§ Order for Second Reading of the Increase of Rent and Mortgage Interest (Restrictions) Bill read.
§ The PRESIDENT of the BOARD Of EDUCATION (Mr. Herbert Fisher)
I beg to move, "That the Bill be now read a second time."
Three years ago the First Lord of the Admiralty introduced a measure for the purpose of protecting the tenants of small houses from an increase of rent. It was ushered into the world under a mingled shower of apologies and compliments. It was pointed out that the Bill was illogical, that it violated most of the accepted canons of political economy—that it was, in fact, open to many objections to which a measure framed to meet a transient and exceptional set of circumstances is inevitably liable. Nevertheless, the Bill received a very warm welcome from every quarter of the House. It was passed through all its stages without a Division. It was recognised to be a necessary measure dealing with a genuine grievance, which, although it was partial in geographical extent, and likely to be transient in its duration, was, nevertheless, very acutely felt wherever it was experienced at all, and felt by a class of the population which were least able to bear any addition to the economic pressure upon it. This measure has now been in force for three years and my purpose to-day in the enforced absence of the Attorney-General is to ask the House to consent to a Bill for the continuance of this measure for a period of years after the conclusion of peace, and its amendment in certain details. The general reasoning which applies to this case must be very familiar to all hon. Members. There is a great shortage of houses. The deficiency in the housing accommodation of the working classes was manifest during the years preceding the outbreak of war and the evil has been greatly aggravated by the abnormal economic conditions which are the result of the War itself. It has been aggravated by the cessation of building operations, by the commandeering of private residences and by the congestion of the working- 800 class population in certain areas in which war work has been undertaken. For these and other causes this evil, which was considerable before and which was very keenly felt, has become greater now. It naturally follows that in places where the demand for labour has been specially stimulated by the War, and even in some places where this particular cause does not operate, the owners of houses have been placed in a position in which they are able to demand a high monopoly price for the article which they have to sell. It was consequently thought to be necessary in 1915, and we still think it to be necessary, to give to the tenants of small houses some protection against exorbitant rents. If there were a free market for houses, if the aggrieved tenant could go elsewhere to obtain the accommodation which he desires, and houses could be multiplied by a stroke of the pen, if there were even a reasonable certainty of a steady inflow of private capital into the business of creating working-class dwellings, there would have been no reason for the Government coming forward to-day to ask for the continuance of the original measure. Not only is there a great deficiency in the supply of small houses, but the building of these houses is at the present time so un-remunerative an enterprise that there is very little reasonable prospect of that deficiency being met for some time to come by the contributions of private capital. While there are these cogent grounds for intervention it is equally clear that any legislation which is framed to meet this very exceptional state of things must be carefully limited and safeguarded, if it is not to do more harm than good. We have not only to consider the interests of the tenants, but we have to consider the interests of the owners and the interests of the mortgagees. We have also to consider the general interests of the community, and in particular the interests of building enterprises. It would be very bad statesmanship to place any undue impediments in the way of the building industry at a time when it is above all things necessary that that industry should receive the maximum of encouragement. If the owner is to be altogether deprived of the right to raise his rent, if the mortgagee, is to be deprived of the right to ask for a higher rate of interest on his mortgage, then the class of property to which these restrictions apply is necessarily depreciated, and pro tanto an impediment is placed in the way of the building industry 801 and in the development of that great extension of houses which we all desire to see carried into effect.
Consequently in considering whether it is expedient to continue the operation of the Act of 1915 the Government came to the conclusion that it was necessary that the ground should be very carefully surveyed. We have had the advantage of a Report from an able Committee presided over by Lord Hunter, which has surveyed the ground; but quite apart from that, and even after this Report was received, the Government made a fresh survey of the ground, with a view to discovering and measuring so far as possible the extent of the grievance which this legislation was desired to remedy. The result of inquiries made in different parts of the country led us to the conclusion that, though the grievance was by no means universal, though there were some parts of the country in which very little was heard of it, it was yet sufficiently general and sufficiently acute where it does occur to justify the extension of the principal Act. It exists in an acute form in certain areas of the Metropolitan district boroughs, and it exists in Glasgow and in centres like Swansea and Sheffield, where war industries have promoted a considerable influx of labour. While the Government have come to the conclusion that the extent and character of the grievance does justify a continuance of the principal Act for a further period of six months, and does justify an extension and modification of the Act in certain directions, it would be contrary to sound policy to create the impression that this form of protection, which is open to so many objections in normal times, and which interferes with the freedom of contract, is to be continued beyond a very limited period. We have come to the conclusion that we are prepared to continue this protection for the period of a year after the conclusion of peace. We think it would be dangerous and against public policy to go any further. Our general object must be to prepare the way for a removal of the artificial restrictions upon trade and industry which have been imposed by the special necessities of an abnormal period, and we are consequently anxious to do nothing which can reasonably be construed as likely to impose disabilities upon the building industry. With this object in view, we propose to limit the 802 extension of the Act to a period of a year after the conclusion of peace, and with the proviso that the Bill shall not apply to buildings erected after or in course of erection at the passage of the Act.
Let me now turn to the provisions of the Bill. The Bill may be divided into two Sections. There is the first Section, Clauses 1 to 3, which concerns the prolongation of the duration of the principal Act with certain modifications. The second Section deals with the extension of the principal Act to a higher rate of house. I will say a few words in regard to the first Section. The principal Act is to be prolonged for the period of a year after the termination of the War, or, in other words, for a period of six months from the date at which it would otherwise expire. But we have not thought it right to continue the principal Act for a further period of six months without some modification framed in the interests of the owner and the mortgagee. The Government has felt the truth of the contention that the owner of working-class dwellings is very often a person of humble means; in many cases a person whose principal source of livelihood depends upon the rent which he receives from his property. I am informed, for instance, that there are many houses in London which are owned by men of quite humble means, and the Government feel that the long continuance of this Act without affording to the owner, who has to meet the higher cost of living, and who is responsible for repairs, which are now far more costly than before the War, an opportunity of raising his rent to a limited extent, would be to inflict an altogether undue hardship upon him. If the owner is to be entitled to some increase of rent, so also is the mortgagee entitled to some increase in the rate of interest. When the principal Act was being discussed it was pointed out by one hon. Member that the mortgagee could not seriously complain if his rate of interest were limited under the provisions of the Bill, because, if his security were depreciated, so also were the gilt-edge securities, and he was in no worse security than the owner of railway stock. However that may be, we feel that if the owner is to be allowed to raise his rent it is difficult to resist the claim that the mortgagee should be entitled to a moderate increase in the rate of interest. Accordingly we provide that 803 during the extended period—that is to say, the period of six months after the expiry of the original Act—the landlord shall be empowered to raise his rent by an amount not exceeding 10 per cent. on the standard rent, the rate of rent which appertained on the 3rd of August, 1914; and the mortgagee should be entitled to raise the rate of interest payable in respect of the mortgage by one-half per cent., but not so as to exceed 5 per cent. per annum. This, then, is the rule during the extended period.
But is this sufficient to protect the legitimate rights of the owners? We think that it is not altogether sufficient. I will furnish the House with two illustrations. It has come to my notice that there is actually a case, and it is typical of many similar cases, in which a house, the rent of which is stereotyped at £18 by the Act of 1915, is sub-let by the tenant for £80 a year. Would it be altogether fair to limit the owner of such a house, out of which the tenant is making so large a profit, to an increase of rent of only 10 per cent.? I will give another case. Suppose that by this Bill the silver-haired butler retires from the service full of honour, and is placed by a private owner in a nice house which cost, say, a thousand pounds to build, at a nominal rent of £10 per annum. The butler dies. Is the owner to be precluded from letting the house at a rent exceeding 10 per cent. addition upon the standard rent which obtained on the 3rd of August, 1914? Clearly it would be unjust to penalise the generous owner or the generous landlord for his generosity. Any Bill attempting to deal even-handed justice between the tenant on the one hand and the owner on the other must provide some measure of elasticity, and this measure of elasticity we do provide under the provisions of this Bill. We provide that, in certain specified cases, the County Court may authorise an increase in the rent exceeding 10per cent. That is in Clause 5 of the Bill. For instance, if the landlord of a house to which the principal Act applied shows to the satisfaction of the County Court
Unless some provision to this effect were inserted in the Bill, the lenient owner who had not raised the rent would be at a disadvantage as compared with the more exacting owner who had raised his rent. Conversely, we provide that where the tenant can show to the satisfaction of the County Court that his house has been let at a higher rent than the standard rents of houses in a similar locality, then the County Court may order that no increase in the standard rent, or an increase of less than 10 per cent., shall be allowed in a case of that kind. Some hon. Members may feel that this Clause does not go far enough, and that there are other cases than these in which a limitation of the 10 per cent. may be desirable. I have had suggestions made to me to the following effect. There are cases in which the landlord has failed to make proper repairs, cases in which the tenant has suffered through the landlord's neglect, and it was put to me that in such cases it would be unjust to allow the landlord to claim an additional 10 per cent. rent. [An Hon. Member: "Quite right!"] All I can say at this moment is that the Government will consider very carefully any suggestions which may be made with a view to the extension of this particular provision.
- "(a) That the standard rent of the house is substantially less than the standard rent of similar houses in the same locality; or
- (b) that by reason of the letting of the house to lodgers or the taking in boarders the wear and tear on the house has been substantially increased; or
- (c) that by reason of the sub-letting of the house or for any other exceptional reason an increase of rent exceeding such ten per centum as aforesaid should be allowed, the Court may authorise an increase in the rent exceeding ten per centum of the standard rent."
I pass to the second part of the Bill. In Clause 4 we extend the provisions of the principal Act to a higher class of house, the maximum rateable value on the 4th August, 1913, being £55 in the case of houses situated in the Metropolitan Police district, £48 for houses situated in Scotland, and £42 for a house situated elsewhere. I am advised, though the estimate is necessarily a very rough estimate, and cannot, indeed, be expected to be accurate, that the number of houses brought under this form of legislative protection would be 460,000 as against the 6,500,000 houses brought under the protection of the principal Act in 1915. Hon. Members will realise that it is always extremely difficult to state a case for a limit, and I can imagine some hon. Members who wish to see the limit lower, while others wish to see it higher. The ground which the Government are taking is simply this: We desire to remove a legitimate grievance. We believe from the evidence before us 805 that the area of the grievance will be sufficiently covered by the limitations which we propose. We do not assert that the grievance will be wholly covered. There may be houses in the Metropolitan area tenanted by very small and deserving people whose rateable value on 3rd August, 1914, exceeded the £55 mentioned in the Bill, but we are principally concerned to confine ourselves to the protection of the poorer tenants, and to that class of property of which there is the greatest shortage, and with respect to which we could be at least certain that private enterprise will come in to fill the deficiency. I have only to add that the provisions with respect to the raising of rent, the increase of mortgage interest, and the recourse to the County Court which apply to the houses under the £35 limit during the extended period, will apply similarly to the new class of houses over which this Bill proposes to extend its protection.
§ Mr. RAWLINSON
Perhaps the right hon. Gentleman can state whether the Bill extends to tenancies created last year? If not convenient, I do not press the question now.
§ Mr. FISHER
This Bill does not affirm any new principle. It is avowedly transitional, it is avowedly exceptional, it constitutes an interference with the freedom of exchange in this country which we should gladly have avoided if it had been possible to do so; but in view of all the circumstances of the case, in view of the condition of the building trade, the shortage, of workmen's dwellings, the great hardships which are endured by the workers of this country owing to the lamentable deficiency of housing accommodation and the monopoly rents which landlords are enabled to charge and to secure, this measure, faulty as it would be in normal circumstances, may be commended to the House as embodying as large a share of social justice as we are likely in this connection to be able to secure. I have used the words "social justice," because anyone who studies the Bill will realise that it is framed with a view to securing as far as possible the just interests of the parties to the bargain. The tenant is protected against unjust evictions and profiteering rents, the mortgagee is empowered to raise his rate of interest, and the landlord and tenant alike are given the opportunity of bringing their respective claims before a rent Court. The 806 landlord is allowed a moderate and equitable increase of rent during the extended period, while at the same time the building industry is advertised to the fact that these restrictions do not apply to houses in process of construction. I conceive it possible that some hon. Members will urge that this exceptional regime should be extended in accordance with the recommendation of Lord Hunter's Committee over a period of three years. It may be argued that when this Act expires there will be a sudden resilience of rents, and that the landlords, once released from these restrictions, will attempt to get back upon their tenants. I do not deny that this is a contingency for which we must be prepared, but it is reasonable to suppose that the resilience a year after the conclusion of the War will be much less sharp and cause much less hardship than would be the case if the restrictions were allowed to lapse with the expiry of the principal Act. It is reasonable to suppose that we shall have many more houses in the country, that owing to the departure of German prisoners, the resumption of emigration, and the evacuation of houses now commandeered for military purposes, the demand for houses will be reduced, and that, owing to the resumption of normal economic activities, distribution of that demand throughout the country will be more equal.
