§ (1) Where a public utility society or a housing trust as defined by this Act has submitted to the Local Government Board a scheme for the provision of houses for the working classes and the scheme is approved by the Board, then, if the scheme is carried out within such period as may be specified by the Board, with the consent of the Treasury, the Board may pay or undertake to pay out of moneys provided by Parliament such contributions towards the cost of carrying out the scheme as may be determined to be pay able under regulations made by the Board, with the approval of the Treasury, subject to such conditions (including conditions as to audit of accounts by district auditors) as may be pre scribed by those regulations.
§ (2) Such regulations shall provide that the amount of any annual payment to be made under this Section shall be equivalent to thirty per centum of the annual loan charges which would have been payable in accordance with the regulations on the total capital expenditure incurred by the public utility society or housing trust for the purposes of the scheme if the amount of that expenditure had been borowed from the Public Works Loan Commissioners.1115
§ Provided that the regulations shall include provision for the reduction of the amount of the annual payment in the event of the Local Government Board being satisfied that the capital expenditure incurred by the public utility society or housing trust has been excessive.
§ Every regulation so made shall be laid before both Houses of Parliament as soon as may be after it is made, and if an address is presented by either House within twenty-one days from the date on which that House has sat next after any such regulation is laid before it praying that the regulation may be annulled. His Majesty in Council may annul the regulation, but without prejudice to the validity of anything previously done there under.
§ Major LLOYD-GREAME
I beg to move, to leave out Clause 19.
My object in seeking to have this Clause deleted is not in any sense hostile, but quite the contrary. I put down the Amendment in that form because I thought the Amendment to the Clause standing in the name of myself and my hon. Friend the Member for the Ladywood Division (Mr. N. Chamberlain) would probably be out of order on Report. I want to draw from the right hon. Gentleman a statement on the position and, if possible, an undertaking that he will reconsider the terms which have been inserted in the Bill. My right hon. Friend will remember that the negotiations on the subject of public utility societies go back a long way before his present tenure of office to that of the predecessor of his predecessor. On the 4th October, 1918, a deputation representing employers and a number of trade unions waited on Lord Downham, the then President of the Local Government Board, and he stated that the terms given to the public utility societies in the Bill when introduced would not be less favourable than those given to the local authorities. At that time the basis under discussion was a contribution of 75 per cent., and the penny rate was not discussed. Some days later, on the 8th of October, he made a statement, which he had written out beforehand, and submitted to the deputation which he had seen. He first referred to the Grant to the local authority, and then he proceeded to refer to the public utility societies, and said:The deficit in their case will be calculated in the balance sheet in exactly the same way as the deficit of the local authority, subject to two exceptions, namely, that the period for the loan will be taken at an equated term of fifty years instead of varying terms and that the Government will advance 75 per cent. of the cost of the scheme, leaving 25 percent. of the cost to 1116 be raised by shares or otherwise. If the estimated deficit in the case of the public utility societies is in fact realised it will mean—as far as we can calculate from figures which can only be hypothetical—that with interest payable at 5½ percent., the public utility societies should see something like 3 percent., possibly more, on the 25 percent. of the capital which they have to find.7.0 P.M
He went on to say that he thought it was reasonable to expect them to work on these terms, as they would not be looking for a commercial return on their money. I have made. some calculations on the scheme, taking the Grant which the right hon. Gentleman proposes to give to the public utility societies, which is 30 percent. of the loan charges, assuming that the whole of the cost in worked out on the loan charge basis. I have taken the cost of the land and the house at £600, which I do not think the right hon. Gentleman will regard as excessive. I very much doubt if, in many places, we should be able to do it at that price. I have taken a rent of 10s. It would be interesting to know from the right hon. Gentleman whether he thinks that is too low a rent for a house for the working classes, because one would like to get from the President some indication of what ho thinks is a reasonable rent which should be paid by the working classes in this kind of industrial area. Deducting repairs, £4 6s. 8d., rates at 12s. in the £ on the rateable value of £15, which is actually the rate in the Birmingham area; water rate, £l; management and insurance, £1; we get net receipts for that house of £10 13s. 4d. a year. The Government Grant of 30 percent. would be £10 12s. 6d., and that would give a total) net receipt of £21 5s. l0d. On the amount borrowed from the Government, which would be 75 percent., or £450, the actual loan charges would be £26 11s. 4d. The result would be that not only would' nothing be earned on the ordinary 25 percent. loan stock, but the society would; be £5 5s. 6d. out of pocket on each house,, and have to find that amount per house to pay back to the Government in respect of loan charges. Taking the same figures if you raise the Grant to 40 percent., there would still be a deficit of £l 14s. 7d., and if you put it at 50 percent., which is the figure I have inserted in a later Amendment, instead of 30 percent., you would then only get on each house for the 25 percent. loan, a surplus over of £l 16s. 3d. £l 16s. 3d. on £150 is nothing like the 3 percent. which Lord Downham thought 1117 would be a reasonable thing for these charges. There is a typical case of a £600 house with a 10s rent.
