have seen that mortgages have been cut, cut, and cut again to preserve the ideological programmes of local authorities such as municipalisation and this wretched land scheme. Home ownership, as usual, comes at the bottom of the list of Socialist priorities, and in particular the lower-income families buying the older houses are those who are most disadvantaged and most disappointed.

It is idle for the Secretary of State to say that building societies will fill the gap. He mutters statements about red-line policy. If home loans are to be slashed by 30 per cent., where can the money come from for the stress areas? In any case, it is not the duty of building societies to further a social policy of helping in areas of housing stress. The duty of a building society is simply to protect the funds of those who invest in it, not to sec them put on property that is risky by any criterion, not to encourage people who really cannot afford to buy to over-extend themselves on borrowings that are beyond their means.

If it is right to encourage home ownership in areas of housing stress amongst lower-income families, that is the function of Government, and local authority funds should be made available. The building societies should not be blackmailed to make up for the failure of the Government to make those moneys available because of their disastrous economic policies.

As for housing construction, there again the Government have a very sorry record. We were told in October 1974: The next Labour Government will … reverse the disastrous fall in house building. Indeed, the hon. Member for Manchester, Ardwick (Mr. Kaufman), then Under-Secretary of State for the Environment, made this statement in Standing Committee on the Housing Rents and Subsidy Bill on 5th December 1974: I have gone round the country addressing special conferences of local authorities urging them to build far more council houses and put the Chancellor in trouble."—[Official Report, Standing Committee A, 5th December 1974; c. 180.] What is the Chancellor now doing to the Secretary of State for the Environment and to his Minister for Housing and Construction?

What has happened to the housing construction programme? First, the Government have admitted that they cannot allow authorities such as Camden to go on building housing units at £50,000 a whirl. I do not think that anybody will complain at that. We know that a circular was issued in July this year stating that the Government find it necessary to take a realistic view of very expensive individual schemes. We welcome that. It is about time, too. That is all we can say.

The figures in the Press notice issued on 22nd November, just a few days ago, show that in the public sector new orders were down 18 per cent. on the previous quarter, and down 14 per cent. on the corresponding quarter in 1975, and for the same period of comparison, private housing orders were down 12 per cent. and up 13 per cent. Therefore, the private sector has to a certain extent rescued the Government from what would otherwise be a very sorry state. But that 13 per cent. up is only on the 1976 figures, which themselves were some 40 per cent. below what the private sector was doing in 1973. A realistic comparison of present and past figures shows nothing on which the Government can congratulate themselves.

The future looks even more alarming. It is no wonder that the housing construction industry is in despair. It is no wonder that the National Federation of Building Trades Employers is beating a path to the Secretary of State's door and the House-Builders Federation is to see the Minister of Housing and Construction to say "We are facing a worse state of collapse than we did during the collapse of the economy in the 1930s." About 200,000 people today are unployed in the construction industry.

Some people doubt that 160,000 houses will be built in the private sector this year, but let us take that figure and compare what this Government have done in the private sector in their first three years of office with what was done during the last three years of office of the Conservative Government. The comparison shows 250,000 fewer properties built for sale. Mr. Charles Mitchell, the President of the House-Builders Federation, has already been quoted. We are told by him that next year we shall be lucky if 100,000 new houses are built in the private sector, as compared with the 160,000 problematical constructions this year.

The public sector is no better and no more encouraging. On the Government's own figures, a current programme of approximately 114,000 will go down to about 85,000 next year. That is why we see the Press handout talking of 14 per cent. and 18 per cent. down on the last quarter. It is a programme in reverse on which the Government are already embarked.

What is the Government's solution? The only constructive solution, in their terms, which they have put forward is to give direct labour organisations of local authorities greater power. What will that do? It certainly will not help the housing construction industry as a whole.

