HOUSING (REVISION OF CONTRIBUTIONS) [MONEY].

HC Deb 15 July 1929 vol 230 cc67-130

Considered in Committee under Standing Order No. 71 A.

[Mr. ROBERT YOUNG in the Chair.]

Motion made, and Question proposed, That it is expedient that the provisions of the Housing Acts (Revision of Contributions) Order, 1928, relating to houses subject to special conditions in the case of which contributions are to be provided under section two of the Housing (Financial Provisions) Act, 1924, should cease to have effect and that the same contributions should be payable and the same provisions applicable in the case of any such houses completed after the thirtieth day of September, nineteen hundred and twenty-nine, as are applicable in the case of any such houses completed on or before that date, and that all such additional amounts as may become payable by virtue of this Resolution should be defrayed out of moneys provided by Parliament."—(King's Recommendation signified.)—[Mr. Greenwood.]

The MINISTER of HEALTH (Mr. Arthur Greenwood)

When the Government decided to take the step that has now been taken, I had hoped that, since the House was able to modify the rates of subsidy by Resolution of this House, we might have been enabled to undo these rates of subsidy by a similar process. Unfortunately, I was advised that once the House had by Resolution fixed the subsidy, legislation became necessary. I should like to point out, for the information of hon. Members who are new to our procedure, that as the Bill that is to come before the House on Thursday next is purely a Money Bill, which must originate in a Money Resolution of this kind, it would be most improper on my part, and against the Rules of the House, were I to issue the Bill before the Money Resolution had passed through all its stages. The Money Resolution and the White Paper which have been issued cover everything which will appear in the Bill.

Before dealing with the question of the Government's decision, I would remind the House of the present position of Exchequer contributions under the Housing Acts of 1923 and 1924. The original subsidy under the Act of 1923 was fixed at £6 a year for 20 years. That Act was to operate for two years. It was prolonged by the Act of 1924. The subsidy provided under the Act of 1924, which was introduced by my right hon. Friend the Member for Shettleston (Mr. Wheatley), fixed the subsidy at £9 per house for 40 years, with an additional £3 10s. per house, making £12 10s., for cottages built in agricultural parishes. Under the Act of 1924, it was proposed that there should be a revision of the subsidy after every period of three years, but, unfortunately, much to the regret, I imagine, of many hon. Members, the then Labour Government were overborne and the period of revision was reduced and fixed to take place after every period of two years. Therefore, on the 30th September, 1926, the question of revision came under consideration and a lower rate of subsidy for both types of houses, for what were called Chamberlain and Wheatley houses, was introduced as from the beginning of October, 1927, from £6 to £4 in the case of the Chamberlain houses, from £9 to £7 10s. in the case of the Wheatley houses and from £12 10s. to £11 in the case of houses built in agricultural parishes: the equivalent of a cut of about £25 on the capital value of the subsidy.

In December of last year the Minister of Health, the right hon. Member for Edgbaston (Mr. Chamberlain) brought a Resolution to the House for the purpose of confirming an Order, which would have operated from the 1st October this year, introducing further revisions of the scale of subsidy. Hon. Members who were in the last Parliament will know that it was then proposed that the subsidy under the Act of 1923 should be abolished entirely that the subsidy under the Act of 1924 should be reduced from £7 10s. and £11 respectively to £6 and £9 10s., the latter having reference to houses built in agricultural parishes. I mention these facts in order that the Committee may see the position in which I was placed when I took over my present office. I realised that unless something were done by the House in this part of the Session, the result would be that when the House meets in October we should have been faced with a lower subsidy which had already begun to take effect. There has not been time—I think Members on all sides will admit that—in the few weeks during which the House is now meeting for the Government to elaborate its more comprehensive housing and slum clearance policy, much less get a Measure through the House before we rise for the summer Recess. I was, therefore, faced with something in the nature of an emergency. I did not wish to prejudice the larger problem by permitting the subsidy of the Act of 1924 to be reduced, and find myself with the reduced subsidy in the autumn. It was essential that time should be given to complete the proposals which will, I hope, be put before the House at an early date after we resume, and I felt that it was necessary to give to the local authorities some stability so as not to imperil the continuance of the steady progress of housing schemes.