Now, either the right hon. Gentleman wants to work through the public utility societies or he does not. Apart altogether from the pledge which his predecessor gave that the terms would be equal, or not less favourable, I think he would be well advised to make use of every source of supply in getting houses built, because we want to mobilise and use every source of building that we possibly can, and get them to work successfully. There are many utility societies anxious to get to work, and they do not look for a commercial return. But if you do not give equivalent terms to the societies they will be in a position to say, "The local authorities are getting better terms, and are able to let their houses at cheaper rates than we can afford to let them at. Therefore, it will be best for us to hand over our land to the local authorities, and to let them build." Unless the terms are the same, the local authorities will be able to let these houses more cheaply than the public utility societies, and the latter will not be able to get on with the work.
I hope the right hon. Gentleman will face the position. A good deal of talk has gone on, and we have been told that great opportunities will be given to public utility societies. I understand that in exalted circles that rather generous estimate is called "painting with a broad brush," and in other circles it is sometimes known by a somewhat similar metaphor, as "eye-wash." But we do want to know where we stand with the right hon. Gentleman in this matter. He is always a very attractive suitor when he comes, and I am sure that the public utility societies wish to take advantage of his proposals, provided they are satisfied that his intentions are strictly honourable. I think, as in some other cases, in assessing the character of the right hon. Gentleman and his intentions, they will look to see what are the settlements he proposes. I hope the right hon. Gentleman will see his way to go, at any rate, a little further than he has up to the present.
§ Mr. N. CHAMBERLAIN
I beg to second the Amendment.
I do so for the same reason as the hon. and gallant Member who moved the Amendment. Upon the terms of this Clause is going to depend the question 1118 whether houses are going to be built by public utility societies or not. In pleading for a revision of the terms I am not pleading for better terms for public utility societies on their account, but I am pleading for more houses. There is this great difference between the terms offered to local authorities and to public utility societies. In the, case of the local authority liability is limited, but in the case of the public utility society it is unlimited. I listened yesterday afternoon to a very interesting speech by the hon. Member for Brightside (Sir T Walters), in which he laid down certain principles for the guidance of the Local Government Board in attempting to fix what should be charged for new houses. He said you must first of all make up your minds that the loan stock or the share capital in a public utility society is not, for a considerable time, going to earn any interest whatsoever: He then went on to say that you must write off one-third of the capital cost as a wasting asset. He criticised the rate of interest which the Government are going to ask for their 75 percent. loan, and he thought that until it came down to 4 percent. it could not be expected to arrive at anything like economic conditions. In addition to that, he said you ought to get rid of the idea of charging a sinking fund. He said that if you are going to put upon a tenant, in addition to the rent, the extra charge of paying the sinking fund upon his house, then at the end of fifty years, when the loan is paid off, the tenant will have paid three-quarters of the cost of his house and land, and he will not hold a stick of the property. I must say that that point had occurred to me also, and it seems to me to be a just one. I can imagine what will happen the moment this becomes clear to the tenant. He will say that it is not reasonable to ask him to pay the cost of the house and land in addition to his rent.
I do not know whether the right hon. Gentleman has followed what has been happening in Coventry in recent months, but from time to time the tenants of the municipal houses there hold a meeting, and they consider the rents they are asked to pay for their houses by the municipality. If they consider that these rents are unreasonable—and they generally do come to that conclusion—then they put up a notice in the window to the rent collectors: "Don't call here. Rent strike on." I do not know what the local authorities 1119 think of their proceedings. At any rate, they have the rates behind them. But what is going to happen to public utility societies if they are faced with a proclamation of that kind. If they do not get their rents, and if they are made to go for months at a time, as has happened in Coventry, without any rent at all for their houses, what will happen to their finances at the end of the year? If the suggestion of the hon. Member for Brightside were adopted, you could get rid of this charge or sinking fund so far as the tenant is concerned. Still, somebody has got to find the sinking fund, and who is going to find it? Certainly the public utility society cannot, and if you are going to go back to the employers, who are expected to find some considerable portion of the capital, and to ask them to find the sinking fund, then you will be bringing about exactly the condition of things which it is generally agreed you do not desire to have, namely, that the employer will be the landlord of his own worker. My hon. and gallant Friend (Major Lloyd-Greame) has given an illustration of what would happen under the terms as they are at present in the Bill. He started with the assumption that the cost of the house and the land was going to be £600. I have this advantage over my hon. and gallant Friend, that I have got actual figures, because I have had before mo the case of a large firm who were anxious that houses should be provided for the people employed in their factories and who are or were prepared to form a public utility society upon the lines laid down in the pamphlet issued by the Local Government Board. They have actually bought the land; they have had plans prepared and quantities taken out, and they have asked for, and received, tenders from eight of the most eminent, reputable, and experienced builders in the neighbourhood. They have had various types of houses on this estate, but for the house which they propose to put up in the largest quantity— containing three bedrooms, a parlour, a living room, and a scullery downstairs, with a bathroom, and such conveniences as, I think, we all desire to see in the artisan's dwelling of the future—the lowest tender which they received, and which came from the man who has put up more workmen's dwellings in that district than anyone else, was £896 per house. If you add to that the cost of the land—and the cost of the land in this case, being 1120 apportioned out between the various houses, comes to £58 a year—add that