Here are some more remarkable figures. Nearly 20 per cent. of all operatives in the construction industry are employed by direct labour organisations. Yet the output is 10 per cent. of the total for the industry. One can draw one of two conclusions from that. First, one could take it that the DLOs have not enough work for the operatives to do, accounting for the difference between 20 per cent. and 10 per cent. and showing that there is a great deal of slack to be made up. If so the Secretary of State cannot talk about their being a minimal threat to the private housing construction industry. They already have that wide gap to make up, let alone the kind of expansion we have heard rumoured. Alternatively, it means that they are totally inefficient compared with the private sector. It would bode ill for the economy if we were to move from a highly efficient means of building houses to one that has proved to be totally inefficient.

The time will come when we shall debate these matters at great length and go through the direct labour organisations throughout the country one by one, but I should like to give one example that has come to my attention.

Sedgefield District Council embarked upon a programme of conversion of old properties, selecting 24 units. The direct labour organisation secured the job on the basis of an estimate of £2,995 per unit conversion. A few months later it was found that the private tenders were much better. The council is having to pay more than £5,000 for each of those units. It might be said that that was bad estimating, that the department did not get its sums right at the beginning, but the irony is that a private builder in the area is buying up similar houses, converting them in a similar way, selling them to the council for £4,000 apiece, and making his profit.

Are we seriously to go into that kind of exercise in order to save public money, which desperately needs to be saved? We shall return to the arguments about direct labour organisations in due course, when I hope that we shall be able to entertain a much fuller House with many more graphic examples of how those organisations operate.

Let us turn to another promise made in October 1974. The manifesto proudly stated: The next Labour Government will … help conserve homes and areas that can be improved with the aid of grants rather than demolish them". The Secretary of State has made noises suggesting that he prefers rehabilitation to redevelopment. Nobody quarrels with those sentiments. We on the Conservative Benches have been saying that for years and years. We welcome the Secretary of State's conversion to this line of thought.

I have been chasing the Minister for Housing and Construction at Question Time for months on the matter of why improvement grants are declining, despite the great promises in the manifesto. In 1973, under a wicked Tory administration, 453,000 grants were authorised. In 1975 only 159,000 were authorised. That is a catastrophic decline, and a wrong orientation of resources, as we have been saying week in and week out. I am glad that we have from the new Secretary of State, examining the problem afresh, a declaration that he is reverting to that proud boast of October 1974. Let us hope that this time we see it implemented, instead of its being dealt with in the pathetic way in which it has been dealt with so far.

Another great boast made in October 1974 was: The next Labour Government will, protect council tenants by giving them security of tenure". Housing Bills have come and gone, but we have seen no reference to giving security to council tenants. The Rent Act 1974 gave security of tenure to furnished tenants, and we have seen the catastrophic effect of that on the availability of privately rented homes. After three years of Labour Government, where is the promised security of tenure for council tenants? Am I to understand that we shall see this emerge from the promise of a tenants' charter? Let us hope so. Equally, let us see in this tenants' charter a commitment to the right of the council tenant to buy his own home if he wishes, so that he can be given pride of ownership, cease to be a burden on society, and have mobility.

The Minister for Housing and Construction (Mr. Reginald Freeson)

A burden?

Mr. Rossi

Yes, a burden, because the blanket subsidy system operated by the Government involves for every new house built for, say, £20,000 a cost to the community of £1,300 a year in subsidy.

Mr. Heseltine

It is more than that today.

Mr. Rossi

It is more than that today. For example, in Camden it is in the region of £50 to £60 per week per family irrespective of whether it needs this kind of help.

Let us see council tenants, who are willing to do so, buying their own homes and taking on the responsibilities of mortgage repayments and maintenance. That is what many of them want to do. They do not want to remain, as Frank Field said, "the feudal serfs of their political masters" in their areas.