I have dealt with the matter in two different parts. Let me, first of all, say something about the subsidy under the Act of 1923. Here, I am following precisely the same lines as the Labour Government in 1924, that is to say, we are continuing the proposals laid down by our predecessors. In 1923, the Chamberlain Subsidy was introduced, and we accepted it and continued it. In 1928, the Conservative Government, in its wisdom, thought fit to terminate the Chamberlain subsidy as from the 1st October, 1929. When this matter was before the House the great opposition that was taken to the revision was to the proposed further cut in the subsidy under the Act of 1924, and not so much to the subsidy under the Act of 1923. I stated on that occasion that so far as I and the hon. Members who sat behind were concerned, we should not complain about the Chamberlain subsidy coming off. If the right hon. Gentleman chooses to murder his own child, I do not see why I should come in and try to restore the corpse. I have agreed to carry on what was the policy of hon. and right hon. Members opposite as far as England and Wales are concerned, because I believe that that subsidy has now exhausted its usefulness. Moreover, I do not believe that that subsidy, however long continued, could solve the real and pressing problem of providing houses to let. On the matter, therefore, of the impending complete withdrawal of the subsidy under the Act of 1923, all quarters of the House, I imagine, will be agreed.

4.0 p.m.

The subsidy under the Housing Act of 1924 is an entirely different proposition. The further reduction of that subsidy was opposed by hon. Members who now sit on these benches and by hon. Members who sit on the benches below the Gangway opposite. We had two Divisions on the question last December, and the two Oppositions were united in their view as to the undesirability of further reducing, at that stage, the subsidy under the Act of 1924. I imagine that had Conservative Members of the last Parliament been able to exercise their free discretion, a large number of them would have followed us into the lobby. Therefore, there is a good deal stronger case for continuing the Wheatley subsidy—to give it its usual name—at the present level, more especially as the proposal to reduce was made in the face of what, I believe, was the unanimous opposition of the local authorities. I would like to examine for a moment what has been our experience of the cut made in the subsidy in 1927. The case of the late Minister of Health was that if he reduced the subsidy he would lower prices. It is not my business to argue that now. I argued it from the opposite bench on more than one occasion in the last Parliament. If it is true to say that the price of houses is lower than it was, it is equally true to say that the number of houses being built is lower, and that is the real problem with which we are faced to-day.

What are the results of our experience of the operation of the cut in 1927 on both housebuilding and unemployment? When you put a proposal before the public that a subsidy for houses after a given date is to be reduced, the first and most obvious result is a rush to complete every available house in order to take advantage of the higher subsidy, and the ordinary development of housing programmes becomes broken. After the subsidy has fallen, work falls away, a smaller amount of housebuilding is put in hand and unemployment increases. That is exactly what has happened as the result of the break in the subsidy in 1927. The reduction which took place on 1st October, 1927, was announced to the House in December, 1926. From the very beginning of 1927 the number of houses under construction rose sharply and reached a maximum in May. As many houses as could be completed before the end of September were put in hand, but then, from May to September, the number of houses which were actually beginning to be built began to fall away, because they could not be completed before the subsidy was reduced, local authorities were beginning to damp down their future programmes and they directed their energy to completing houses which were actually in course of construction.

It is perfectly true that in the month of September, 1927, the housing output of this country reached its maximum when over 52,000 houses were actually completed. But we ought to notice what followed upon that. At the end of September, 1926, when no word had been said about the reduction of the subsidy, though, of course, people, presumably, knew the law, over 102,000 houses were under construction. On the day when that old subsidy ceased to exist, exactly a year later, at the end of September, 1927, only about 52,000 houses were under construction. The number of houses actually being built had dwindled to one-half. By the end of October, 1927, the actual number being built had shrunk to 48,000, and during the whole of last year, 1928, the number of subsidy houses under construction at any time never exceeded 60,000, and it is interesting to see the progress that has been made in house building and the slowing down which followed the first reduction of the subsidy.

I will give the Committee the number of subsidised houses for England and Wales for each year ending 30th September. I give round figures, in thousands. In the year ending 30th September, 1924, the number completed was about 36,000; in 1925, it was 92,000; in 1926, 131,000; in 1927, after the great rush to build before the subsidy fell, 212,000; in 1928, the rush having exhausted local authorities, and created the reaction which many of us pointed out would inevitably follow, was 101,000; and up to the end of September this year I imagine we shall not build more than 120,000 subsidised houses in England and Wales. That in itself, I think, is a complete justification for the decision which the Government have taken to preserve the subsidy at its present level.

Sir BASIL PETO

Will the right hon. Gentleman give an elucidation of the last figure—120,000?