to the £896 and you get a total of £954, which is the total you have to provide for as cost of the land and the house, as against my hon. and gallant Friend's total of £600. In forming a public utility society this firm, naturally, began to make calculations as to how the finances of the society would work out, and making out the necessary calculations, allowing nothing whatever for interest upon the loan stock, which the firm provided, it was found that, including rates, it would be necessary, in order merely to cover the charges, to ask a rent of 16s. l½d. per week for each house. What is going to happen in a case of that kind? Does anybody suppose that the rent of these houses is going to be governed by their cost? It is going to be governed by nothing of the kind. It is inevitably going to be governed by the rent charged by the local authority for a similar class of house in the same district. Perhaps my right hon. Friend may. think that the figures I have given are excessive, and that the local authority may be able to get houses built very much cheaper. But as a matter of fact, I know that that local authority has also got a scheme, and has also had plans prepared and tenders received, and that the cost of a somewhat similar but, perhaps, not quite so good a house as the one I have spoken of has been over £800. It does not very much matter to the local authority what rent they get for these houses, because their liability is limited. They have to spend a 1d. rate, and as soon as that is done any further loss will fall entirely on the State. They are only subject to such pressure as may be put upon them by my right hon. Friend to get rents as soon as possible to an economic level. I take it, then, that they will charge as high a rent as my right hon. Friend thinks it is safe to ask, and, subject to the procedure that I have already prescribed in the case of Coventry, no doubt that is what they are going to do. But I am quite sure that that rent will be less than 16s.l½d. per week. If so, it is quite impossible for the public utility society to charge any more. What, then, is going to happen to the society? Not only would there not be sufficient income to pay the interest on the loan stock or the share capital, but they will not be able to make both ends meet. Where is the deficit to come from? Unless those who are thinking of forming those societies can see with a fairly reasonable amount of certainty 1121 that they are going to make both ends meet, they cannot run the risk. The result in the particular case I have mentioned is that the whole scheme is held up in order to see what is going to happen here. I do most seriously warn my right hon. Friend that unless these terms are drastically amended we will not get any considerable number of houses built by public utility societies.
To my mind the whole system is wrong. The whole theory upon which public utility societies are invited to build houses is wrong. If the 50 percent. contribution which formed the subject of an Amendment standing in my own name, but which was out of order—if it had been adopted I do not think it would have been really a satisfactory plan, although I admit it would have been very much better than the 30 percent. now in the Bill. I do not know whether this is the occasion for putting it forward, but, to my mind, there is only one satisfactory plan of dealing with this question, and that is to bring in a tenant who is willing to purchase his own house. In order to do that and on a fairly large scale, there are several things necessary. First of all, you have to make up your mind that you cannot expect a tenant to buy at present-day cost. That principle has already been recognised, even in the course of our discussions here, because, as was pointed out by the hon. Member for Brightside, the terms of the Government are really equivalent to a present of one-third of the capital cost. You have, therefore, to offer the house at a price below its cost, whether it be one-third or some larger sum. The second thing necessary is to offer easy terms of payment. You have to allow the intending purchaser to put down only a small proportion of the ultimate capital he has to find. You have to lend him the rest and allow him to pay it off by instalments, and if one may trust the practically universal experience of this country, the capital will be paid off in far less time than is laid down in the conditions. Then there is another thing necessary, and that is that when a man has purchased his house, he should not be allowed to sell it again to any comer. His sale must be subject to the approval of the managing committee of a public utility society. Lastly, it is necessary to give some security to a, working-man purchaser that he will not be prejudiced by having locked up so large an amount of capital. He may want to move from the district. He may 1122 even die, and whoever succeeds to his property may find it inconvenient to live in so large a house. It is therefore necessary that there should be some provision under which a purchaser of his own house may be able at any time to sell it back again to the original owner—the public utility society or local authority—at a valuation. If that were done I think you might see a very considerable extension of the system of tenants owning their own houses, which has prevailed already in some towns in the North, and it would get the right hon. Gentleman out of many of the difficulties which are ahead of him even if he succeeds in getting the House to agree to his Bill. There is, for instance, the very difficult question as to who is to have the houses which are to be built. You will have a number of houses, the rents of which are subsidised at the expense of the rest of the community. Everyone cannot have them. Who is to decide who is to have this favour? Here the simple test which could be applied readily is that whoever wanted to purchase his house could have the first chance. It would get rid of any question of rent strikes, it would result in enormous reduction in repairs to houses—an economy which is desirable at any time, and particularly desirable now, when all of us must realise that we are a poor and not a rich country, and that we have to save and not to waste anything.
I need not dwell upon the advantage to the community at large of having large numbers of the working classes owning their own dwellings and becoming thereby automatically advocates of law and order and against anything which upsets the balance and equilibrium of the community. I hope the right hon. Gentleman will re-commit the Bill in respect of this particular Clause, in order that he may be able to offer more generous terms than those which have come from the Committee. I am quite certain that as the Clause stands now it will not give the right hon. Gentleman the result he desires. I confess I am not altogether sanguine, even when the terms are improved, that it will do all that we hope for from it. But I do think it will put the matter on a new footing, and that we should have a much better chance of obtaining a supply of houses from this source.