§ Mr. GLANVILLE
May I ask whether this Act will apply to houses, the occupiers of which hold long leases?
§ Mr. FISHER
Yes, I think so. I was about to point out that whenever these restrictions are abandoned there will necessarily be some rise in rents and some increase in the profits of landlords. That cannot be helped, nor is it altogether an evil. The building trade should be given the stimulus of higher profits. The Government has come to the conclusion that as soon as that stimulus can be given to the building trade without undue hardship to the poorest class in the community, the sooner it will be possible to repair that grave deficiency in housing accommodation which lies at the root of so many of our social troubles.
§ Sir THOMAS WHITTAKER
I do not rise to utter a single word in opposition to this measure. It is a moderate proposal, but I do wish to utter a few words of caution, if I may do so, with a view to urging the Government, which has given a great deal of attention to this matter, and arrived at what must be considered a compromise between the various interests, will not yield to pressure to extend this in a direction, which would render serious injury. There is another side to the question—the right hon. Gentleman has referred to it—besides that about which we have heard so much, and seen so much in the newspapers. I may, incidentally, say that I do not own a single house except the one in which I live, so that I am not interested in the matter. The necessity for this measure arises from the fact that the whole economic and social position at the present time is abnormal. This is practically a war measure, and when you have to deal with questions which arise out of the present position you are almost in every case placed in the position that you have to make a choice of evils. Whatever you do or fail to do will result in evil in some respect. I think we should all agree that something must be done. It would not be right to allow property owners to exact what is described as a monopoly rent, and it becomes necessary to legislate, because, unfortunately, there are some owners who do not seem to recognise that they ought to be moderate in these matters. It is they who create the difficulty. They are, I am certain, an exceedingly small minority of the landlords of the country, but they bring trouble down upon the rest because of their unreason. Hardships will be done to landlords, and hardship has been done by the measure in the past, and whatever you do will inflict hardship on somebody. If you do nothing you will find there are landlords who will inflict hardship and injustice upon their tenants. If you prevent the levying of a reasonable increase in rent and a reasonable increase in interest on mortgage you will do injustice to others. This trouble is not the result of the War. It has been aggravated and accentuated by the War, but it existed before the War. It dates from 1909, [Hon. Members: "The Budget!"] Not so much the Budget as what was said in connection with it; not so much in the legislation itself, if you look at that, but as the result of what was said. Land- 808 lords were held up to derision and attack, and denounced as though the owning of house property was almost a crime. There has been for a long time an agitation against owners of house property—in my judgment, largely an unreasonable and selfish agitation, and a foolish one, because it has brought this trouble, as the right hon. Gentleman has pointed out, most hardly and severely upon the poorer portion of the population. If you denounce owners of property and hold them up to odium, then you deter people from becoming owners of property, and the first result of that is to make it difficult to sell property, difficult to get mortgages on property, and the result is that you can only induce people to own property if they can get a bigger return from it to compensate them for the odium which they have to suffer, and so you get a less desirable class of owner as the result. That is the result of that policy, and that makes houses dearer instead of cheaper. People will not build if they cannot sell, and people will not buy if it is held to be objectionable and unpleasant to own property, and if you have not buyers you will not have builders, and you will not have people who will lend money on mortgage to build. That is the sort of thing we have suffered from, not so much because of the actual legislation, as because of what was said in connection with it, and of what was threatened, and this kind of legislation accentuates that feeling.
You cannot ignore the laws of political economy and of justice with impunity. They have a very awkward knack of coming back again upon you and hitting you at the back of the head when you least expect them, and cannot defend yourselves. The position is aggravated very much just now. Everybody is in a state of unrest, and the great majority of the people of this country, and indeed of the world, are out for getting something from somebody else. Everybody is feeling the pressure of the present economic conditions, and everybody is trying to evade it by putting it on to somebody else. We are playing ducks and drakes with time-honoured experience and teaching. Some of it is popular, but I venture to say that it is mostly unsound, and that it will come back again upon those for whose benefit it is primarily intended. Who are these landlords? Anybody who has knowledge of the subject knows that they are mainly small people and small middle-class 809 people. Especially is that so as regards the smaller class of houses. If any hon. Member will take the trouble to turn to the Annual Report of the Inland Revenue Commissioners, those which were issued before the War, because owing to various conditions they have had to be curtailed since then, he will find some very interesting information there respecting the kind of property left by people at death. It is all carefully scheduled, and he will at once see what is the class of property that different classes of people leaving different fortunes held, and he will see from that at once that the great mass of the house property of this country is held by small people. Why is that so? House property is not a wise or a profitable investment, and anybody who has experience of it knows that that is so—that is, if you buy it from a builder in the ordinary way. As a matter of fact, anybody who has knowledge of this subject knows that the rents of houses are too low in normal times. They do not get an adequate return upon the investment. They do not take into adequate account the costs, the outgoings, arid the losses which are involved in owning house property. [Mr. Tyson Wilson: "Oh, oh!"] Ah, but I am speaking with knowledge. This property does not pay, and that is why the experienced business people and wealthy people who have access to sound advice and who know more about ordinary investments do not put their money into this kind of property. This kind of property is bought almost entirely, certainly in the first instance, by local people, small people who have little general knowledge of investments. They want, and very wisely, to put their money into something they can see and that they know something about, and so they buy house property. They see the rent, but they do not fully realise the costs, repairs, losses, empties, depreciation, wear and tear, and one thing and another, and they are apt to overestimate the return they will get upon it. They give too high a price for it, and the result is that the rents are not remunerative. I know that very large losses indeed are made by people who buy house property.
The agitation which occurred some eight or nine years ago made property very largely unsaleable at anything like its ordinary figures. Now there is a revival, and it is a little hard on people 810 who bought property, and who found it very seriously depreciated, not to be allowed to sell it now when there is a revival in price. Also it prevents building. The right hon. Gentleman is looking forward to a revival of building. You will not get very readily a revival of building for residential houses for a long time to come; it is too costly in every way. There is another class of owner of property that does make money, and that is those persons or companies who buy property which has to be sold and goes at knock-out prices. They take it up at low figures, and often rack-rent and make money, but they have not bought at the cost price of that property. They have bought far below the cost, and that purchase has represented a serious loss to somebody. Look at the extent to which property falls into the hands of those who have lent money on mortgage upon it. The usual rate of mortgage is two-thirds of a cautious valuation of the market value. When that property falls into the hands of the mortgagor, it is a clear evidence that that property is down in value, at least, one-third upon what it was when that money was lent, and represents a substantial loss to somebody. When this property is sold, these people I have been speaking of buy it up. A good many are all right, but many do not make the best landlords, and, perhaps, they are as responsible for racking rent as anybody in the country.
The Bill proposes to allow a very moderate increase. Why should there not be an increase? Everything in the country is costing more. Yes, and in the vast majority of cases, the occupiers themselves, and those who are agitating on this question, are those who are getting more for what they are doing. They are getting more either as salaries or in their businesses. They have got an increase. Everybody gets an increase, but the landlord is not to have it. I think the provision that is made in the Bill is a modest one also, when you come to the rate of interest on mortgage. Why, you can get more than 5 per cent. on Government Bonds. Surely it is a very moderate proposal indeed, that you should allow them to go up to 5 per cent. on a security which is not equal to War Loans or War Bonds. Rents can only go up 10 per cent. Is there anything else gone up less than 10 per cent.? We want to be careful how we penalise particular sections of the community. I put in these views, not because there is not another 811 side. There is another side, but I do want the House to recognise that there is this side which I have been putting, and that it ought to be borne in mind. I support quite cordially the proposals of the Government, who have gone into the matter very carefully, and they seem to me very moderate.
But take this question of turning out tenants. It is not all a one-sided business. A man may buy a house in order to get in. He is without a house, or he would not do that possibly. Somebody is going to be out of a house. You allow the present tenant to remain in, and that means that you are keeping somebody else out. You are going to inflict a hardship on the man who is willing to buy the house and go in. He is without a home, and may be—and probably is in many cases—a soldier come home, and the tenant you are going to protect has not been out at all, but has been having a good time in his own business, very likely, or earning very big wages, whereas this man comes home from the front and cannot get a house. Again, it is a choice of evils, and there are two sides which you must bear in mind. That is really the sum and substance of what I have got to say. This kind of legislation is undesirable. It is a necessity in the abnormal times in which we live. Whatever you do in connection with it, you inflict hardship upon somebody; therefore, it has to be a compromise. Let us make that compromise as reasonable as possible, and not push either side to an extreme.
§ Mr. ROWLANDS
I am not going to follow the right hon. Gentleman who has just finished, but I must say he has tried to put the case very clearly from his point of view, to make out a case for dealing with the rents and in connection with the increase of mortgage. But I do think he went a little far out of his way when he gave us that illustration just now in connection with what is taking place and what is known as "buy or quit." I agree he might find some isolated case where the person who wishes to get into a house is a soldier who has returned, and who would have our entire sympathy; but surely, if the right hon. Gentleman had anything like the correspondence some of us are in possession of from all parts of the country, and which the right hon. Gentleman who introduced the Bill said 812 went over such a widespread area, he would find that the illustration of the soldier, who has our sympathy, is a most exceptional one. In the majority of cases, we know, the desire is simply to utilise the present shortage of houses in order to get out a solid paying tenant, because there is a chance of making a large sum of money at the present time by the sale of the house.
§ Mr. ROWLANDS
None of us have, but those are the majority of the cases. All I want to do is to discount the right hon. Gentleman's illustration. His illustration has the whole of our sympathy, but I say it is the exception and not the rule. The Bill that is before the House is, as we who have been following this question during the past four years know, one of an exceptional character that has been called for by exceptional circumstances. Those of us who, as far back as the end of 1914, commenced drawing the attention of the Government to the conditions which were arising—and I think I was possibly the first Member to put down a question to the Ministry upon it—know that what was taking place in 1914 and going on in 1915 until the Act of Parliament was passed in that year, was that owing to the shortage of houses, owing to the removal of large portions of the population for munition work, and so forth, to other areas, there was an increase of rent being made of the most astounding character by landlords. I gave illustrations then which I have in my possession to-day where small property was being raised 2s. a week every few months. Such a thing could not possibly go on. Hence we had the Act of 1915, and I believe that that Act has done a very large amount of good. What we have to criticise in connection with the action of the Government at the present time is that though they have introduced this Bill, it does not deal drastically enough, in our opinion, with the crisis which has arisen with regard to house property. The Minister of Education said that, with some exceptions, this notice to quit or buy was taking place over very large areas, and you might say over the whole of the country. He himself illustrated what we, who have correspondence in our possession, know, that you can go to Glasgow and Edinburgh and find cases. You can find in Glasgow the most exceptional scheme. I do not express any opinion upon 813 it, but particulars have been sent to me with regard to one large owner of flats in respect to a bonus system. I do not want to express any opinion in regard to that bonus system because I could not quite follow it. But I looked into it, and I think there was something—that at the end of twenty-five years the bonus had to be returned to the landlord so that he would not be in a much worse position to what he had been in previously. I can take hon. Members to Plymouth and to places all over the country where this exists.
I want, however, an explanation from the Government as to how they think this measure will protect the middle classes, for it is the case that the Act of 1915 protects mainly the smaller people—how this measure will protect the people who within the next fortnight or so have to clear out of their houses. I may be told that under the original Act the landlords will have to go into the Court to evict them. I do not want the cases to have to go into the Court. We know it is a costly procedure. We know in these cases in the Police Courts that the judgments of magistrates vary very much. They may go before the justices, but we have not much confidence in their decision in connection with these cases. In respect to the County Courts, we believe they would get on much better. The fact of the whole case is that the landlords a portion of them, anyhow—that is, the greedy ones—have, to a large extent, brought this legislation upon themselves by not having learnt the lesson of the legislation of 1915. They have still gone on sweating, or trying to sweat, people, but, in this case, another and a higher section of the community than they did before 1915. It has been pointed out that the measure gives the landlord the right of raising the rent by 10 per cent. I am not going to say that there are not many cases where that is not quite justifiable. But what is the reason put forward for raising the rent? The cost of repairs. I want to know from the Ministry what protection there is going to be given to the tenant that he shall have some benefit from this in having a clean dwelling to reside in because of this additional 10 per cent. rent. There is nothing in this measure that I can see—and I shall be glad to be corrected on this point—that says, "We are going to give you 10 per cent. extra on your rent, either in a smaller or in a larger house; you have done no repairs, 814 "because that has been the general rule during the last four years"; we are going to give you this extra 10 per cent.; what are you going to do in the way of whitewashing and sanitation to make these homes better for the people from whom you are taking this 10 per cent? It is not urged that the landlord shall spend the whole of that 10 per cent. We do say, however, that anyone who knows such property at the present time has the right to ask that some of the money should go in the respect I have mentioned so that the tenant may get some benefit from it.