The next promise in October was: The next Labour Government will…encourage public ownership of rented property". What has happened to that? The Minister for Housing and Construction has been insistent on what he has called social ownership. The hon. Gentleman is a great believer in that. I respect his integrity, however much I may disagree with him over the policy, but I am encouraged that the more recent Secretary of State is using entirely different language. In a speech in September the right hon. Gentleman said: It is our duty to ensure that the relationship between landlord and tenant is the best possible one—and that the best use of the stock is made—which is why we are engaged upon a review of the Rent Acts. I do not subscribe to the view that all landlords are grasping, nor am I unaware of financial difficulties and lack of expertise that often inhibits landlords from improving their properties. That is excellent. It could have come from one of my own speeches. I wish that the right hon. Gentleman would tell the Minister for Housing and Construction what he is now thinking. Of course we are having a rent review. We must have it in order to get some sense put into this silly situation. We all know that the Rent Act 1974 dried up the supply of rented accommodation. We do not need to argue about it, because it is common knowledge.

The hon. Member for Ilford, North (Mrs. Miller) referred to a licensing scheme. It was a Conservative-controlled council which launched a licensing scheme for private rented property for the use of its tenants. Let us not stop there. Why not have the Bill which was introduced by my friend David Lane, the former Member for Cambridge? His Bill contained serious proposals which had wide acclaim outside this House. The only opponents were those with a doctrinaire bias towards its proposals because they are still wedded to the idea of social ownership. It take a long time to shake those fossilised views from their minds.

I turn now to land. I shall not detain the House long. I could go one by one through all these great and good promises which were made in the Labour Party's February and October 1974 manifestos. I shall end with this one because the right hon. Gentleman referred to it: Land required for development will be taken into public ownership, so that land is freely and cheaply available for new houses, schools, hospitals and other purposes. Out of that emerged the Community Land Act. That, like the Rent Act 1974, has had the effect of drying up the supply of the commodity with which it was concerned. Just as we have seen furnished houses disappear from the market, few people are bringing forward their land for development today. Indeed, local authorities are reluctant to come forward with plans under the Act because of the restrictions on their resources.

I mention one matter to the Secretary of State involving a case which I should like him to investigate. This involves Broadmead, a small development in Richmond for which the developer received planning permission to build 11 houses. That permission was granted after a great deal of discussion with the Richmond Council and, in the process, the developer agreed to preserve 240 trees. The Secretary of State can imagine the problem faced by that developer in meeting the requirements of the local authority to deal with the environmental aspect and other important matters. However, the moment he received that permission the Greater London Council said "No, we are taking over the land by compulsory purchase order".

That happened in spite of all the undertakings given by the then Minister that he wanted the legislation to be used to help developers and small builders. We persuaded the Minister to write into that legislation, into Schedule 6, a requirement that local authorities should have regard to the needs of local builders and developers in exercising their powers under the Act. That has not happened.

Indeed, so weak and ineffective was the reply given by the Minister in an Adjournment debate on the subject that I understand the Greater London Council is now embarking in Harrow and Barnet on a deliberate policy of denying small builders and developers the opportunity of carrying out developments which their enterprise and expertise have enabled them to identify. That is a disgraceful situation.

Sir Anthony Royle (Richmond, Surrey)

Is it not now time that the Department of the Environment started an inquiry into the relationship between the Greater London Council and the boroughs, because the story outlined by my hon. Friend continues to repeat itself because of the bad relations that exist between the GLC and Greater London boroughs as a whole?

Mr. Rossi

I am grateful to my hon. Friend for underlining that point. I draw comfort from the fact that the Secretary of State was taken completely unaware by this matter when it was put to him in an intervention; he had not heard of the case in question. He has given me what we had not yet received so far—namely, a ministerial undertaking that he will investigate that case and every case of its kind. I hope that he will do more than investigate the situation, and will use the undoubted powers reserved to him to make sure that the Act is used in the way intended by his predecessors, as was made clear in Committee and throughout the country at the time.

Having had my fun, as it were, about Labour's manifesto—although it is no fun for the people of this country to have seen those promises broken and breached one by one, because they were promises cynically made and even more cynically broken—I welcome much of what the Secretary of State said in his speech. Several hon. Members mentioned the need for us to have a consensus policy on housing and land. Nobody would welcome that more than I because time and again I have complained about housing being used as a political football to the detriment of our people.