§ Mr. A. WILLIAMS
I have an Amendment on the Paper somewhat similar to that we are now discussing, and I had better speak now instead of waiting till 1123 later on, when I may not have the opportunity. I entirely agree with what has been said that the terms offered to public utility societies in this Bill are not such as will enable them as a rule to build. You may, occasionally, get an old society which has a lot of houses, and it may be able to get higher rent for those houses after the War, and out of the funds so created it may be able to pay the rents of new houses it builds. In exceptional cases that would be the subsidising of new houses out of old houses. But if you take the new houses on their own merits and assume a public utility society which has no houses to begin with, it cannot possibly, in the districts with which I am acquainted, put up houses and pay its way. It does not want to make a profit, it does not want to make more than a most moderate interest on the money, the mere wages of capital. In these societies the members of the committees of management usually give their services gratuitously. In spite of all that it will not be able to pay its way on the terms offered in the Bill. I know of one case in the North of London. I inquired there and was told that the terms offered to the local authority were such that the local authority could let houses at from 2s. to 3s. cheaper than the public utility society could let them. That calculation was made by a man who has an unsurpassed experience in the working of these societies. In the South, in a little town near which I live, we have a public utility society of which I happen to be president. We went the other day into the question of whether we could build, and we came to the conclusion that unless we could get 13s. 6d. or 14s. a week rent for a workman's cottage with three bedrooms and a small parlour, we could not possibly pay our way. Some people will say that it is a good thing that public utility societies should not be able to pay. They do not want such societies to do anything in this matter. I think that is a great mistake, because the societies go quicker than the local authorities and they set a standard which educates the public, and when the society has built the public begin to wake up and to say, "Why should not this be done on a larger scale?"
Building by societies does not in the least interfere with the work of the local authorities. On the contrary, it sets the standard and example up to which the authorities have to live. In one of the places with which I am most intimately 1124 acquainted, there was a great dearth of houses, the local authority had not the slightest intention of building, but made every possible objection. The little society which we started put up forty cottages, with the result that the whole place was buzzing with a demand that the local authority should do something. At the last election a local authority was elected pledged to do something, and they have done something—they have written to us to ask us what we will do. Possibly they will by-and-by go on to do more than that. I venture to say that if the terms offered to public utility societies were adequate, you would get two very great advantages, and get them at once. When I speak of adequate terms, I think the very first condition is that the free grant, in whatever form it is given, should represent the real difference between the present cost of building and the probable post-war value of the cottages. It cannot be said that the 30 percent., which is now given as a remission on the yearly payments really does represent the difference between the present cost of building and the probable post-war value of the buildings. Therefore, you begin by saying to a public utility society, "We want you to build, but we insist that you should make a heavy loss on the transaction. "I do not consider that those are adequate terms, and it seems to me that, if those are to be the best terms put forward, it is quite useless to put in a Clause asking public utility societies to build. Perhaps I should not say quite useless, because I admit that there may be exceptional cases in which something can be done, but in most cases it is useless.
One great advantage that you get by offering terms which will enable public utility societies to go ahead is that in many places building will be started at once. You may be able to compel local authorities, but you cannot compel them to act at once or to act quickly, and there are many places where the local authority certainly will not act quickly. If you offer adequate terms to a public utility society in those cases, you will very often have a few of the most public-spirited inhabitants coming forward and showing an example of what can be done in the way of providing houses quickly. That is one great advantage, and it also will give employment quickly to those men who need employment. That is another great advantage. I will give another, and I hope equally practical, ground for wishing 1125 that the Government had made their terms, and will even now make their terms, to public utility societies such as really will enable them to build. That is, that if you give. adequate terms to the public utility society, it may become a genuine working class organisation. Hitherto, the Government has lent so small a part of the cost of building that a large sum of money has had to be found from other sources. Before the War, in the case of a fairly good artisan's cottage, costing then, say, £300, the Government were prepared to lend £200. That meant that someone had to find £100 A society of working men desiring to build houses, one for each member, could not possibly find £100 per member for putting up the houses, and, therefore, they had to rely upon middleclass capital. The same thing will happen with the present offer of the Government. The Government are offering, it is true 75 percent. of the cost of putting up houses at the present time. The cost of putting up a very ordinary workman's cottage at the present time cannot be less than about £600 or £630.Therefore the Government are prepared to lend about £450 or £460 upon it. Where is the remainder coming from? The working man cannot find £150 for building, and, therefore, these public utility societies, until the grant is made considerably larger, must necessarily rely upon middleclass people for a large share of their capital If the Government would lend up to 90 percent. of the value of the house, I venture to say that these public utility societies might become genuine working class organisations. It would not he necessary for them to rely upon middleclass capita], because in the case of a £600 house, if 90 percent. or £540, were advanced by the Government, the society would only have to find £60 for each house, which is a much more manageable proposition. I believe that in that way you would have a large number of really working-class societies starting in various parts of the country and putting up houses on a collective ownership basis. Therefore I very much hope that the Government will see their way to increase the loan from 75 percent. to 90 percent. The margin of 10 percent. is, I am sure, ample. Cottage property, if properly looked after, is the most admirable security for money, and I do not believe the Government would suffer the least risk by advancing up to 90 percent. We have to remember that the 90 percent. only lasts as long as the 1126 cottage is absolutely new. Every year there is so much paid off by way of redemption, so that as the cottage becomes older the margin of security to the Government becomes greater and greater.