I have a serious complaint to find in regard to the Government in connection with this measure, because they have left out entirely one phase of this great question that we were promised should be dealt with last autumn. I do not find that it comes within the scope of the Act of 1915 or of this amending Bill. I refer to the question of people who have leases, and who have been served with notice of dilapidations and are asked to carry out extensive dilapidations immediately at an enormous cost. The Government has not attempted to deal with that question in this Bill. I want to know, and I shall endeavour to persevere with the question, whether the promise of last autumn is to be redeemed, and the measure then promised is going to be brought in. There is another point of criticism—the Government, when they come to deal with this measure, cannot deal with it in a bold manner. They must have some qualification. We had great difficulty in the Debate of 1915, in the original draft of the Bill, to get it made £35 for the Metropolitan area. We had to persevere a great deal and very strongly on purpose to get the whole of the Metropolitan Police area taken in so far as London was concerned. Now that the Government are asked to deal with another aspect of the case they immediately begin to set up a barrier as to how far it ought to go, and have made it £55 rental or rateable value. From the speech of the right hon. Gentleman, if I did not misunderstand, he used the words "rateable value," which is quite a different thing from the rental. The Bill says rate or rent. It makes, of course, a much wider margin as to the number of people who come in. I have received one letter—I will not worry the House with more—though my postbag this morning is quite voluminous enough on this without anything else—but I wish to say that £55 is an absurd 815 figure. I have a letter from a Kent lady, living in Sidcup. This lady says, "My house is rated at £56, and to me it will a great hardship if I cannot get the protection afforded by the Act." Then she goes on to say she is eighty years of age and has lived in the house for eleven years. She is offered the alternative of buying or quitting, and all because the Government will not raise the figure above £56 to £56 per annum. Fifty-five pounds does not cover the struggling middle classes who require relief at the present time. Even in your assessments Acts you make a difference in regard to, I think it is the Inhabited House Duty, when you get to £60, and consider that all under £60 ought to come in. Why not in this case make it £75 and cover the whole of the cases that ought to be dealt with in this Act? I believe £75 to be the least rateable qualification that you should adopt.
Then comes the point as to the duration of the Act. At the present time the Bill is only for twelve months. That is really, I think, only an extension of six months over the principal Act. The period is too short. I hope the Government will consider in Committee the advisability of extending that period. It may be said, "Oh, but when you mention the fact of repairs you have ignored the possibility that the landlord may make some structural alterations or some improvements that will swallow up the whole of his 10 per cent." May I remind the House that in the main Act of 1915 that difficulty is met. Hon. Members will there find a Clause under which the landlord who makes structural improvements, or is called upon to do so, is allowed to charge an extra 6 per cent. on the capital outlay lie incurs in connection with that structural improvement. Another point—and more important to my mind—is in Clause 4. That is the alteration of the dates. It will be found that the Government have altered the date in the original Act to 4th March, 1919, from 25th November, 1915. The effect of that, so far as I can understand, the fixing of the 4th of this month instead of November is that any bonuses or any increment that has recently been made shall not be interfered with. Let me take a typical case, and what is taking place. A gentleman whom I know, a literary man, has a house at about £50. His library is there, and his books are his tools. He cannot get another house. He has paid his rent, and was negotiating for a renewal of his 816 tenancy, being in danger of being turned out, when suddenly, for some mysterious cause, the landlord was put to one side, and the mortgagees came in. He has had to submit to an increment of £15 a year on the rent he was paying. If your date stands at 4th March, that gentleman has to submit to an increase nearly three times as large as that which you think a landlord is justified in charging. I think, therefore, we might ask you to keep to the date of the Rent Acts. Then, further down in the same Clause, there is another alteration which I think has a very detrimental effect on the amending Act that we passed in 1918. It was found in 1918 that there were landlords who were doing what they are at the present time, professedly selling houses to persons who occupied, and the occupation was a bogus one, and hence in 1918 the 1915 Act was amended in the following way:For the purpose of this Section the expression 'landlord' shall not include any person who since the 30th day of September, 1913, had become landlord by the acquisition of the dwelling house or any interest therein.and so forth. That you propose to eliminate by Sub-section (5) of the Clause. I hope the Government will reconsider the and let the original date stand, which I think is a much greater advantage, and not virtually abolish an amending Act of Parliament that was found necessary at the time.
I do not know that there is very much more, except that question of the standard rate. We are told that you are to alter the whole condition of things, and that you are to seek around the neighbourhood for what is called the "standard rent." As I understand the word as it is used in the Act of 1915 it is the pre-war rent of August, 1914. Are we to keep to that or not? We are told that, supposing the rental is lower in some localities, the Court is to have the power of raising the rent and then putting the 10 per cent. on that. How are you going to get those particulars? How is the Court to become thoroughly convinced—because the Court cannot make person al investigation as to the conditions why that rent is lower in a particular area? Of course there is the pretty illustration with regard to the butler. We all admire that devoted servant, and his loyal support of his employer, and his looking after his guests thoroughly well when they pay visits to the house, and we all like to see him get some reward at the end of his services; 817 but how many cases of that kind take place? The illustration is rather a far-fetched one. We are quite prepared to enshrine the butler in the house at a much lower rate than the value of the house, but we have to deal with this question as practical and common-sense men dealing with a large area and many houses, and we know that such an illustration will not hold water for one moment. It is a most dangerous thing to give this power of seeking around and trying to find out means whereby the rent can be raised. I hope the Minister in charge will realise that when this Bill gets into Committee much alteration will have to be made, and that he will be prepared to accept practical Amendments which will put it in a practical manner. I think the right hon. Gentleman said that the Clause in connection with proceedings in County Courts should apply in all cases. I am informed that under certain conditions cases of contract over £50 could be taken in the High Court. [An Hon. Member: "No, no—£100!"] I take it that this Subsection (2) of Clause 5 means that the whole of the proceedings shall be dealt with in the County. Court and not under any conditions in the High Court.
I have given this rough criticism to this measure. I should have wished the Government to have taken a broader view of the situation and dealt with the dilapidation question, and made a broader appeal than this is, but I can assure them that when it gets into Committee they will have to listen to some Amendments which I believe will improve the Bill very materially. The whole question is simply this: We must have more houses. The solution of this problem will only be mot when the Government first of all gets on vigorously with its housing schemes, and gets some houses into existence that are required so much at the present time. All measures of this kind can only deal temporarily and in a paltry manner with the serious problem of housing, and we therefore urge the Government to get on rapidly with their housing scheme so that people may be in better tenancy and live under more healthy conditions than they do at the present time.
§ Mr. W. R. SMITH
In rising to address the House for the first time, I do so with the confidence based on the knowledge that the House is always very generous to those who make their initial effort in Debates in this Chamber I would like to say that we welcome this Bill as being some- 818 thing towards meeting the demands that have been put forward by the Labour party so far as the legislation that should be brought forward this Session is concerned. We feel that this Bill in itself is a very important measure, because it relates to subjects which have a very large bearing upon a question which has been already largely discussed in this House. The question of industrial unrest is one that has received already very considerable attention; it has been a matter that has exercised the Prime Minister to the extent of special efforts being made in connection with some of the industries of this country, and it is because of the bearing that this measure has on that question that it has the special interest of us who sit on the Labour Benches. One of the difficulties we have to contend with, and one of the reasons which have led up to a great deal of industrial unrest is the fact that agreements in regard to wages have been altered in their bearing by changes that took place subsequently. We can see how, unless something is done towards giving the wage-earner some protection; is regards rent, agreements that have been made in regard to wages will lose their significance and will recreate to a very large extent unrest in the minds of the people that would otherwise not occur. I think that is one of the main reasons why this legislation was first introduced, and I would like to say that it appears to me that in considering this question at the moment we ought to have regard to that aspect of the case. That brings me to the first Clause of the. Bill. This legislation will be necessary so long as there is an absence of houses adequate for the needs of the people, and it must be obvious to the House that the scarcity that now exists cannot reasonably be expected to be removed under the period covered by this Bill. If we are to deal with this question effectively, I think it better that the period of time contained in the Bill should be of such so character as to carry us to the period when more houses will be forthcoming for the needs of the people. Although we welcome the general principles contained in this Bill, it may be necessary, so far as we are concerned, to ask for some Amendments, and one of them may be in regard to the period of time during which this Bill proposes to operate. We recognise to-day the necessity of stabilising the conditions of industry. It is apparent to all sections of this House that one essential 819 from the point of view of national interest, is that the conditions of industry should be stabilised and settled in a manner that will admit of its full development and progress. From that point of view it is very desirable that this Bill, in so far as it attempts to meet the difficulties of the wage-earner, should be carried forward to a period of time that will obviate anything in the way of disturbance so far as the industries of this country are concerned. I think it must be obvious that you cannot have erected in any way suitable for the needs of the people the number of houses needed by the time that this Bill would expire, if the present period is retained in the Bill. Therefore we suggest that the period of one year should be altered and extended to two years.
With regard to the conditions under which it is proposed to permit landlords to claim, so far as the rent of the houses are concerned, we are of opinion that 10 per cent. is too great an increase and that 5 per cent. would be adequate for the purpose. It is as well that the House should remember that landlords already have opportunities of raising rents where they have incurred certain liabilities. For instance, if the rates of the district are increased they can claim that increased rate by an increased rent. Again, if they are called upon to make any improvements in the house they are entitled to raise the rent to compensate themselves for the increased liability. It is only in regard to the ordinary repairs or money spent in things of that description that they are not permitted to raise the rents of their tenants. During the past four years this item has not been a very great burden to the landlords of this country simply because the repairs have not been carried out. One's experience in localities of which one has definite knowledge shows most clearly that the properties have not had money spent upon them by way of decoration, or the ordinary repairs that would otherwise have taken place, and we feel that now an increase of 5 per cent. would be adequate for the purpose, whilst at the same time we feel that there should be some guarantee for the tenant that if he is called upon to pay this extra rent then certainly he should have the advantages for which this extra money is proposed to apply. We are opposed to any increase being levied upon the tenant for the purpose of the upkeep of the houses 820 unless something is done to them to change their condition from what is now the case with so many houses.
The next point is in regard to Clause 5. Here I very much regret that the Government should have thought fit to propose legislation in this way. We suggest to the House that Sub-sections (a), (b), and (c) of Section 1, Clause 5, are entirely unnecessary. I would like to refer to the necessity of avoiding anything in the nature of irritation in the minds of people that would develop dissatisfaction, which might manifest itself in what is known as industrial unrest, and it seems to me that if this Clause is to stand in its entirety, and Sub-section (a) is to be a condition upon which an extra amount can be claimed, then we are going to introduce into our various areas irritation which must of necessity develop into national unrest. How are we going to determine the standard rent of houses? If the standard rent is the pre-war rental, that is already covered in the previous Acts, and there is no need to insert a Clause of this description. It seems to me that this Section is entirely a speculative one that will develop the greatest irritation, and will mean that the tenants not only will have to defend themselves against actions that are brought under this provision, resulting in loss of time from unemployment, but it is going to produce a set of circumstances that will possibly develop some of the very evils that this Bill is supposed to avoid.
The difficulty of proving what is the standard rent will be a very difficult one indeed. If there is no standard to go by, how can that point be determined? I repeat that if the standard is the pre-war rent there is no need to have this Clause, because that provision is already contained in the Acts on the Statute Book. Sub-section (b) permits an extra charge if it can be shown that the house has been let to lodgers or the taking in of boarders. I would like point out here that in many cases this development has taken place of necessity rather than of choice. The congregation of large numbers of working people in areas where their labour is required has developed the necessity for lodgers being taken in where otherwise they would not have been provided for. This may be in many respects a very temporary thing indeed, and it would be most unfair for a tenant who, for a temporary purpose, has taken in a lodger to enable the person to work in that area, to have 821 it established as a reason why the rent should be increased, when possibly a week or two later on the lodger may go because of the fact that his labour is no longer required in that particular district. It may be soldiers' widows or other widows may have taken in lodgers in order to augment their scanty incomes, and it would be very unjust if they should be called upon to pay an extra rent which would be the means of taking away from them the very substantial advantage which accrues to them from having taken these people into their house.