Mr. GREENWOOD

In each case the number is for the year ending 30th September. It is a full year's quota, and is an estimate which, I understand, is likely to be a fairly accurate one. Then consider what was the effect of this very sudden slowing down in the rate of building. It obviously reacted on the state of unemployment. I know that criticisms were made from the Government Benches about our including unskilled workers in the figures of unemployment, but I would like to give the position with regard to unemployment of two skilled crafts in the building industry before the reduction of the subsidy and immediately afterwards. I take first the case of the bricklayers. In the last three months of 1926, before the reduction of the subsidy, unemployment amongst bricklayers was 5.2, 6.2 and 6.5 per cent. for October, November, and December respectively. In 1927, immediately after the reduction in the subsidy, unemployment amongst bricklayers in October, November and December had risen to 7.4, 9.3 and 14.7 per cent. respectively. In the case of the plasterers, the change in the volume of unemployment was even more marked. In the last three months of 1926, before the reduction of the subsidy, the percentage of unemployment amongst plasterers was 1.8, 2.9 and 4.1 per cent. In October, November and December, 1927, after the cut in the subsidy and the reduction in the volume of building, the percentage increased, the figures for October, November and December being 7.5, 11.4 and 17.9 per cent.

It is perfectly clear what will happen if we do that kind of thing again. Many of us on these benches and on the benches below the Gangway prophesied that this would be the course of events, but we were told that it would be all right, that it would pick up. Unfortunately, up to the present, that has not proved to be the case. The same thing is actually happening to-day as happened in the similar months of 1927, not on so large a scale, because so many houses are not being built as were being built in 1927, but the number of houses under construction is increasing in order that they may be completed before the subsidy will have come to an end at the end of Sep- tember. Pressure is being put on to get these houses completed, and, as in the case of 1927, local authorities are already beginning to avoid any fresh commitments for housing, because of the further reduction of the subsidy. Unless, therefore, something is done, we may expect a repetition of 1927, a further cut in the amount of building, another increase in the amount of unemployment and a general disorganisation of the building industry. Therefore, I propose for the time being, that is to say, until after September of next year, when the next revision is due, to maintain the subsidy under the 1924 Act at its present level, and, in doing that, I think experience will justify the step which is being taken.

In the case of Scotland, the same policy has been adopted. As hon. Members are aware, Scotland, being a most-favourednation, has yet to suffer its first cut in the subsidy. The proposal in the Money Resolution and the proposal embodied in the Bill is that the present subsidy under the 1924 Act, the full subsidy, should be maintained, and as regards the subsidy under the Chamberlain Act, that that should be allowed to fall, as the late Government desired that it should fall.

My main contention is that this unseemly scramble for the few months prior to a proposed reduction of the subsidy is not good for the local authorities, is not good for the building industry, is not good for the workers in the building industry and is not in the interest of good housing. You may build houses rapidly for a month or two, but then, I am afraid, it may mean scamped houses and, therefore, worse houses. The local authorities are perfectly well aware of the evil results which follow this scramble, and they themselves would wish to avoid it. I have received the assurance of an important body representing local authorities that if the subsidy Order is modified, as we are now proposing that it should be, I can rely upon the local authorities continuing their building programmes without the hiatus which would inevitably have followed otherwise. I am glad to think that this proposal will achieve its object, and that we shall get a steady continuance, and, I hope, an expanding volume of house building under the auspices of our local authorities. This Money Resolution and the Bill which will follow it are therefore designed merely to bring a measure of stability and con- tinuity for the time being to the building of houses to let, while a larger and more comprehensive scheme is being prepared and passed through Parliament.

I hope that with the assistance of Parliament, with the hearty co-operation of the building industry, and with the closest association with the local authorities, to secure, within a relatively short space of time now, the adoption of a reinvigorated and more determined housing and slum clearance policy. It would not be in order for me to deal with that question now, nor would it be possible at this stage to outline with any completeness the proposals on which the Government are working and which they propose to submit to the House in the near future, but I would commend this Resolution to the Committee as a purely preliminary measure necessitated by the circumstances of the case, not necessarily representing any final view and certainly not an attempt to cope with what we regard as the gravest aspects of the housing problem. I am sorry to have had to bring what appears to be so small a matter to the notice of the Committee. I had to do it in order to protect myself; in order to give an indication to local authorities of our earnest intentions; in order to inspire them to continue their building programmes and in order that they should feel that the Government were behind them in their desire to promote the maximum amount of house building with the knowledge that very shortly I shall be able to consult the industry and local authorities on larger measures in which I hope we shall all co-operate to eradicate the worst evils of housing and overcrowding from our midst.

Mr. DENMAN

Is it proposed to conduct this Debate with the rather strict limitations that were attached to the Debate on the Unemployment Insurance Financial Resolution or allow the wider kind of Debate which was permitted on the Empire Development Financial Resolution?

The CHAIRMAN

The Debate must be confined to the question of the subsidy and the houses affected by the subsidy.