For these reasons I greatly regret that the Government have put in such very poor terms to public utility societies, and I hope they will reconsider the matter in order that these societies may be encouraged and enabled to become purely working-class organisations, and that they may, moreover, at the present crisis, be encouraged to begin building at once, and supply the houses which are needed, and give that employment which is so urgently needed at this moment. I am certain that, if the public utility societies are encouraged, they will get to work much more quickly than the. local authorities can, and infinitely more quickly than those local authorities whom you are obliged to compel.
§ Mr. CHARLES EDWARDS
My experience is altogether opposed to what I have just listened to. I do not believe that, if this Clause is retained in the Bill, there will be built a single house more than if it is left out altogether. I do not agree that houses will be built any more quickly by these public utility societies than by public authorities. In fact, I believe that the opposite will be the case. Public authorities have been asked, for a considerable time now, to prepare their plans, get their sites ready, and so on, and I know that much of this work has been done, and more than one local authority that I am well acquainted with has already everything in hand and is simply waiting for the money to start building. I am opposed to handing over public money to private persons. I am opposed to this Clause on principle. I have heard some rather queer things here to-day. Hon. Members oppose a certain thing, and yet by their speeches they support it. I think it is a pernicious principle to hand over public money to private individuals. I have had some experience of housing by public authorities. I was a member of a small urban authority for a good many years, which put up nearly 300 houses, and they have now plans for some few hundreds more. Those houses were let at cheaper rents than other houses in the district—I suppose because a public authority does not put up houses to make profits out of them, but for people to 1127 live in. Another thing that popularised those houses, perhaps even more than the question of rent, was the security of tenure to the people who lived in them. That is a very important point, and it is not guaranteed at all by the public utility societies.
§ Mr. A. WILLIAMS
It is guaranteed by the regulations of the Local Government Board recently put forward.
§ Mr. EDWARDS
I have not seen those regulations, but anyway, I am putting the public utility societies in the same place as the clubs that we have known so well, and so many of which have existed in different parts of the country. Working men and others would form themselves into clubs to build houses. They did not always live in the (houses themselves, but rented them to other people. Sometimes one of their children got married, and wanted a house, or some friend came along, and the result was that houses of that sort were never so well looked after. People never took the same pride in those houses as in the houses built by public authorities. People living in houses built by the public authority I have spoken of, would decorate those houses and treat them as if they were their own, knowing that as long as they paid the rent, and looked after them, they were safe. Another point against the public utility society, to my mind, is this. A company of employers, if you like, could turn themselves into a society. It might, for instance, be a colliery company, and I know something about colliery-owned houses. Sometimes a man disagrees with the officials and leaves his employment, and, although there might be employment within a reasonable distance, he has to clear out of his house. My opinion is that the proper people to build houses are the local authorities, and I think that this Clause will give some of the backward authorities an excuse for getting out of building, and for not taking up their responsibilities in regard to providing houses for the people. They will try and encourage here and there the formation of public utility societies, in order to save themselves the trouble of building. I do not know the regulations that my hon. Friend speaks of, but I do know the security of tenure that a person has who lives in a house that has been built by a local authority.
§ Major LLOYD-GREAME
If the hon. Member will read the Report, he will see 1128 the precise terms under which public utility societies assisted by the Local Government Board will work, and that security of tenure is a vital consideration throughout.
§ Mr. EDWARDS
I have not read that, and was not aware of it, but I hope there is something in it, because I know the position of people when they settle down in their houses, knowing that they will be able to enjoy security of tenure. It makes better citizens, and that, I think, is what we are all after. Therefore, I am still in favour of the local authorities doing the work. The public has some control over them, whereas you have no control, or very little, over a public utility society. The Labour party as a whole stands against this, and during the time of my election, only a short time ago, this was one of the points that was talked about at most of the meetings. Cases have been experienced of people being, for different reasons, turned out of houses owned by clubs, and I have mentioned the case of colliery-owned houses. My instructions, and I agree with them entirely, were to favour council or municipal housing as against privately-built houses, whether built by public utility societies or anybody else
§ Mr. J. A. PARKINSON
l am very much surprised to hear hon. and right hon. Gentlemen deplore the inability of the public utility societies to make profits, for that is really what it amounts to. If that is the case, I think it is the best argument that could be brought forward on behalf of municipal housing. I do not see why the Government should help public utility societies any more than anybody else. I think everybody in the House will agree that houses municipally owned will become a national asset, 'and will be there for all time. We are on the verge of great steps towards nationalisation. Why should we not take steps now to make it possible, and even easy, for the local authorities to build houses'! Some of my hon. Friends state that public utility societies would build much more quickly than local authorities.