Those are phases of the Bill to which we on this side of the House take some exception. We welcome the Bill, so far as its general features are concerned, as absolutely necessary in the conditions of the time. I do not know that it is necessary at this stage to discuss the reason of the shortage of houses. In my judgment, the difficulty would have been less had public bodies been bolder and more courageous in their policy years ago. We must recognise more and more that the housing of the people must be looked upon as one of the public services and must not be left indiscriminately to private enterprise. If the different local authorities will look upon this question from that standpoint and try and adjust the housing accommodation of their district to the needs of the population, we may not have this difficulty in the future to the same extent as we have at the present time. I am obliged to the House for the attention that they have given me in this my initial effort. I hope that the Government will see the necessity of meeting some of the points that we have raised. We have only one desire, which is to see this legislation established, but we would like to see some of its features that we think spoil the measure ameliorated, and we hope that we shall be met in that direction when the Bill is in Committee.
§ Mr. LORDEN
I, like the hon. Member who has just sat down, stand up here to speak for the first time, and I hope that I shall have the usual indulgence of the House. If the hon. Member will read Clause 5 of the Bill, he will see that it establishes the question of a standard rent. Most people who have had any dealings with rating know that the basis that is worked upon is the rental of adjoining or similar houses, and this principle therefore is one which is well defined and which can be well maintained. Many speakers have 822 alluded to this Bill as dealing with the housing of the working classes, but I read it as dealing with rateable value up to £55 per annum, and, on the ordinary rating, that will give a gross rental of £66, because taking a sixth off for repairs and other matters, brings it back to £55. You are, therefore, dealing with houses up to the rental of £66, and you can hardly regard that as dealing with houses for the working classes. There are houses up to that rateable value that are used for some of the working classes, but they are largely let in small tenements of three or four rooms, which in my opinion is extremely objectionable, and it is the landlords of those houses in nearly every case who are the profiteers in rentals. This Bill cuts two ways. You will not get any more houses if you are going to have such legislation as this. I know some thing about it, because I happen to be in the building trade, and, if you want to encourage building, it is not the slightest use bringing in legislation of this sort. It does not affect me personally because I am interested in property the rentals of which generally run from something like £500 to £1,500, but it does affect a lot of my friends, such as small tradesmen who have purchased a few houses with the money that they have thriftily saved, and on which they have thought that they would be able to live in their declining years.
I have in mind the case of a man who put all his savings into four houses, rented at £50 per year each, and which in pre-war times brought him in about £150 per annum. He now finds that, instead of paying on the average some £5 or £6 per year in repairs, it costs him from £16 to £20 per house, because repairs have gone up to such an enormous extent. Hon. Members on the other side have suggested that repairs have not been done. Why have they not been done? There have not been the men in ninety-nine cases out of 100. In my own house the other day we had a burst pipe, but for the life of me I could not get a plumber, although I am in the trade. Therefore, instead of it costing me a pound or two it will cost £20, because it brought the ceiling down. That is a case in point. I want to urge upon the Minister in charge of the Bill that there is a way of meeting some of the difficulties with regard to these repairs. At the present time under Schedule A of the 823 Income Tax an allowance of one-sixth of the gross rental is made for repairs, or almost entirely for repairs. It never has covered them, and to-day it does not look at them, but if it were made one-third instead of one-sixth it would minimise the question of repairs very largely. That is a point that I would urge very strongly upon the Government, because to-day they are assessing a house at its gross rental less one-sixth, and the return is not one-third of what that rental should be. The hon. Member suggested that it should be 5 per cent., but 10 per cent. upon £66 is only £6 12s., and what repairs are you going to get done to a house rented at £66 for that sum? Therefore, 10 per cent. is very reasonable and modest. With regard to the rise in other matters, it is a ridiculous suggestion to make it 10 per cent. If you made it 50 per cent. it would not cover it. I am not suggesting for one moment, however, that you should go beyond the 10 per cent. I think it is a reasonable way of meeting an acute difficulty which has arisen.
Who are these landlords who are asking people to pay higher rates, or giving them notice to quit? The bulk of them have only owned their houses for a few weeks or months. They are the profiteers whom you want to stop. The ordinary landlord does not do a thing like that. A man who has owned property for many years never dreams of doing such a thing. Between him and his tenant there is usually the best of feeling. The tenants remain for years and years, and the houses are maintained in reasonable repair. The repairs are the crux of the whole matter. Why not suggest that half the increase should be spent upon repairs? No landlord would object to it, because it would be a limitation to his expenditure on repairs, which have been so enormous during the last few years. There is this question of the shortage of houses. You are up against it very badly in this country, simply because of the extraordinary legislation of the past. Take my own case. In 1904 I purchased a farm in the country. I am one who on a holiday always look for something to engross my attention. At different times, as it came into the market, I bought about three miles of frontage on a main road between a sea side town and a market town. I did so with the idea of creating small holdings. Not far away there was a large naval 824 station, and the petty officers on their retirement look out for a little piece of land, and a house, where they can keep a couple of cows, a pony to take their produce to market, and have fifteen, twenty, or even thirty acres of land. I purchased this land with the idea of putting up the houses, because I thought it was so desirable. Each house, I suppose would be rented somewhere in the neighbourhood of £60 a year, and each one would have had a cottage. Why have not those houses been put up? It is because of the legislation introduced a few years ago. That land remains agricultural land to-day. You are only going to accentuate that difficulty by this form of legislation.
The Government are quite right in putting a limit upon it. Are you going to ask the Government to embark upon building houses for people up to £66 a year rental? One man wants a house of a vastly different description from another. He has his own ideas, and the ladies, too, have some idea as to how they like their houses planned and arranged. Probably, if they had been consulted in the past we should have more convenient houses. One man desires a number of sitting rooms, another a number of bedrooms, and a third prefers to have a bathroom almost to every bedroom. Are you going to stop these people following their own ideas, because the Government cannot cater for all these fads and fancies. Every man, however, has a right to decide how his house shall be planned. The Government will never embark upon such a policy; they could not satisfy the people. If they embarked upon building houses up to such a rental, they would do away with all individual ideas of comfort in a house. The shortage is even partial so far as the working-classes are concerned. There are certain areas which are very congested, but there are other places where there have been no munition factories where you can get a number of houses. You must, therefore, be careful how you legislate, because if you legislate in a panic the consequences usually fall upon those whom you want to benefit. The man you want to benefit and for whom you want housing to-day is the man who is engaged in industry. I am sure that hon. Members opposite will agree with me there. There is not the slightest doubt that they want better houses than they have had before. But what are they going to cost? What houses will you get 825 to-day to pay even a rental of £35 per annum? What is it going to cost you to-day to build a house which before the War was let for £25 per annum? It will cost you £1,200.
§ Mr. SPEAKER
The hon. Member is really wandering rather far from the Bill before the House. He is dealing with the whole housing question. That does not arise on the Bill, which is of a smaller character.
§ Mr. LORDEN
I respect your ruling, Sir. All I wanted to bring to the mind of the Minister was the difficulties that are arising with regard to housing generally. This Bill simply deals with the point of the restriction of rent. I want to impress upon the Minister that it is dangerous legislation when you proceed in this manner, because you hurt the man you want to benefit. I would thank the House for listening to me.
§ Mr. W. GRAHAM
The House will forgive me this afternoon if I deal with this Bill more from the point of view of Scottish conditions. We on these benches will not be accused of undue tenderness towards property owners. For the most part we hold the belief that housing should be a matter of public enterprise, but I am content for the moment to take conditions as they are, and I hope fairly and honestly to face the situation as it has confronted property owners, and more particularly small property owners in this country during recent years. There can be no doubt that, with something like a 126 per cent. advance in the cost of repairs, and with the accumulation of other conditions which have made it specially hard for the small owners of property, a case has arisen in which they are entitled to claim an increase of rent. I do not mind admitting that, although 5 per cent. has been suggested this afternoon, on the whole 10 per cent. is a not unreasonable proposition. There may be room for amendment or reconsideration on that point, but, everything considered, I do not make any objection. There are, however, features in this Bill, more particularly from the point of view of Scotland, to which I feel compelled to direct attention. In Clause 4 it is laid down that the limit for Scotland is to be £48. The right hon. Gentleman who introduced the Bill did not indicate in any way how that figure was reached so far as Scotland is con- 826 cerned. I feel very strongly that the figure for the Metropolitan area is altogether too low, but certainly this figure of £48 for Scotland is also far too much on the low side. In Scotland there is a very large number of small tenants of houses—minor professional and better artisan classes—who occupy properties that are rented up to approximately £60 per annum. Apart from certain favoured sections in certain parts of Scotland, many of these people have derived little or no advantage from war conditions, and even a 10 per cent. advance on the rental of houses which they are now occupying would mean a considerable hardship in many cases. I therefore suggest very strongly that the limit should not be £48 in the case of Scotland, but should be at least £60, or even a higher figure, if the Government is prepared to consider that proposal. In Clause 5 of the Bill we have a series of proposals which I think I am entitled to say with confidence were inadequately defended by the right hon. Gentleman who introduced the Bill. Paragraph (a) provides that wherethe standard rent of a house is substantially loss than the standard rent of similar houses in the same localityit entitles the landlord to an increase, on an application to the Court, exceeding 10 per cent. Unfortunately, there is no indication here as to how many houses are being considered. There is no information vouchsafed as to what is to be the procedure before a Court is entitled to say that an increase in excess of 10 per cent. is to be allowed. There may be a comparatively small number of houses in a district peculiarly situated or to which peculiar conditions apply, and it appears to be open under this paragraph to any ring of house proprietors or house-owners to found on that comparatively limited number of houses in order to demand an increase in excess of 10 per cent. Surely it should be laid down clearly and unmistakably, more particularly in this matter as applying to Scotland, that there should be a reasonably large number of houses so situated before a demand can be made legitimately in the case of those for which this excess increase is requested. In paragraph (b) there is the provision that ifby reason of the letting of the house to lodgers or the taking in lodgers the wear and tear on the house has been substantially increased,2.0 P.M.
again the owner of the property is entitled to demand or request an increase of 827 more than 10 per cent. I suggest respectfully to the right hon. Gentleman who represents Scottish interests in this matter that it must be within his personal knowledge that this will penalise a very large number of people in the city of Edinburgh, and in other large communities in Scotland, who have been taking in boarders or lodgers for a living. They have not profited, for the most part, from war conditions. Scottish experience points to the fact that a very large proportion of the boarding-house and lodging-house keepers in Scotland have been penalised by the absence of lodgers on active service during the past four and a half years, and a very large proportion of them were assisted under the National Relief Fund. For the next few years in our history it will be necessary for them to work exceedingly hard in order to make up for the losses which have occurred in a large number of cases since the War commenced. So far from being able to pay any increase in excess of the 10 per cent., I have no hesitation whatever in stating that they will find it exceedingly difficult to pay the 10 per cent. advance itself. They are entitled to protection under a Clause of this kind. Again, there is no indication as to what is to be the method of arriving at wear and tear. Apparently, it is going to be open to any owner of a property to proceed to the Court and merely to say, because of the presence of lodgers or boarders in this property, he is entitled to an advance. It would be difficult to resist the argument that in nine cases out of ten there is a chance, at least, of more wear and tear in the house with the presence of lodgers than would be the case if the lodgers were absent. But, at the same time, I disagree entirely with the theory which seems to underlie this Clause, that the lodger is necessarily a destructive prodigal who causes much wear and tear to the house which he occupies. Everything considered, with the return of large numbers of men from the forces, more particularly in the university cities of Scotland, there may be for some years a competition for accommodation, and that so far will have the tendency to make the lodgers, or boarders, more careful and more desirous of meeting the requirements of their landladies, and the best conditions of the property they occupy.
828 In Clause 6 a provision is made under which the owner of a property is required to give a clear statement as to the standard rent. I would ask the right hon. Gentleman in charge of the measure whether it is proposed that in supplying, that statement to the tenant there should also be a provision under which the tenant will have no difficulty in ascertaining clearly what he is paying by way of rent on the one side and by way of local assessment on the other, where the compounding system applies. One of the greatest sources of housing unrest in Scotland within recent years has come from the operation of the Scottish House-letting Act, and the difficulty of large numbers of tenants in ascertaining unmistakably what exactly is rent, and what exactly is local assessment. There is a widespread feeling, rightly or wrongly, that increases in local assessment in Scotland, up to the limit to which the Scottish Act applies, have been made the occasion or the means of exacting what was from every point of view an increase in rent. That is one of the most necessary and urgent improvements which should be incorporated in this Clause in order that there should be no doubt whatever as to what is rent and what is local assessment, where the two are compounded, as they are in a large number of cases, under the one head.