I also welcome the right hon. Gentleman's comments about the changed attitude towards the private landlord. I appreciate his statement on the need to concentrate on rehabilitation and on the use of improvement grants rather than on redevelopment and the bulldozer. I welcome his proposal for single capital allocations to local authorities and the provision of cash limits giving them a discretion. I welcome the fact that the right hon. Gentleman wishes to see a partnership between local authorities and developers under the Community Land Act. I now await implementation of that promise in the cases I have mentioned to him. I also welcome his statement that we are to have a tenant's charter.

I agree that the housing problem is of such magnitude that we need to be selective and to pay greater heed to the needs of inner-city areas. On those aspects there is complete common ground. It is possible to shape a common policy between the main parties on these matters. The only difficulty is that Labour is wedded to the concept of public and social ownership. So long as Labour adheres to that view and seeks to impose solutions on the people of this country, it will be difficult for us ever to find common ground.

However, as regards the concentration on the inner cities, I should like to make this suggestion to the right hon. Gentleman. I know that his greatest problem will be one of finding the resources with which to do it. There are up and down the country new towns which have been developed, and those have many assets at their disposal. They could sell to pension funds and investment funds commercial and industrial properties and thereby turn over money, instead of the money having to be borrowed afresh. That money could then be utilised for the setting up of new development corporations in the inner cities. I have in mind particularly London's dockland. I put that forward as a positive, constructive suggestion which has not yet, I think, been considered by the Government.

I have just received a note from the Deputy Chief Whip of the Opposition to the effect that my time is up. Therefore, although I would wish to say a great deal more, I conclude on that point.

3.41 p.m.

The Minister for Housing and Construction (Mr. Reginald Freeson)

I was beginning to wonder whether I would get any time at all.

I shall not pursue the point, but if decibels could build houses and solve our housing problems, we should not, after the speech of the hon. Member for Hornsey (Mr. Rossi), be needing this debate. I cannot compete with the decibels and the flamboyance. However, I want to deal with one or two points that need to be dealt with among the many that have been raised in the debate. I hope that hon. Members on both sides of the House will appreciate that although I shall not be touching in detail on all the points that have been raised, some of which went well beyond the responsibility of the Department of the Environment, the record will be read. In so far as there are matters that we need to pursue subsequently with an individual Member or by some other means, or matters that need to be raised with colleagues covering other Departments, we undertake to do that.

I want to touch on at least one particular aspect of the recent rate support grant statement. That was the subject of considerable discussion earlier. I do not have the time to go over all the ground raised by hon. Members, nor do I think it necessary, because we shall have an opportunity shortly to discuss the matter much more fully in the House. However, much point was made about the employment position in local government. Because we have been in considerable discussion with local authority representatives on this point, it is only right to get on the record the position as we see it, as factually as possible.

We do not believe—contrary to what was said by some earlier in the discussion—that the recent rate support grant will lead or needs to lead to widespread redundancies in local government. We have not said that. I think that it was suggested that we had said that earlier. At least, that is how I understood the statements that were made. We have not said it. The task facing local government should be seen against the background of local government as a whole, not only this year or in 1977 but over a period. We estimate that there are 2.6 million full-time and part-time local government workers in England, including police. Given a 1½ per cent. to 2 per cent. re- duction in local government expenditure, which is what is involved in the recent negotiations, this includes job losses of 20,000 to 30,000, or about 1 per cent. of local government manpower.

A reduction of this order is no more than the increase in manpower that occurred between March 1975 and March 1976. But, more important, I am confident—my right hon. Friend has made this clear in our private discussions and in public statements on this matter—that as a whole this number can be found through natural wastage in the system. This occurs at about 5 per cent. overall per year, anyway. We are quite confident that by natural wastage and, in some cases, by deferring the replacement or the refilling of posts which are to be filled in due time, we can avoid in local government the kind of redundancies that were being suggested earlier in the discussion and in one or two public statements.