§ Mr. PARKINSON
We only have a certain amount of material and a certain amount of labour at the present moment. Why should not the local authorities get on with their plans, and have them endorsed by the Local Government Board, 1129 and use up the whole of the material and labour in their particular districts, in order to get on with building schemes? I take it that private builders would tender according to the plans and specifications of the local authorities, and they would have the whole of the labour available and of the material at their disposal. If all the material and labour available can be used in that way by the local authorities I think they ought to be the persons to build the houses. I do not see why we need trouble so much about the public utility people, because, after all, they are not out to house the people, but to make profits on the capital invested. An hon. Member says "Nonsense," but I say if the local authority can build houses, and let them at a cheaper rate than the public utility society. then the local authority ought to build the houses to house working people as cheaply as possible. The local authority could also sell the property if necessary to the tenant, and give him the opportunity of purchasing his house. I do think, whatever step we take, we should take a step towards making the municipalisation of houses a national question. We ought not to put any special privileges in the way of public utility societies, but I think if we can put any special privileges in the way of local authorities we ought to do so. The local authorities are the persons who ought to house the people. The tenants of such houses are free to remain, in them as long as they behave themselves. That cannot be said of privately-owned houses or those owned by any society. They will use their authority to clear out the tenants under certain conditions whatever the Government may say or the local authority. The local authorities will not do that, because they have no axe to grind. They are there to make the best citizens possible out of the material at hand. I contend that unless we do all we possibly can to help forward municipalisation of the houses, we are not doing all we can to build up the best citizens. The housing conditions of the past have been very, very bad, and very often much worse than they ought to have been. I am not blaming any one section more than another for that, but still now that the opportunity has come to have better houses and to make better citizens, and to give the tenant security of tenure and make him feel he has a right to live in his house so long as he uses it well, we should go the right way about building up 1130 better citizens, and if we can we should stretch a point on behalf of the local authorities.
§ Sir DONALD MACLEAN
My two hon. Friends who have just spoken have displayed a touching faith in what public authorities can do. I have great hopes that public authorities will improve very much in their grasp of urgent problems. In this matter we are face to face with the question of the most urgent and pressing character, and we have to be practical. If we look at the record of public authorities in dealing with housing, or indeed any other question, I ask hon. Members, no matter to what party they belong, will they say that expedition of any kind is a marked feature of the efforts of those bodies?
§ Sir D. MACLEAN
I do not know whether I speak from longer acquaintance with the operations of public authorities than my hon. Friend does. In the end I dare say their work is more solid and more enduring, but for getting a job through quickly you cannot look to a public authority for expedition at any rate. That is my point. This is a most pressing matter, and in the view of the majority of those who know public authorities you cannot get speed out of them. This thing has got to be done now. It is not a thing to wait. You have got to deal with it in a practical manner, and we know what public authorities can do from our experience of them in the past. We have to use every agency now that can be trusted to move with a substantial measure of public spirit. I know of co-operative societies which supply districts. Such societies have to be registered under the Provident Societies Act, and they are specifically limited to paying a dividend of not more than 6 percent. What is 6 percent. to-day? It is just worth 4 percent. or 3½ percent. four years ago. The experience of the past shows that such bodies as those registered under the Act and under the careful supervision of the Local Government Board instead of being discouraged to deal with this problem ought to receive every possible encouragement we can give them. We shall have the revolution with regard to housing on us unless the thing is grappled with immediately. Let us bring everybody in who can build houses. The hon. Members who moved go further, I think, than the 1131 Government can go, because if you are to give additional grants there will: be an almost overwhelming amount of Government control, and if you have that you lose that very initiative and freedom through Which alone public utility societies can get their best work done. Honestly I do not see how much further the Government could go at the present time than they have gone. I believe that the public spirit of the men who operate in these housing societies will give them the courage to undertake these experiments even with what I may call the rather limited encouragement given to them. I do pray my hon. Friends, if they possibly can, to get rid of the idea that the way to grapple with this pressing problem is to smash individual civic spirit. It really seems almost hopeless when one feels that you are trying not to encourage these bodies, to whom you cannot deny public spirit, and by doing so you are asking for trouble and breaking down a real chance of grappling at once with this problem.
§ Mr. EDWARDS
I am talking about a district I know where the work has been done so well by the local authorities, so that there is no mistake in my mind in the view that they are the right people to deal with and grapple with this problem, which I agree with the right hon. Gentleman is an urgent matter.
§ Sir D. MACLEAN
My hon. Friend speaks from experience of a district of which he has a good deal of knowledge and where I happen to know his own personal efforts have been of a nature which redound to his credit. I know in a general sense what those who belong to co-partnership have done and are doing. The mere 5 percent. or 6 percent. they get is not the driving force at all, but it is the public spirit of men and women who have undertaken these things and worked this organisation, and I think we ought to support them to deal with this problem. If the day comes when we can all resign ourselves to being more or less inactive members of the community and that the State will do everything for us that is all right, but what are we going to do now? In my opinion unless you take the opportunity of giving every encouragement you reasonably can to public utility societies, this problem this day twelve months will be in an unsolved condition.