Mr. CHAMBERLAIN

The right hon. Gentleman the Minister of Health and I have had a good many sharp differences of opinion in the past and it may possibly be that those differences will not grow less by reason of the fact that we have exchanged positions in respect of this Table. Notwithstanding those differences, may I be allowed to offer him my congratulations on having succeeded to an office which, although it is one of the most arduous, is not exceeded in interest or importance by any other Department of State. Although I expect I shall have to differ from him on many points I know that he will bring to his duties the same sincerity, ability and industry, which he invariably displayed when he was in opposition. There are always two and frequently more sides to any problem. That is a fact which, as we have already observed in this Parliament, is more easily appreciated when you are in office than when you are in opposition. As the right hon. Gentleman gains further experience in his present office, it may be that he will come to entertain more kindly feelings and sentiments towards his predecessor than those he used to express so vehemently when all the responsibility was mine and all the freedom was his. Indeed, I begin to find evidence of progress on his part even in the Motion now before the Committee. Not very long ago the Prime Minister flew to Durham to address a meeting of his supporters and to give them some idea of the plans he was going to carry out in the new Parliament. In the course of his speech, he alluded to the housing subsidy, and he told his supporters this: As soon as they got the King's Speech over, they would introduce a Bill to put back the subsidy for housing which was contained in the 1924 Act. When I read that I was very seriously concerned. It did not occur to me to doubt that the Prime Minister was voicing a Cabinet decision. Indeed, I remembered that in December of last year, when I asked the House to approve the Order which I then made, in conjunction with the late Secretary of State for Scotland, under which, as the right hon. Gentleman has reminded us, the subsidy on the 1923 houses was to come to an end altogether and that on the 1924 houses was to be reduced on the 1st October next, the right hon. Gentleman the present Minister of Health moved an Amendment the effect of which was to do precisely what the Prime Minister said he was going to do—namely, to put back the subsidy on the 1924 houses to what it was under the Act of 1924. That is not the proposal before us now. The proposal before us now is not to put back the subsidy where it was in 1924; it is to leave it where it is. The right hon. Gentleman has not told us what has occurred between the time when the Prime Minister announced the decision of the Cabinet nine days ago and to-day, which has made him modify his views, and I am not going to try and embarrass him in any way by pressing him to give us any information. I believe now what I said last December in this House, that to put back the subsidy where it was in 1924 would be an act of absolute madness. I believe it would put up the price of houses. I do not want the price of houses to be increased, and, therefore, I welcome the moderation of view which has taken place in the mind of the right hon. Gentleman and his colleagues, and I am glad that they have abandoned their original idea.

What remains? What remains is not a positive but a negative proposal. It is to do nothing; instead of doing what I wanted to do—namely, to make a further reduction in the subsidy. The reason why the Government wish to avoid any further reduction in the subsidy is because they feel that it would lead to a reduction in the rate of building. They do not want to see the rate of building reduced. None of us want to see the rate of building reduced; we are all anxious that it should not only be maintained but increased, and we are glad that while we were in office we were able to increase the rate of building, indeed, so much so that we exceeded the programme laid down by the right hon. Member for Shettleston (Mr. Wheatley) in 1924 by more than one-third. There is really no difference between any of the parties in the House as to the desirability of increasing the rate of building, provided, of course, you are building the right kind of house at the right price.

That is just where the difference of opinion comes in; the question of price. Last December the present Chancellor of the Exchequer told us that it was more important to maintain the rate of building than it was to reduce the cost of building. [HON. MEMBERS: "Hear, hear!"] I am surprised that anybody should cheer that sentiment. If hon. Members will consider their case against the 1923 Act, it is that it does not provide houses at a price which working people can afford to pay. That is the accusation made, not only against the Act of 1923 but against the houses built under the 1924 Act, and wherever we go to-day the cry is not merely give us houses but give us houses at a rent which we can afford to pay. Unless you can reduce the cost of building a very large part of our people, who are inadequately housed to-day, will have to give up all ideas of ever being able to occupy a new house of their own unless they choose to overcrowd it by taking in lodgers. For that reason it seems to me more important to cut down the cost of building even than to maintain the rate of building.

An HON. MEMBER

Did you reduce the subsidy in Scotland?