I very much hope that some posts from now on can be left vacant or filled later, as I have indicated, as part of this exercise. This would be much better than unnecessary job losses or redundancies. I am not saying—and could not say even in the good times—that there will be no redundancies in local government in the coming year. There is always a certain number of redundancies in local government, as elsewhere, but I believe that although rates of natural wastage—retirements, resignations and deaths—will clearly vary from authority to authority and from service to service, the necessary reductions can be achieved largely through natural wastage, and this has been made clear in recent discussions with local authority representatives.

Mr. Heseltine

The Minister will know that the local authority representatives disagree with his view. Is he aware that although the average figure indicates something along the lines of which he has been describing, the authorities which have to deal with higher figures will have to cope with the problem differently?

Mr. Freeson

It would be stupid for any Minister to say that there would be no redundancies in local government. There are variations from area to area even in the good years, let alone in difficult years such as this one. Whatever may have been said since the rate support grant announcement, these matters have been argued in detail between my right hon. Friend the Secretary of State and the local authorities and I stand by what I have put honestly to the House and what we have put honestly to the public and the local authority associations as our calculation. We have presented a paper to the local authority associations and they are fully aware of our view.

Of course there can be disagreements and arguments. I can understand that local authorities who feel that the reductions may present them with particular difficulties may wish to make defensive public statements. I do not say that critically; we are all inevitably involved in that kind of exercise from time to time in public dialogue. It is, however, important for me to put the Government's position on the record.

Mr. Norman Tebbit (Chingford)

Is the Minister saying that the recent great demonstration against the cuts by people in unions such as NALGO and NUPE was entirely unjustified and a puffed-up lot of rubbish about nothing?

Mr. Freeson

I am not saying that. I cannot take responsibility for the hon. Gentleman's words. He must be responsible for them.

A number of hon. Members have referred to the homelessness Bill. I wish to make clear that the Bill has not been dropped. The fact that it is not in the Queen's Speech and that it is only a hoped-for possibility this Session does not mean that it has been dropped. We are continuing to work on it.

I know the appalling personal tragedy of homelessness. I experienced it some years ago and I have lived in and represented at local government and parliamentary level an area which has suffered more than many others from this problem and other stresses in housing.

The statistics that we have made available add depth to our knowledge and will carry forward our understanding of the problem and its causes. In 1975, local authorities came to the help of over 33,000 households in urgent need of accommodation. This is a considerable achievement, and represents the strenuous efforts that authorities, particularly in London and major metropolitan areas, are making. I know authorities who are using half their annual vacancies to assist in the permanent rehousing of homeless families.

These efforts must be seen against the background that the only present statutory provision concerned with homelessness is the National Assistance Act 1948, which relates to social services authorities. We firmly believe that today's conditions need a clearer statutory basis, which sets the responsibility for dealing with homelessness in its proper housing context as one of the functions of housing authorities.

Very constructive meetings were held earlier this year with the local authority associations and representatives of appropriate voluntary organisations. Those discussions showed a general agreement both on the need for this legislation and that it should place a clear duty on housing authorities very much in accordance with the principles set out in the joint circular.

The legislation will therefore place a duty on housing authorities to secure that accommodation is made available for those whom they are satisfied, after appropriate inquiries, are homeless and within a priority group.

We propose to define these groups by order—which will be subject to the scrutiny of Parliament—and to take power to review and revise them in the same way. We must, however reluctantly, recognise that in present circumstances it is unrealistic to expect authorities to be able to assist all to the same extent.

There is no question of every homeless individual having a preferential statutory right among all the other needs reported which have to be dealt with by local authorities. The first claim on resources must go to the most vulnerable, including families with young children. None the less, the Bill will require that authorities advise and assist so far as they can any homeless person in his attempts to obtain accommodation for himself; and it remains an essential part of our general housing policies to see an increase in the proportion of accommodation suitable for single people and small households.

The Bill will also make clear that the practice of splitting families as a way of meeting their accommodation problems should end, except in those cases such as marital violence, where it is clearly in the interests of those concerned. On this and a range of related issues, co-operation between housing and social services authorities is clearly vital and the Bill will make specific provision for this.