§ 8.0 P.M.
§ The PARLIAMENTARY SECRETARY to the LOCAL GOVERNMENT BOARD (Major Astor)
The Mover and Seconder were obviously fully acquainted with the facts and had gone very carefully into the financial proposals and what is involved in these proposals. The hon. Member opposite also spoke with great knowledge, and I know the amount of time he has given in the past with regard to, the development of garden cities. I frankly admit that the financial assistance which the Government has felt bound to give to housing, has been one of the most difficult things which the Government have had to decide in connection with the housing proposals. The framing and drafting of a, Housing Bill has required careful thought, and the Bill before us shows how progressive Parliament is now compared with the spirit in which this problem was. approached the last time a Housing Bill was before us, when revolutionary proposals were put forward by young Tories and turned down, while the same proposals are now brought forward by the Government and accepted with acclamation and without opposition by the House. The difficulty has been to frame a Housing Bill that would really meet the needs of the situation and arrive at a fair basis of financial assistance to meet this very difficult emergency. That has been due to the fact, that we really must guess when we try and estimate what the value of, the houses will be or the cost will be or the economic rent will be in five, or six, or seven years' time. Therefore I want to emphasise when the Mover and Seconder told us that the terms offered are not sufficiently generous, my answer to that is that the reasonable fairness of these terms cannot be estimated now, when we do not know what rents are going to be charged in five, or six, or seven years' time. The Government's offer is not limited to the emergency period. The financial terms that the Government are offering will extend to the whole period of fifty years, and it may be, if the cost of building goes in a certain, direction, that the terms in ten, fifteen, or twenty years' time will be very generous. There is an element of uncertainty about it, and it is because of that element of uncertainty that the Local Government Board, working in close co-operation with the Treasury and consulting the representatives of public utility societies and local authorities, have found it exceedingly difficult to put forward proposals which would be sufficient to assist the societies or 1133 local authorities on the one hand, which would not be extravagant or expensive, so far as the Treasury or the taxpayers are concerned, on the other hand, and which would be fair and reasonable terms when the emergency period is over. That is why I say, quite frankly, that it is not easy to deal with the point that the terms offered to the public utility societies are less favourable than those offered to the local authorities. I am sure my hon. Friend will be the first to admit that it depends largely on the state of the building market in six or seven years' time. We have tried to make that as comparable as possible, and in 1927 we may be able to make a final estimate and a stereotyped subsidy for the remainder of the loan period. In our opinion, the 30 percent. assistance which is being given by the Government will very probably, as far as we can ascertain, be the right figure—that is the conclusion we arrived at when we were trying to fix these terms—and, in our opinion, we thought we might reasonably look forward to a reduction of 30 percent. at the end of the emergency period. The President of the Local Government Board gave this figure on a previous occasion, so that as far as we can estimate at the end of the emergency period the terms which we were offering respectively to the local authorities and the public utility societies might be similar and comparable. I quite admit that there are difficulties. The hon. Member for Ladywood (Mr. N. Chamberlain) put the position of the public utility society when it has to fix a rent next year or the year after, and as he very rightly says, if a local authority is not able to recoup itself in the rent it has got the rates to fall back upon, whereas a public utility society has not.
§ Major ASTOR
The hon. Member for Ladywood wants to know what happens if there is a loss in the case of a public utility society. It is quite possible that the other side of the body or the business, if there is a loss, might bear it, and I quite realise that in the beginning there might be a loss, but later on the rents of local authorities will presumably be going up, so that we all look forward to increasing rents, which are now kept abnormally low by the Rent Restriction Act. We all realise, in fact we 1134 are aiming at getting away from anything approaching charity rents, and we are aiming at getting back to an economic or commercial rent in 1927, and although I quite admit that a public utility society might ab initio find itself in a very difficult position and either have to charge a higher rent than a local authority, or if it charges the same rent as is being charged in the neighbourhood it may for a time lose money. We do not know the way in which building is going to work out, and it is quite possible that the same public utility society which has lost money at the beginning may be doing the very reverse later on; but, at all events, we do know very well that a large number of these businesses do not look at this merely from the point of view of profit or loss. They know that it is in the interests of their businesses, and they are public spirited enough to know that their workmen or employés should be well housed. Some of them know perfectly well that they have to put up houses even without any assistance whatever, and, therefore, any help which the Government is able to give them is to the good. It might not be as much as they would have liked——
§ Mr. A. WILLIAMS
The hon. Gentleman seems to imply that public utility societies are branches of some employer's business. I hope he will not give the public that impression, because it is entirely incorrect, and public utility societies in many cases have no connection with any business whatever.
§ Major ASTOR
I was only trying to deal with the particular point which had been raised by the Mover and Seconder, who had given figures which I know were derived from a business concern which wishes to house its own people and is prepared to put aside money to do so.
§ Major LLOYD-GREAME
My figures were simply figures which apply however the money is found, whether by borrowing from Members of this House or otherwise. It does not make the faintest difference where the money comes from; it is simply a question of whether there is a dead loss or whether there is not.