Finally, I want to offer three constructive proposals which, I hope, will be entertained by the Government in connection with this measure. First, while I do not seriously dispute that a case has arisen for the 10 per cent. increase, I do suggest that it is necessary, in Clause 5 particularly, to introduce some limit to the extent to which the excess may be granted in respect to the three heads mentioned. There is no limit in the Bill as it stands at the present time. In the next place there is the gravest danger that the 10 per cent. will become a flat increase in the rentals throughout the country. There is no provision for elasticity below the 10 per cent. limit, although in many cases an increase of even 10 per cent., small as the sum may appear, may not be justified. That is, all tenants up to this limit run the chance of becoming automatically liable to this advance, and it should be possible for the Government to consider some proposal which would provide for the consideration of cases on their merits and not expose tenants to a flat rate of increase. That 829 involves the establishment of something resembling fair rents Courts, and that was one of the leading recommendations of the Royal Commission which inquired into housing conditions in Scotland. Here you have a Bill which is going to apply to an infinite variety of conditions in Scottish housing affairs. There are all manner of personal and family circumstances. The circumstances vary from owner to owner of the property, and this seems to me a fitting and reasonable opportunity for the establishment of some democratic tribunal, apart from the Sheriff Court, which will fix rents on the merits of the application, which will be fair to the proprietors of the houses on the one side and to the tenants on the other. I regret very much that the Bill does not seem to make adequate provision for the smaller and working-class owners of property, more particularly where that property is mortgaged. A very large number of people belonging to the industrial classes have succeeded to one or two houses as the case may be. Under stress of physical hardship or economic difficulty since the War commenced they have found it necessary to mortgage that property, if it was not mortgaged before. They are now living, by reason of other additions to their expenditure, on a very narrow margin indeed. Their hardship is admittedly great, but I feel strongly that they are not sufficiently protected under this measure. Like other representatives of the Labour party, I welcome the measure. On the whole, I think it is moderate. At the same time I sincerely trust the Government will be prepared to consider helpful and constructive Amendments, such as will confer serious injustice on no class, and more particularly will protect the interests of tenants, especially where they have suffered severely during the past four and a half years of stress and trial.
§ Mr. J. JOHNSTONE
I also am going to deal with the Bill from the Scottish point of view. In Scotland we certainly welcome the Bill because it tends to relieve a class that has been very hardly hit, namely, the middle class. Part of my Constituency forms a part of Glasgow, and in that area at present houses are being sold over the heads of the tenants, and they will have to clear out on the Whit-Sunday term. In that suburban area the tenants will not be protected by the limitation of £48 per annum. A great number of the houses are occupied by middle-class people at a rental of £55, and they would 830 not come within the scope of the Bill. I therefore strongly submit that the right hon. Gentleman should carefully consider whether he cannot increase the limit from £48 to at least £60 in Scotland. Further, the rental will be the rental on the valuation roll, and any modification of one-sixth for wear and tear will be given to the proprietors. I also agree with what the hon. Member opposite has said in regard to the limitation of the period after the War being too low. I should favour the increase of that limitation to two years. I think the operation of the Bill ought to continue for two years after the termination of the War. I quite agree that Clause 5 will lead to unnecessary litigation. I would rather see paragraphs (a) (b) and (c) left out of the Bill altogether. So far as Scotland is concerned the only parties who have any chance of having the valuation of their houses lower than neighbouring tenants are the proprietors of houses who have been in possession, occupying their own houses, for many years, and the assessor has not thought fit to disturb them. But even in cases of that kind the assessor comes along and, as a rule, is very careful to see that no single tenant is allowed an advantage over other tenants in that neighbourhood and that the rents and valuations are tuned up to the proper level. I think it would lead to quite unnecessary agitation and irritation and to litigation in the Sheriff's Court to leave these paragraphs in the Bill. The 10 per cent. increase is hardly justified. Many humble persons in Scotland have invested their savings in house property. It used to be a very common practice—it is passing away in recent years—for a man, in order to make provision for his wife and family, to invest his savings in house property, and some little time ago a case was brought to my notice of a widow whose husband had invested his savings in this way. She had a small business, but during the War her income from house property had sunk to such a low ebb that she was unable to carry on the business. It is not to be assumed too hastily that every owner of house property is a capitalist—a man rolling in wealth. If there is one class of the community who have not had any increase of their income it is these humble people, and surely a good case has been made out for a 10 per cent. increase to cover the increased cost of living. I hope, therefore, the Minister in charge of the Bill will carefully consider the case 831 of Scotland from the point of view that the limitation of £48 is far too low and ought to be increased to £60.
§ Mr. GLANVILLE
I wish particularly to deal with the proposed increase of 10 per cent. and the reason adduced for such an increase. First, we are told that the interest of the mortgagees must be considered, and that the mortgagee is not getting sufficient interest on his money because he can get a higher rate of interest elsewhere than he gets on his mortgage. That is true. The mortgagee, when he lent the money, generally got 4½ per cent., but he got more than he would get on a Government security. He was well covered. The statement made by the right hon. Member for Spen Valley (Sir T. Whittaker) that the mortgagee frequently has to foreclose is lightly exaggerated. The mortgagee generally is amply secured, and he got a higher rate of interest than he would get for ordinary securities on the Stock Exchange. Then a war broke out and the mortgagee discovered very quickly that he could get a higher rate of interest on the Stock Exchange for Government securities and many other kinds of securities than he got on his mortgage. That is quite true. But he had to start with a loss of something like 20 per cent. on his capital before he could take his money out of his investment and put it in something else, whereas if he lends money on mortgage he is amply secured whether the war came or did not come. His £100 was still worth £100. If it is necessary that the mortgagee should be allowed to have 5 per cent. interest instead of 4½ per cent. I do not think that is very material. The landlord can pay—I say that advisedly—and I see no reason why it should be passed on to the tenant.
Further, the right hon. Member for Spen Valley said that on small property two-thirds is generally considered the amount to be lent on mortgage. Take a house at £300. A sum of £200 is lent on mortgage at 4½ per cent., and the argument is that it should increase to 5 per cent. The owner of the house that is worth £300, on with £200 is lent on mortgage, gets the profit on the £200 as well as on his own £100, and I feel sure that if we could get the data we should find that the owners of small house property get 6, 7, 8 and even 9 per cent. on their investment. Their reason for borrowing on mortgage is because they get something like 4½ per cent., 832 which is the general price, and can handle it and get 7, 8 or 9 per cent. on the £200 out of their £300 worth of property in which they speculate. Consequently, so far as the mortgage interest is concerned, I do not think that is the slightest justification for allowing this 10 per cent. increase.
The main argument outside the question of mortgage interest is the cost of repairs. I think every fair-minded man will admit that since the War broke out—even the Property Owners' Association admit it—the repairs have not been done to anything like the extent to which they have been done prior to the War. They will have to be done at some future time. The amount allowed by the local authorities on repairs is the difference between the gross and the rateable value. On a house in the Metropolis rated at £20 the gross would foe about £25; therefore the difference is about £5 a year. Four and a half years at £5 a year for repairs represents £22 10s., and not more than half of that money has been expended. The landlord has not only had that balance in his hand, but he has had the accumulated interest on that money for four and a half years up to the present time. That produces something like 30s. towards the extra cost of repairs as proposed in this Bill. In this Bill the proposal is that the landlord shall charge 10 per cent. more rent for six months. I will stick to my £20 rateable value. Ten per cent. on £20 for six months is £1. It is proposed that the landlord shall charge £l, because he has to pay extra value for repairs which he did not do before—I am not complaining that he did not do the repairs—whereas the interest on the money which he has held in his hand would quite make up for that £1. I can only describe that as a pettifogging proposal. If there was any reason for making the period longer than six months it might be worth the while of the Government to do it. Look at the danger of it. By Act of Parliament landlords are to be enabled to tell their tenants—and it will have almost the registered Government stamp upon it: "Your rent is to go up 10 per cent. on your rateable value for a period of six months." I quite agree that the proposals in the Bill generally are very good, and I do not find any fault with them except that the rateable value should be in the Metropolis, at any rate, very much higher that £55. I can see no necessity for the other Clause in regard to the 10 833 per cent. The earlier proposals of the Bill are excellent. I suggest that the rateable value should be very considerably raised, that the period should be prolonged more than another six months, and that the 10 per cent. interest should be entirely swept aside by the Government, because it is pettifogging and irritating, it is not justified and absolutely unnecessary.
§ Mr. CAMPBELL
As representing a surburban constituency which is largely middle class I welcome this Bill very warmly. There is no class in the community which has suffered so much in the War as the middle class, and I want most respectfully to urge on the Government to see if they cannot raise the rental limit in Clause 4. I suggest that in Sub-section (a), and possibly in another Subsection, they should omit the words dealing with the amount of standard rent and leave the limit only the rateable value, which would bring in a great many houses that would otherwise be left out. I quite understood, and I am sure that my Constituents understood, that the Leader of the House, in speaking on this point the other day, referred to the rateable value only, and many of my Constituents are very disappointed to see these other words in regard to the standard rent included in the Bill. I think, apart from the hardships that would be involved, it would be better on general grounds to leave the question of the standard value out, because it is not at all easy to say what standard value is. There would be very considerable difficulty in finding out what the standard value is. There is no difficulty whatever in knowing what the rateable value is. Therefore, I respectfully press upon the Government that they should leave out the words referring to standard rent, and let the rateable value be taken as the basis.
§ Mr. CLEMENT EDWARDS
The party for which I speak desire to express thanks to the Government for the intention which evidently has moved them in regard to this Bill, but cannot congratulate them on the method by which they are attempting to give effect to that intention. The evil which caused the Government to take rapid steps by the introduction of this measure was that there was a combination among landlords to take advantage of the abnormal war conditions to compel tenants occupying houses outside the protection of the Increases of Rents Act to pay higher 834 rents by telling them that they must either buy those houses at an extortionate price or must quit. The present Bill proposes, in the first place, to say to the landlords that they cannot, in the case of a tenant occupying a house within the proposed new limits, turn him out without going to Court. But then the Bill proceeds to give an open invitation to landlords, through the procedure of the County Court, to secure an unlimited increase in the rent. The hon. Member who purported to represent in a very definite sense the landlord claim discussed this Bill on the basis of the proposed increases in rent being confined to 10 per cent. for the standard rents, and approved of the 10 per cent., and why the Government in the case of those tenants they are purporting to take within the protection of the old Act are not giving them the advantage of the 10 per cent. limitation, I do not know.
In Clause 5 they say in effect to the landlord, "You must not increase rent without the permission of the Courts, but you can get the permission of the Court to increase the rent to any extent." There is no direction, no suggestion which is to guide the Court as to the circumstances in which it may increase the rent. There is no power even to reduce an increase that may have been proposed up to the time when this Act comes into operation. The effect of it will be that hundreds of thousands of tenants will either have to pay increases of rent or go through the, for them, objectionable process of having to go before the County Court. In response to the interjection of the hon. Member for Rotherhithe, the right hon. Gentleman (Mr. Fisher) said he understood in the case of leases where there was a fixed rent, where the lease was unexpired, the Bill would give power to increase rent. I am not sure whether my right hon. Friend did not say that with some misapprehension. I put the thing to him quite specifically, not merely as applying to houses that are held under leases which are unexpired. Clause 2 provides that no such increases shall be recoverable until the expiry of four clear weeks after the service of notice to increase. Does that mean that where the tenant holds under a definite contract of tenancy? I do not care whether it is a lease or a quarterly or a yearly tenancy, is it seriously proposed that this Bill is to give definite power to landlords to break their contract as to the amount of rent, or does it mean or is it intended that the four weeks' notice 835 must be four weeks before the expiry of the existing contract which fixed the rent? If it means the first, that the landlords, in spite of what the contract with the tenant may be, may give him notice at any time four weeks beforehand and jump the rent, then the work that is going to be put on the County Courts of this country will break down the whole County Court machinery and create a state of irritation and mischief even greater than the widespread mischief which this Bill aims at removing. Which of these is proposed?