I propose, too, that the Bill will be accompanied by a code of guidance for authorities on how we see these responsibilities being implemented. We are pressing on urgently with the further consultations now needed. My Department will be writing to the local authority associations immediately about the question of any financial and manpower implications in our proposals. We shall also, before Christmas, carry forward consultations with them and the voluntary organisations on the code of guidance to which I have referred.

We are in the meantime considering what further steps we can usefully take. I am quite sure that legislation alone—this needs to be stressed—cannot cure this social ill, and I therefore believe that whatever the legislative position the major point is that authorities should continue to give a high priority to meeting the needs of homeless people.

I stress the need to obtain the right kind of housing. With 50 per cent. of our households now consisting of one person or two people, the proportion of provision in the private and public sectors, not only of new building but of rehabilitated accommodation affected by planning control policies and the like, must be changed so as to meet the needs to which I have referred. It is not simply a question of introducing the Bill.

Let me as succinctly as I can make clear the position about the house building programme in recent times. In the year before we took office there were 113,000 public sector starts in Great Britain and prospects, on the basis of information that was put before me and which appeared in the Public Expenditure White Paper of the Conservative Administration, of a further sharp fall. We took immediate and effective action to reverse this position. In each of the years since we returned to office we have had more starts and completions than in the previous year, so that we have transformed the situation from the abject position recorded at the end of 1973 after the collapse of the boom.

Last year, we started 54 per cent. more new dwellings in Great Britain than were started in the last year of the Conservative Administration—174,000 compared with 113,000. We completed 162,000–51 per cent. more than were completed in the last year before we took office. So far this year, up to the end of September, starts are up 62 per cent.—141,500 compared with 87,000 in the last year of the Tory Administration. All these figures for starts and completions show a reversal of the position, whatever may be the present difficulties or the results of the present controls. I fully expect that at the end of this year the figures will still be higher than the very good totals achieved last year.

Despite the controls, we will achieve records in the forthcoming year well above the averages of the last Tory Administration in the years between 1970 and 1974. I am not boasting, because I am concerned about the constraints under which we must operate. We shall have problems I admit, but no one on the Conservative Benches is in a position to attack this Government for their record over the past two and a half years, or, indeed, in the current year. When one considers what we have produced against a serious economic background one will see that we are far and away ahead of the previous Administration during their spending spree.

Mr. Rossi

The Minister has concentrated on public sector figures and overlooked the private sector figures. In 1973 there were 215,000 starts in the private sector and in 1975 there were only 150,000.

Mr. Freeson

What the hon. Gentleman does not say, and does not dare to refer to, is the total collapse of house building in the private sector in the latter half of 1973. That was the worst crisis in either the public or private sector in 30 years. Fewer houses were in prospect for construction in that period than in any other since before the Second World War. Today we are operating against a far more difficult economic background, but nevertheless our record is far better.

I do not intend to pursue the question of DLOs, because of lack of time. If there had been time I would have taken the opportunity to rebut many of the questionable statements made. But we will soon have other opportunities to discuss this. Earlier this year, when this issue first came to the House on the municipal trading debate, I was challenged by the Conservative Front Bench to undertake the recommendations of the Chartered Institute of Public Finance and Accountancy. I said that I would study these, and I was told by the Opposition that if I did give that undertaking the differences between the two sides would virtually disappear. I was told the same thing by the NFBTE.

I have made it publicly known that we are doing precisely what we were asked to do by the Opposition spokesmen, yet today we have been told—admittedly by another spokesman—that the Opposition will still resist the Bill. They say this, even though they have not seen it yet, and even though I have given the undertaking about the CIPFA recommendations. In fact, the disciplines in the Bill will be tougher than the CIPFA recommendations. I hope that this doctrinaire and blatant misrepresentation from certain quarters will cease, and the whole matter will cool off. This is an exercise in efficiency to improve the services of DLOs.

Debate adjourned.—[Mr. Thomas Cox.]

Debate to be resumed on Monday next.