§ Major ASTOR
One of the difficulties in making any estimates is the great difficulty in finding out what the cost of building houses is going to be. I went into it with the Seconder of the Amendment, who showed me some of his figures, and we gave him other estimates, which, I am sure he 1135 will agree, were entirely different from his figures. It is extraordinarily difficult at the present moment, with the uncertainty which exists and which is responsible for much of the delay, to know exactly what the cost of building a house is going to be, and all estimates of profit or loss must, of course, depend upon the cost of building a house. The Seconder of the Amendment raised another point, as to whether the rent would include sinking fund. If he reads the regulations, he will find that that is the case, and there is there a precedent. Whenever in the past loans have been made to local authorities there has been in the regulations a stipulation that the loan should be repaid through a sinking fund. I have been into that recently, and I think the amount involved is very small. My right hon. Friend the President has tried, in carrying out negotiations with the public utility societies and the Treasury, to do as much as he could. He was as anxious as anybody in this House to get the assistance of every individual or every group of members of the community in order to get houses. He did not want to stereotype either the type of house or the body that was going to build houses, and I am glad to say that in Committee the Bill has been modified in order to make it easier to assist public utility societies. Not only is there a cash grant, but Amendments were moved and agreed to which will enable more assistance to be given to public utility societies in the future than has been done in the past, irrespective of the actual financial assistance which we are giving at the present. That must be taken into consideration when we are discussing whether or not the particular financial assistance is adequate. I have been into this again very carefully with my right hon. Friend, and I am afraid I cannot announce to the House that we are able to alter the financial assistance we are going to give.
We hope that the terms which we offer, with the Amendments which have been included in the Bill will really enable a large number of societies to go ahead and assist us. We want their assistance. We do know that as a matter of fact houses are actually being built, although it takes rather longer probably for a public utility society to get going. Schemes are being submitted, and houses are being built, and schemes for covering a considerable acreage have been submitted to the Board. 1136 We hope very much that public utility societies will develop. It is an experiment which we are all watching with great care. I regret that the hon. Member who spoke just before me had not read the Regulations, because I feel certain he would not have criticised the proposals of the Government if he had had an opportunity of studying our Regulations carefully. One of the conditions that we make is that the tenants of these houses shall have a share in the management; another condition is that they shall have security of tenure, and another condition is that if there is more than the 6 percent. profit that additional profit shall be used for the benefit of the tenant. There is great scope for experiment and for initiative, and that is one of the reasons why, when we have secured due economy in the erection of houses, we do not want to have too much Government control of the way in which these schemes are ran. We want to encourage initiative, and we want these committees of management representing the tenants to strike out and try new experiments. We believe we may find considerable development which may materially assist us in dealing with this problem in the future. I will see that the hon. Member gets a copy of the Regulations, and I can assure him that the point which he feared, that the tenants would not have security of tenure, is amply safeguarded by the Regulations. The Seconder of the Amendment carried out a principle, which I wish other hon. Members would follow, of not criticising unless they offer an alternative suggestion. He suggested that occupiers of houses should be given facilities for acquiring ownership of houses over and above the co-operative ownership which they get as shareholders and members of the societies. Our Regulations are so framed that that is possible. We have not been able to set that out in detail, because we wanted to know what the views of the Committee were upstairs, and the House, were on the principle of ownership. My hon. Friend opposite has followed the discussion upstairs, and knows that the Committee has framed a principle of ownership by the individual occupier, giving him facilities for his acquiring the house. There is a very general sentiment on the part of individuals to have security of tenure. One way of getting security of tenure is by owning the house in which you live. Another way is by taking it from the local authority—not so secure, perhaps—but 1137 the principle having been accepted by the Committee upstairs, being agreed to by the House here, and being within the four corners of the Bill, we are going to see the extent to which we can carry out that principle. We approve of the principle. We believe it is a sound principle, and we believe, as my hon. Friend does, that it will enable us to surmount some of the difficulties he otherwise anticipates. I regret I cannot meet the Mover to a greater extent, but, at all events, I assure him we will do all we can, so far as public utility societies are concerned, to embody the principles accepted by the Committee upstairs, and agreed to here.
§ Sir P. GRIGGS
May I say that the reason for some of the high prices is the specifications that are sent out? I was told by a Member of this House that he had been asked to tender for a number of houses, and he had specifications binding him down to every item. That has made the high prices. I can take you to a garden city that has been formed where houses have been sold quite recently for about £700—semi-detached houses, with tiled roofs and everything you want, and with roads taken over by the local authority. Some of these houses have been sold for as low a sum as £535 within the last few months, with a. ground rent of £6 15s., and a lease of 999 years, with saving covenants. With a 999 years' lease, which is just as good as a freehold, only it enables the purchaser to find less money, you have an instance of what be uses can be built for.
§ Amendment negatived.
§ Major ASTOR
I beg to move, in Subsection (1), after the word "period" ["within such period as may be specified "], to insert the wordsafter the passing of this Act.This Amendment merely brings the Clause into line with the other financial Clauses.
§ Amendment agreed to.