The right hon. Gentleman, in his very admirable speech, on winch I congratulate him, in which he moved the Second Reading, said that the subject of the Government was to provide for the state of mischief which had arisen through abnormal conditions, but not to impinge upon that period when normal economic activities would be resumed. But can it seriously be suggested that you are going to have a resumption of the normal economic activities in regard to building houses which, if it means anything for this purpose, means that the great dearth of houses is to be overtaken in a year from, now? The right hon. Gentleman who spoke from the Front Opposition Bench, who speaks with a very large knowledge of the building trade, and the hon. Member who spoke particularly for the building trade both stated that there can be no attempt at the building of residential property for some time to come. What I urge very earnestly on the Government is that the period during which this Bill is in operation shall be extended substantially. I will link that suggestion with another in a moment or two. Then comes the case of the rateable or rent limitations. I do not know whether the rateable limitation of £55, is £55 of rateable value at this moment, or, take the rental value, I do not know whether it is £55 rental value at this moment; or whether it is a £55 rental value in the sense of being a standard rent under the principal Act. If it is going to be a £55 rental, as it existed on the 3rd August, 1914, that is very different from a £55 rental value as it exists to-day. I am quite sure you will find in London many houses which were rented just £1 above the £35 limit in August, 1914, that are well up to £55 to-day.
I suggest that £55 is not a sufficient limit, even in the single occupied house, 836 from the point of view of dealing with those people with whom my hon. Friend expressed great sympathy, the working classes, and does not in the least degree deal with the mischief for a large body of the middle class, and the middle class have as much right to the protection of Parliament from any abnormal war or post war condition as any section of the working classes. There is also the consideration where you have congested areas and houses normally rented at £80 or £90 which are now occupied by composite tenants. There was nothing more surprising than the revelation made when the voting lists were prepared for the last election than to find a number of married people living in the same house. You have many of those cases. What has happened is this. It is not a question of sub-letting, but by a frank arrangement with the prime landlord you have cases of, say, three tenants taking a house jointly at a huge increase in the rent as compared with the time when it was occupied by a single tenant. That involves dealing with houses of a rental very substantially in excess of the £55 for London and the other parts of the country in proportion. I commend very earnestly to the Government the imperative need, if they are really going to deal with the mischief with which they profess to grapple, that they should consider a substantal extension of the figure to. I should say, £80 or £90. I would ask the Government even at this late hour, after the strong representations that have been made from different quarters, to consider if it is not possible to courageously face the whole problem, and, instead of making landlords and tenants go through the costly and, to many of them, the objectionable, machinery of the County Court, with the risk of breaking down that machinery generally, that they should take the recommendations that were made by the Committee who sat on this question, and go boldly forward and set up a fair-rents Court for the great cities and urban districts of this conutry. The Government will have had representations already from the party for whom I speak, and I do think that a very great and useful work might be done if those representations were adopted, and you would be enabled to grapple with this great problem. We appreciate the difficulties of the Government, and know they have been overworked, but in dealing with this problem they might at least treat it as a constituent 837 part of the larger problem, and, in conjunction with this Bill, get a large experiment in the direction of getting a fair-rent Court which would be of infinite value when they came to deal with the larger scheme of housing with which they are going to grapple in a short time. I should like, if I may, to have an answer to my specific question as to when this notice of four weeks operates.
§ Mr. M'GUFFIN
In speaking here for the first time I crave the indulgence of the House. If I were consulting my own feelings, I would not do so until I had become more accustomed to the Rules of Procedure. I desire to say that I regard this proposal as a moderate Bill, and one to which in all probability the property-owners are entitled, but one, by reason of my position as a member representing a large industrial community in Belfast, I am obliged to oppose. I do not oppose it on the ground that I regard it as a moderate measure but on the ground that it will inflict further privation on people who, in my opinion, are unduly burdened at the moment. I and my Labour colleagues here gave a pledge to the electors that in the event of such a Bill being introduced it would receive our strenuous opposition, and for this, among other reasons that it was freely circulated in the city that it would enable house and property owners to raise their rents even to an exorbitant figure. Under those conditions and that suggestion I made, what might be called perhaps a Jephtha's vow, but a vow which I intend to obey. I am not opposing the Government. I quite agree that something must be done to meet the situation, but I dissociate myself from the measure that they have proposed. We have at the moment a serious scarcity of houses in the City of Belfast. In all probability there are about 83,000 houses in that city, 80 per cent. of which are occupied by the working classes. Those people have been suffering very serious economic privation by reason of the increased cost of living, and I for one cannot agree to impose what at the moment appears to be a further economic burden upon those people. They have had to exist for years under very limited conditions, and to suffer an increase in the cost of living that I estimate on good authority to have been something like 100 per cent. We feel at the moment that they have got in respect of this serious 838 difficulty an increase of something between 60 and 70 per cent. in the way of wages, which is not in any sense commensurate with the degree to which the purchasing power of the pound has fallen.
The reason why I as a Member for this constituency oppose the Bill is, that I have just received information during the week that the mills and factories which for the most part are crowded in the division which I represent, have been reduced practically to half-time. I think it was a most unfortunate moment, so far as Belfast was concerned, to introduce this measure. It has been said that rents are too low, but I know of certain districts of the Division, where in all probability, any hon. Member who saw the property, would say the rents were too high, by reason of the uncomfortable and squalid nature of the houses in which the people have to live. It has been said that there is nothing made out of house property at the moment, but I am not so sure of that, and I think the money they are saving by doing no repairs to the houses must be more than compensating them for the decreased value of the pound. There are, of course, good landlords and bad landlords, and amongst the bad landlords is the individual who evicts a man from his holding that he has been occupying for over twenty years, simply because he will not agree to buy the house at a rate which is 100 per cent. above what he himself paid for it. We cannot recognise any fairness in such conditions, and though I agree with the Government that there is something to be done in respect of certain poor people who have unfortunately this as the only source of their income, at the same time I am obliged to say that it should have its limitations. It should only be done in respect of those whose incomes are absolutely threatened by the nature of the circumstances. I wish to suggest to the Government that it might be possible under the circumstances to take some other course, such as indemnifying those who are suffering at the moment by reason of the limitations of the principal Act. I do not know whether they will take that suggestion into consideration, but if they can I would strongly recommend it to the Government; but I will oppose rigidly anything that will for a moment add to the economic grievances of the people. I am obliged to the House for the attention they have given me in my maiden effort.
§ Mr. RAWLINSON
I do not propose to trouble the Government with the large questions of principle which have been put before the House by various Members, and notably by the right hon. Gentleman the Member for Spen Valley (Sir T. Whittaker), who gave forth principles which sounded even more excellent because they were the same speeches as we made in rather different language in 1910. I feel that those speeches have had a good effect at last. I wish for one moment to come to the Bill itself. Very few people have spoken much about this Bill, and I want to look at one enormous change which is brought about by the Bill, and which was dealt with by the right hon. Gentleman who introduced it in two sentences. We have a definite case here of the lease of a house, a lease for twenty, or forty, or fifty years, at a particular rent. Probably, if it is an old lease the rent will be somewhat low. Under this Bill, according to the right hon. Gentleman, the landlord, upon giving four weeks' notice to the tenant, can raise the rent by 10 per cent. without any appeal at all under certain circumstances. Was there ever a more gigantic change than that, in the case of a leasehold which has been running for a long time at a definite agreement, with about twenty years yet to run, the landlord without any sort of reason can tender a four weeks' notice to his tenant and raise his rent 10 per cent.? But it does not stop there, because if he can show certain other things as well he can go to a County Court and get a further increase still. It is an extraordinary alteration of the law. This Bill has a very wide reaching effect, and it extends now to houses in the country of £42 rateable value or standard rent. The rateable value, I suppose, means a net rateable value, but there is a glorious uncertainty about most of the things in the Bill, and although many questions have been asked of the right hon. Gentleman on the Front Bench, very few answers have come back.
§ Mr. RAWLINSON
I should have thought there would not be very much trouble in answering a simple question such as whether or not the rateable value is gross or net?
§ The LORD ADVOCATE (Mr. Clyde)
The answer is different according to whether you are dealing with England or Scotland. In England it is net rateable value.
§ Mr. RAWLINSON
Therefore you have got it at net for this country. I am not concerned with Scotland. Now take the other alternative. There has been a good deal of demand for houses during the War at Cambridge. Would the Bill apply to a lease made last year in Cambridge? I have no doubt it would. A lease was entered into, we will say, of one of the houses of a rateable value of £40, the standard rent being below that figure, and probably the lease was entered into by the occupying tenant at a very much larger sum, because the value of houses has gone up and people, with their eyes wide open, have taken houses of this type and paid, no doubt, more than £40 a year, probably going up to £50 or £60 a year. The tenant, directly this Act passes, goes to a County Court and says the house has been let to him above the standard rent and he, therefore, asks for a reduction. I gather this from the language of Sub-section (2) of Clause 5, which is as follows:Where in any such case the tenant of any such house in accordance with rules of court shows to the satisfaction of the County Court that, as respect a house first let since the third day of August nineteen hundred and fourteen, the standard rent is substantially higher than the standard rent of similar houses in the same locality, the County Court may order that no increase in the standard or an increase of loss than ten per centum shall be allowed in the case of that house.I do not know the exact meaning of that Sub-section, but I imagine it to mean that when the rent is being charged there is a discretion in the County Court to alter it. It may be I am taking too hasty a view of it, and, if so, I shall get the reassurance. The point is, assuming a new tenancy entered into last year comes within the meaning of this Act, is there any power of the County Court to interfere in favour of a tenant so far as the rent he agrees to? That is the question I ask, and it will be dealt with probably by that particular Sub-section. If I may go back to the first point, if it is not intended to apply to existing leases, I think the Bill will certainly require to be re-drafted. Standing as it does, this Bill does make a very wide change in the position of affairs as they are at the present time. May I ask one further question—a very small, one? I suppose the Bill would apply in 841 the same way to a furnished tenancy? Provided that the unfurnished rental came within the amount of the rateable value, the mere fact that the house was let as a furnished house would not remove it from the Act.
I hope I have not appeared too truculent in attacking this Bill for a moment. But when entering into a thoroughly unsound Bill economically, and a thoroughly indefensible Bill, except on the ground of emergency, it does behove the House of Commons to look very carefully at each provision of the Bill and to make thoroughly certain that they understand what they are passing. It is for no hostile reason that I have put forward these points, because otherwise you pass a class of legislation which does an immense amount of harm. Unless you make your Bill clear—and this Bill is not clear—landlords will be compelled to take legal opinion. It is essential that a Bill of this kind should be drafted in the clearest possible terms, and the House should be under no misapprehension when dealing with this uneconomic, and, in that sense, objectionable, form of legislation, but should see to it that, however good the intentions may be, the Bill does not do injustice to people we never meant to attack at all.
§ 3.0 p m
§ Mr. CLYDE
I think the House is greatly indebted to the hon. and learned Gentleman for the speech just delivered, for this reason, that that speech, more decidedly than most of those which preceded it, recalled the attention of the House to what, after all, is the only question for the moment, namely, What is this Bill? There are a good many topics, themselves very important and of a far-reaching character, which lie just outside this Bill, and I have just a word or two to say about some of those topics which have occupied a very large part of the general discussion which has taken place. The hon. and learned Member who spoke last, and also the hon. Member who spoke second from the last, put certain questions as to the scope of the Bill with regard to current leases, and I should like, if I may, to make the effect of the Bill first of all clear with regard to this. Let me preface by reminding the House that this Bill of 1919 necessarily inherits all the virtues and all the vices of its predecessor of 1915, and, while I would not like to say that this Bill is one that is 842 easily read by him who runs, I think it is true that most of its difficulties are derived from the character of the legislation of 1915 upon which the Bill is based.
With reference to Clause 2 of the Bill, and to the proviso to Sub-section (1), which deals with the four weeks' notice, what was done in 1915 was not to enable any rent to be recovered that was higher than the stipulated rent, not to enable any man to break the bargain by raising rent so long as the bargain remained, but what was done was to say that, even if by a bargain the rent had been raised above the standard rent of 4th August, 1914—for, you remember, the 1915 Bill was not passed until December, 1915—notwithstanding the part of the rent which was in excess of the standard rent of 4th August, 1914, it should be, in the words of the Act, "irrecoverable." Of course, in the case of a very long lease, such as that to which the hon. Member referred, if the life of the lease were longer than the life of this emergency legislation, you get back to the original contract rent under the lease. The full rent would be recoverable. Therefore, under the 1915 Act, there was a very violent interference with a great many current leases, but the interference was to prevent the recovery of the whole rent in all cases where the rent stipulated was in excess of the standard rent of 4th August, 1914. The Bill of 1919 is exactly the same thing. It does not alter that state of matters one bit, and the four weeks' notice of an intention to increase by 10 per cent. refers to an increase not above the rent stipulated in the lease—because that, of course, you cannot exceed, as that is the bargain—but to a 10 per cent. increase within the limit of the stipulated rent.
§ Mr. CLYDE
If the hon. and learned Member reads the first Sub-section of Clause 2—I admit it is not easy—first of all it deals with an increase in the rent of the dwelling-house, and next to an increase which, by virtue of the principal Act, would be irrecoverable, and then it says, "shall be recoverable if the amount of the increase does not exceed 10 per cent." but there is nothing to make anything recoverable which would not be recoverable under the bargain. The only result is that you get rid of the irrecover- 843 ability of that portion of the contract made to the extent of 10 per cent. which was over and above the standard rent.
§ Mr. RAWLINSON
I am afraid that I agree with the right hon. Gentleman who introduced the Bill that this Instruction may require words to make it quite clear to us.
§ Mr. CLYDE
If there is any doubt as to the words not being clear, then certainly they must be made clear, because that is the intention of the Clause and of the Bill. I do not at present think there is any doubt, but if trouble is apprehended in the reading, the words must be made such as will without any doubt whatever carry out the intention of the Bill. I pass from Clause 2 to Clause 4, because the latter Clause is in exactly the same position. The hon. Member put the case of a lease made last year. He asks what is the effect under this Bill. Exactly the same as under the Act of 1915. If in regard to the rent in that Bill an increase is made, and if the effect of that increase is to cut into the average of the standard rate over that of 1914, then the rent is to go back to that of 1914. So long as this emergency legislation remains it is almost exactly a reproduction of the state of things under the Bill of 1915. Once more, there is nothing in this Section which will allow anyone to charge a bigger rent than he did, in fact, during the currency of this emergency legislation.
Finally, pass on to the difficulty which is to be met under Clause 5. This, apparently, has misled more than one hon. Member. Again, if there is any real dubiety about it, it must be made perfectly clear, because Section 5, if the hon. Members and others will follow me by looking at the Bill, says:Where, in the case of any dwelling-house to which the 1915 Act or this Act applies, where an increase of rent is permitted by this Act—This Section therefore deals only with the case where there is a permitted 10 per cent. increase. As I have already explained, that case is never one of raising the rent above the rents stipulated in the lease. If a case admits an increase of rent it is under Sub-section (2), and then there may be an application to the Court in regard to the said case. In such a case you can go to the County Court on the plea that, under special circumstances, the increase might be a little greater; or on 844 the plea that, under special circumstances, the increase ought to be so great. I hope I have made made these points as plain as necessary.
With regard to to-day's discussion, I am sure my right hon. Friend will feel that he has certainly no reason to complain of the criticisms which have been directed upon his Bill or of the general tenure of the discussion. On the contrary, the Bill has been generously received by the House. I think in the main it is understood as being what it really is—a measure of emergency, just as much as was the Bill of 1915. But there have been frequent references in the course of the discussion to certain, matters, to which I alluded a moment ago, as lying altogether outside the scope of this Bill—even proposals as extensive as the substitution for contract rents altogether of rents fixed by some form of rent tribunal. I do not think it would be the slightest use to hold out any hope, or suggested hope, however remote, that within the limits of this Bill further proposals of this kind can find a place. They are proposals that would have to be considered upon their own merits. This Bill admits that we are dealing with a state of things in which, in the main, we are as yet dependent upon voluntary enterprise for the production of the house supply, and upon voluntary contracts in regard to the conditions upon which those houses are made available for use. So long as that is so we must obviously confine ourselves to that which is necessary in the present extremely difficult circumstances—necessary, that is to say, to make the machine work, until either a complete building scheme is established or until we get back to something like normal circumstances. The truth is that the Bill is an emergency Bill, and we would only get ourselves into infinite difficulty if we endeavoured to tack on to it, or introduce into it, proposals that were not for the purpose of the emergency in front of us, but were really intended to lead to the establishment of some form of different organisation of house-ownership, house-building, house-living, and of house-financing.
I might make some reference to one or two other topics of discussion, though I need not spend much time upon them. On the Bill itself criticism has concentrated itself mainly upon, two points—almost altogether upon those two points. 845 The first is the question of the limit. The second is the question raised in Section (5) which admits access to the County Courts. I think there is no doubt—let us be quite candid—that this Bill is intended to deal with a class of house rather more limited than those for which an extension is asked up to £60, £80, or £90. There is no doubt that the intention and purpose of this Bill, just as it was the intention of the Bill of 1915, is really to deal with wage-owners' houses. This was not intended to be a middle-class Bill at all. I am bound to say—although all these matters, of course, are quite open in Committee for anyone to propose an Amendment upon—that I think the moment one admits that the Bill is an emergency Bill—and, as the hon. Member who spoke last very truly and quite frankly said, a Bill based upon the frank violation of every canon of ordinary economics—I think there is a great deal to be said for not having interference except where it is clamantly called for, and in the interests of those who are least able to protect themselves against the ordinary conditions of free contract under present circumstances. I am not laying down any hard and fast line for the moment, and as to the maintenance of the limit, you may have it a little too high or too low—it is difficult to satisfy everybody—but the thing rather points against making any rise in the limit as large as those who contemplate it covering £60, £80, and £90 a year houses. I do not want to foreclose any discussion on the matter. These are Committee points.
The other matter referred to Clause 5. These points have been fairly pressed. I agree, speaking for myself, that it is always a bad thing to introduce into anything of this kind, if it can be possibly avoided, that which relates at all to any former tribunal. The House will observe that there are only two alternatives. Really this House or the Committee will find itself compelled to make a choice in the end between accepting, for want of anything better, either a hard and fast system which admits of no elasticity, and provides for no special circumstances at all, or, even at the cost of what might conceivably be cumbrous procedure, a system with a certain amount of elasticity, to meet special circumstances. As far as I remember, the main points in the discussion are covered by the general regulations upon which I have just made my 846 observations. I feel assured that if you remember that the Bill is an emergency Bill, and nothing but an emergency Bill, and if we bring to bear upon it as much moderation and good sense as has been brought upon it to-day, I think there is every likelihood of a satisfactory Bill finding its way back to this House.
§ Sir FREDERICK BANBURY
I have listened to some five or six speeches on this Bill, and, as far as I could understand it, there was not a single Member, with the exception of my right hon. Friend who has just sat down, who was altogether in favour of the Bill. The general trend of the speeches was to the effect that the Bill did not go far enough, that the time-limit was too short, and various other things which they thought ought to be modified. There was the speech of my right hon. and learned Friend opposite, whom I am very glad to see back again in his place. I am not quite certain of the real meaning of that speech, but the best part of it was the last few sentences, in which he said that this was the most unsound and uneconomical Bill that could possibly be introduced. I observed that when he asked a question of my right hon. and learned Friend the Lord Advocate as to whether or not leaseholders who had entered into long leases could be taken before the Court and have their rents increased, my right hon. and learned Friend the Lord Advocate said: "You cannot upset a bargain. This is a bargain which leaseholders have entered into." My objection to this Bill and to this class of legislation is that you are altering bargains, and that you are altering bargains merely at the option of one party to the bargain. If you were to say, "We will alter all bargains," that would be more consistent There is a very bad shortage of houses, as has been said. In the street in which I live there is on one side of me a house which has been to let for four years, and on the other side of me one which has been to let for about two years, and there are many other houses in the same street which are still to let. The house which I occupy I was foolish enough to buy some few years ago, and thought I had made a good bargain. Now I cannot sell that house except at a very great loss. Supposing I happen to have in another locality a house which has increased in value. If you mean to say there is any reason in fairness and 847 common honesty that I should not be allowed to take advantage of the increase in the value of the one house merely to set off against the decrease in the value of the other, that will not hold water for a moment. If you do go and bring forward these vote-catching measures instead of being guided by economics, this is the difficulty you find yourself in.
I am sorry the Prime Minister is not here, because I should like to remind him of a speech which he made which is alluded to in the leading article of the "Morning Post" of to-day. He said:No one will invest his money in industry or agriculture if he cannot get an adequate return for it.Do you suppose, does anyone suppose, that if this sort of legislation is carried anyone will be foolish enough to invest their money in houses in the future? One of the reasons for the shortage of houses is the Budget of 1909; there is no doubt about it, and I am not speaking in a party sense. Now you are going to pass legislation of this sort, and what is going to be the effect? The effect will be that no one will invest their money in property of this description. You encourage people to say, "Well, it is true I entered into a bargain and took a house for three years; the three years has expired, but I am not going to give the house up, because I think that with a little pressure I may be able to get legislation introduced under the pretence of emergency and get the rent reduced." When you pass this Bill and get rents at a certain figure, is it not very probable that people will say, "I am not going to pay as much as that now, and want my rent reduced because the cost of living has gone up, or I want to uplift myself and live better than I did before. Therefore I cannot pay the rent?" I think it was my hon. Friend to my left who said he was in favour of a 10 per cent. increase as long as it related to poor people; capitalists were not to enter into the category.
What happened in Coventry in May, 1917? The houses there belong to the Coventry Corporation, and on Sunday night effigies were burned of those tenants who would not join in the strike against the rent. The town clerk received an intimation from the Secretary of the Tenants' Defence League that the tenants at Stoke Heath had agreed to accept the offer to reduce the rent by 1s. per week. This decision was arrived at although it reduced the income from those houses by 848 £1,700, but it was hoped that this amount would be saved in the expenses. Those tenants were not paying an economic rent, but simply the cost of the municipality. The tenants had had an enormous increase in their wages, and yet they refused to pay an economic rent to the municipality. The same thing has been happening at Woolwich and on the Clyde. I am glad the Lord Advocate is here, because it seems to me that everything that is evil comes from the Clyde. Take, for example, the Report of the Committee presided over by Lord Hunter and Professor Scott. That Committee reported that where the feeling of discontent was most pronounced, few increases were discovered to have been made up to 1915 which were not justified. The Report stated that nevertheless strong feeling was shown by the tenants, and in some cases there was organised opposition to any increase in rent whatever. That was the position of those on the Clyde. I do not want to exaggerate, but I am inclined to think those men were earning from £5 to £6 per week, although before the War they were earning only perhaps £2 or £3, and yet these very people, who had had enormous increases in their wages on the score of increased cost of living, refused to allow a man whose sole means of livelihood came from his houses to raise his income through the rent to meet the general increase in the cost of food and repairs.
§ Mr. WATERSON
Let the right hon. Gentleman be quite fair. The increase in the cost of living has gone up 125 per cent., while the increase of wages has not doubled the pre-war standard.
§ Sir F. BANBURY
Why should the men on the Clyde be the sole people to be put in the same position as before the War while nobody else is to be put into any better position at all. I do not mind what the increase was, but suppose the increase in wages was 80 per cent., what increase was there in the rent? None at all. The tenants had means to pay an increase and they refused to do it. I see my hon. and learned Friend the Member for Cambridge (Mr. Rawlinson) opposite, and in the old days we often worked together with advantageous results to myself. Ho has said that he does not want to be truculent on this matter. I hope he is not always going to give way in the face of something which is economically unsound, because if he means that I am afraid I shall have to terminate our partnership. A gentleman 849 has written me a letter on this subject; apparently he has invested his money in house property and he received certain dividends up to 1910, but since that time he has received no dividends. Having made a bad investment he wishes to get out of it by selling his property, but this Bill prevents him from doing so. Is that sort of thing going to conduce to the commercial prosperity of the country?
I do not wish to deny that there may have been hard cases in regard to certain landlords and tenants, but there have been equally hard cases with regard to certain tenants and certain landlords. Whatever happens in this world there always will be hard cases, and they make bad law. We are going to embark upon a fatal course in this case. We are going to allow the breaking of contracts to the advantage of one of the parties to the contract, not because there has been any breach, but because one makes a little more out of it by breaking his contract. What is the foundation of all this? Sanctity of contract; and without that you cannot carry on anything. I cannot give the French phrase, but the English is that the appetite increases with eating, and that seems to be what is happening in this case. I should not be in the least surprised if at the end of this year we find the Lord Advocate coming down, and in that clear and lucid way in which he charms the House, saying that for the future the tenants will pay any rent they like providing it gives 2 per cent. interest upon the original outlay before the War. I know I am speaking as the leader of a forlorn hope, as a party numbering one, and that is myself, but I feel very strongly upon this matter, and I think the House is in danger of doing a wrong thing from good motives. I do not doubt that there are cases where a certain amount of hardship will ensue if some measure of this sort is not passed. But you cannot help that. We have all suffered during the War, and I am afraid we shall all have to suffer in the future. We cannot help these cases, but, believe me, it is far better for the commercial prosperity of the country that we should allow these hard cases than throw political economy to the wind, and for the sake of securing a few votes pass a measure of this sort.
§ Sir ALFRED YEO
I desire to say a few words on this matter. I am not sure whether the Bill covers the question of the 10 per cent. which the landlord is still to 850 be allowed to ask for in regard to the increase of the rates. I do not think that has been put before the House. [An Hon. Member: "Yes it has."] Then I did not hear it. I hope that question will be looked into. Under the old Bill the landlord can ask the tenant to bear part of the rates if there is an increase, and it is understood, if the rates decrease, the landlord will also take off that portion. If the House passes this Bill and gives to the landlord the right to increase his rent by 10 per cent. is he still going to have the same right to put the increase of the rates on to the rent in addition? This is the point which will cause a good deal of heartburning and trouble in the future. The other side of the question is one in which the public are taking a great deal of interest. Many people have expressed their willingness to pay the extra 10 per cent. if the landlord will only do the repairs. We are receiving letters in which the landlord says that owing to the excessive cost of materials, he cannot carry out the repairs in his houses. Bless my heart, for twenty years they have never put a bit of paper on some of the walls, and they have never put a whitewash brush on some of the houses. If the landlords will carry out what they profess to be willing to carry out and do the repairs inside the houses in order to make them sanitary and fit to live in, then there will be very few people who will object to paying the extra 10 per cent. There is one other question which I want to ask the right hon. Gentleman. If this Bill becomes law, does it in any way protect tenants who, in January, received notice to get out of their houses by 25th March or 24th June? There are thousands to-day who have hanging over their heads eviction notices, and some protection will have to be given in that direction. I ask the right hon. Gentleman to consider that point. The Lord Advocate said that landlords were compelled to give their tenants four clear weeks' notice before they could put on any increase. He is aware that it has been decided in the case of the London County Council versus Brunton that was not necessary. If this House passes a Bill and it is distinctly understood that four clear weeks' notice is to be given to a tenant, surely it cannot be upset and a Court of Law say that it is not necessary to give the notice? We shall have an opportunity in Committee possibly to put forward certain suggestions which we hope may strengthen this Bill and which 851 will help to make it more acceptable to all the parties concerned, but I want to thank the Government for so promptly bringing it in, though it is a Bill mostly on the side of the landlords, and very little for the tenants.
§ Major LLOYD-GREAME
I feel sure that the right hon. Baronet (Sir F. Banbury) is the only Member who has received this Bill with feelings of sorrow. I am exceedingly grateful to the Government for having introduced it so promptly. The evil is considerable. It is widespread in area, and it is also widespread in the classes of people who are affected. I am going to ask the Government, recognising the evil and the difficulty as they do, to make the Bill complete by going a little further in two respects. I am not concerned with the economic principles which were laid down by the right hon. Member for Spen Valley (Sir T. Whittaker). Those are principles which in normal times we should all accept. I am less concerned to criticise his own admirable criticisms of the recent electioneering tactics of his own party. These are absolutely abnormal times, and this is an emergency Bill to continue during an emergency, and those economic considerations do not really apply. There are two suggestions that I want to make for the favourable consideration of the Government, and I hope that they will consider them before the Bill goes into Committee, because I cannot conceal from myself that whatever attitude the Government take up that, of course, is the form in which the Bill will go through. First of all, I would ask them to make the Bill reasonably retrospective. They provide in Section 4 that the test date when you are going to see whether the rent has been raised is to be 4th March, 1919. In not a few cases it has already happened in this raising of rent campaign that some of the earlier sufferers have succumbed and have agreed to an increase of rent. They have not had as much faith as some of us have had in the intentions of the Government, and they have made peace with their adversaries and have already agreed to pay an increased rent and an excessively increased rent. It would be most unfortunate if the very men who first gave rise to the agitation which has led to the introduction of this Bill were not to have the benefit of it, and I would suggest that in place of 4th March, 1919, the 852 Government should themselves move an Amendment in Committee substituting 25th December, 1918. That is not only essential to protect those people who were first caught in this matter, but if you do not do it you will actually put a premium upon the profiteers who got in first, and that would be an unreasonable thing to do.
I know it is going to be more difficult to press the Government upon another point, but I do suggest most emphatically that the rateable value of £55 is too low. The present proposal is not going to touch a very large number of professional and business men of the middle classes who are very fully entitled to consideration. Those people are being exploited at the present time in three ways. The biggest exploitation at the present time is being made in cases where the rent or rateable value is between £50 and £100. Nobody knowing the situation in some of the London divisions—I believe it is the same in certain provincial centres—will deny that. Those people are being penalised in one of three ways, and sometimes in a combination of those ways. In the first place, they receive a direct notice that their rent is going to be substantially increased. They are also told that if they wish to renew they must pay a premium to renew, which the original Act covers within the limit, or, as in a case which has been brought to my notice, they are told—this is another form of premium—that if they wish to continue they must pay a reasonable increase in rent and also invest a large sum of money in the stock of the company or society which happens to be the owner of the house. These people are just the type of people who have got the most claim. Their claims are not put forward very frequently or loudly. The war record of these middle-class men and women is as good as the war record of any class in the community. They have made quite as big sacrifices as anyone, and they are people who have had far fewer compensations. I know of countless cases to-day of professional and business men living in houses rented at something between £50 and £100 who threw over everything and went to the War, and have probably been away four years, and whose wives have just been able to keep on in the house. There are cases of women who are just managing to keep on. The right hon. Gentleman the President of the Board of 853 Education, in introducing the Bill, said that during this year, when people were getting back, that was a time when they were entitled to particular consideration. I would ask him to give that consideration to this type of professional and business man who is now coming back after services in the War, and who is, as much as any man, entitled to the reasonable consideration which the Government are proposing to give to other classes of the community. I venture to make this appeal with the more confidence because I am not asking the Treasury for a penny. I realise that if this was asking for a Grant from the Treasury the thing would be difficult. I notice that on Tuesday the Leader of the House, when he was under a rather heavy fire of supplementary questions, said that it would be wrong to raise this above the £55 limit, because you did not want to take building out of the ordinary channel. I submit that that is a fallacious argument, because we are not asking that these men and women of the middle classes should not pay an economic rent. What we are asking is that during this period of transition, when there is an artificial shortage, that they should not be compelled to pay an excessive rent, nor excessively exploited. It is perfectly reasonable to add to the rent the extra cost the landlord is put to in repairs, and, if necessary, to safeguard him in that way. Whether it ought to go further than it has done in the Bill I would not say—I think that any such Amendment would be perfectly reasonable. But I do ask that they should be protected during the transitional period, and I do not believe that I am violating a single economic principle in asking that.
Two general principles have been laid down by the Prime Minister and other Ministers which should govern the attitude of the Government and of the State towards such cases as this. The first is that the State does not interfere with private enterprise unless the general interest requires it, unless private interests are running counter to the general interest of the community or to the public conscience. The second principle is that when the State does step in it must do so in a way which is fair to all those concerned, and not only fair to one section or one class of the community. I do ask the right hon. Gentleman who is in charge of the Bill to give effect in Committee to those two 854 principles by extending the provisions of the Bill in the two directions I have indicated.
§ Colonel YATE
I have only one point, and that is the question of the compounded houses, raised by the hon. Member for Central Edinburgh and other speakers. Provision is made in this Bill for the restatement of rents to be provided by the landlord, and I hope that the right hon. Gentleman will consider the question of providing that the landlord shall always give the tenant a statement of the rates due on the house he is occupying.
§ Mr. MOLES
I rise not so much to offer hostile criticism to this Bill as for the purpose of suggesting that its scope is not sufficiently large. It does not give a deserving class of tenantry all the protection to which they are entitled. We have listened to arguments put forward in the name of social economics upon the behalf of the owner. We have been reminded that there are many property owners whose sole income is from property, and that since the purchasing power of money has substantially fallen, that since every other class of the community has, in the farm of wages or salaries, received increases, the property owner is entitled to receive increased emoluments from his property. On a surface examination that looks sound. We are reminded also that the interests of mortgagees have to be considered. The mortgages will certainly take care of that. We are reminded further that the cost of repairs and renewals has substantially increased, and that it is not fair to the property owner that a rent fixed, when the cost of repairs was substantially lower, should not now be increased to meet the increased cost of repairs. If those repairs were as systematically carried out as the rent was systematically paid, there might not be much objection to that on the mere score of economics. But perhaps we had better get away a little from text-book theories and look at a few hard facts. Suppose for a moment that, instead of the purchasing price of a sovereign having fallen by 50 per cent., it had inflated to the extent of 20 per cent., is there any man in this House or outside who would believe for one moment that any Minister or Government would have brought forward a Bill to reduce the rent to a corresponding degree?
§ Mr. MOLES
The right hon. Gentleman the Member for Spen Valley put the whole House in a state of painful emotion by two typical cases. He told us of the case of the venerable and silver-haired butler, grown old and feeble in the service of a tottering aristocracy, and when he was no longer able to continue his duties his benevolent patron sent for him, and, gushing benevolence and old port at every pore, threw himself on his neck and, with a fervent blessing, gave him a £10-house for life; and the butler proceeds to let it for £70, and breaks his patron's heart. If there are to be found within the four corners of this Island butlers who are sufficiently stony-hearted to carry on a performance of that kind, and if the right hon. Gentleman in his virtuous indignation is prepared to champion such butlers, I would not raise a hand to save one of them. Then there was the soldier returning, covered with meritorious stars, his pockets bulging with gold which he had saved from his shilling a day, and the first landlord that he meets he takes by the throat and says, "Give me a house!" The landlord, moved by a patriotic spirit, regardless of cost, proceeds to eject some civilian and instal the soldier, and the housing difficulty and shortage is solved by flinging one man out to put another man in. The housing problem is not going to be solved in that way. The difficulty I have in looking frankly at this Bill is that it proposes to extend so much protection as is already given to more than 6,000,000 tenants. Suppose this Bill be not carried into law, the protection which those 6,000,000 presently enjoy will be gone upon the expiry of the Act. While I do not like certain of the provisions of this Bill, I like a great deal less the prospect that will then confront these 6,000,000 tenants. If I cannot have all the measure of good I would desire, I would at least take so much as I can get. I welcome the fact that in this Bill there is offered the further protection to a very deserving class of the community who will hitherto have it. The right hon. Gentleman who moved the Second Reading told us that that covers an additional 450,000 people.
May I tell the House a typical example—not the example of the hypothetical butler or the imaginary soldier. It is a case I know to be typical and the facts of it are within my own knowledge. It is the case of a tenant who, if this Bill becomes law, 856 will be covered by it. The property was put up a year ago for sale and each of the individual occupiers was offered the option of purchase. All that the indulgent landlord proposed to extract from any of them was 100 per cent. of profit on the original construction of the property. Some of them were foolish enough to buy. Others of them, believing that an economic rent or an economic purchase price was such a price as a prudent or solvent tenant or purchaser would pay, refused the offer. Four months ago there came along another enterprising gentleman, who did a deal with the original owner. Every single tenant was forthwith put upon notice. The new tenancy was created on a month's notice plus a month's notice to quit and the price which had originally been a mere 100 per cent. profit went up substantially more. One of the tenants pressed the question with his new landlord, pointing out that the price asked was impossible and preposterous. He received the answer:Very well, if you do not like it, I have got to get my money out of you or somebody else.In order that the full force of the law might be liberated against this man, he was informed that the ordinary machinery of the County Courts was not swift enough to get him out, that the High Court would be invoked, and that he would be got out swiftly and effectively at increased cost. Like a prudent man, he accepted the inevitable, broke up his home, sent his furniture to the market, dispersed his children to his friends and stood homeless in the city in which he was born, although prepared to pay his rent. Any measure which would prevent other hapless families from oppression of that sort is welcome to me. I only regret that the measure does not go further and bring within its scope those who are beyond £55 rental, and I regret that it is not retrospective in character. I would suggest that instead of the 4th March being the date fixed it ought to have been the 1st January. When the time comes to discuss this Bill in Committee I hope to make certain suggestions by way of Amendment, and I hope the right hon. Gentleman in charge of the Bill will receive them, knowing as he will, for I shall demonstrate it to him, that it will affect a large class who deserve consideration at the hands of the Government just as much as the class that will be protected.
§ Mr. FISHER
As the afternoon is far gone, I hope the House may see fit to grant us the Second Reading now.
§ Question put, and agreed to.
§ Bill accordingly read a second time, and committed to a Committee of the Whole House for Monday next.—[Mr. pratt.]