Mr. CHAMBERLAIN

The hon. Member is new to our debates. If he had been in the House in the last Parliament he would have realised that the question of Scotland is on a different footing and is dealt with by a different Minister. I do not pretend to have the local knowledge of Scotland which will enable me to enter into the particular reasons which, in the opinion of my right hon. Friend, made the situation and problem rather different in Scotland. I think the Committee is probably aware that the whole purpose and reason for the reduction of the subsidy which was proposed to and approved by the House last December was to reduce the cost of building. The right hon. Gentleman the Minister of Health does not agree that there is any connection between the amount of the subsidy and the cost of building. He is determined not to believe that there is any such connection, and per contra he is ready to swallow any story which may be put to him which purports to give any other reason why there should be a fall in the cost of building independently of what may happen to the subsidy. Whilst I have never said, and do not say now, that the price of houses is governed solely by the subsidy, I am convinced that the actual amount of the subsidy is a most important factor in fixing the price of houses and I have strong evidence in support of that view. When Einstein propounded his theory of Relativity he offered a test by which his theory might be verified or otherwise. He predicted that if his theory was true a ray of light coming from a star behind the sun would be deflected by the curvature of space around the sun and an expedition was sent out on the occasion of the next eclipse to see whether in fact this did take place. The observations of the astronomers confirmed the truth of Einstein's prediction and most people accepted them as proof that Einstein's theory was correct. But, there were of course some people who were so tied by their old prejudices that they would not accept any evidence to the contrary. So it is with the particular subject that we are discussing to-day. In my humble way I followed Einstein's methods of induction and deduction. I set up my theory on certain observations. I predicted that if my theory was correct certain results would follow. And as a matter of fact they did follow. But the right hon. Gentleman would not listen to any evidence which showed against his theory, namely, that there is no connection between the subsidy and the cost of houses.

I see opposite a good many unfamiliar faces of Members who cannot have heard the previous debates which we have had. I should like, if I may, to give them some of the figures which brought me to the conclusions that I have been describing. Perhaps those who have heard them before will forgive their repetition. In 1921 there was in operation what is now known as the Addison Scheme. In July of that year it was decided to close the scheme down because the price of houses had got beyond control. In that month the average cost of a non-parlour house throughout the country was £665. As soon as this scheme was closed down and no more subsidy was payable the price began to fall. It went on falling, until in December of the following year it reached the bottom at £346. In the following year, 1923, there was introduced the Bill to which the right hon. Gentleman has alluded. Immediately the price began to go up. The subsidy under that scheme was equivalent to a capital sum of about £75 per house, and by January 1924 the price had gone up by £40, to £386.

Then came the ever lamentable event, when the party opposite came into office. The right hon. Member for Shettleston (Mr. Wheatley) had his turn, and under his Bill the subsidy was increased from the equivalent of £75 to the equivalent of £160 or more than double, with the old effect again on the price, which immediately began to go up. In a month it had gone up by £52 and by October of that year we had reached a figure of £451 a house at which it then remained approximately. It so remained until December, 1926, and it was on those figures that I said to the House at the time that since in the past there had been this continual rise in the price of houses whenever the subsidy had been put up I drew the corollary that if we wanted to reduce the price of houses it could be done by reducing the subsidy.

Mr. THURTLE

Or by checking profiteering.

Mr. CHAMBERLAIN

The hon. Gentleman and his party will now have an opportunity of formulating their ideas on that subject and it will be interesting from the purely philosophic point of view to see how they work out. I am merely discussing now the particular theory which governed my action in recommending the House to alter the rate of subsidy. From the time when the announcement was made that the subsidy would be reduced, although the subsidy was not reduced as a matter of fact until 1st October following, the price steadily went down until in the first quarter of this year it had dropped to £339. The right hon. Gentleman said that the price was somewhat lower than it had been. Yes, it is so, and that was certainly a mild way of putting it. As a matter of fact it has dropped, since the change of the subsidy, by no less than £112 a house.

Mr. SHILLAKER

The subsidy did not do that.

Mr. CHAMBERLAIN

In my opinion it did do it, or a great deal of it, and it is up to those who take a different view at any rate to show what in their opinion were the causes which brought about the extraordinary drop in the price. The right hon. Gentleman said to-day that he was not going to argue the question as to why the price of houses has fallen. He said that he had argued it before and was not going to repeat his statement. I was rather sorry that he took that line, but I can remember the arguments that he used, and it was possibly because he remembered that those arguments were not very sound that he did not choose to repeat them to-day. I know that his principal argument was that really the price of houses is governed entirely by supply and demand.

Mr. GREENWOOD

Largely, not entirely.

Mr. CHAMBERLAIN

The right hon. Gentleman's principal explanation of the reason why the price of houses fell was that he said that the effect of the announcement that the subsidy was to be reduced was to diminish the demand for houses and consequently to diminish the price. But that would be true only if the diminution in the demand preceded the fall in price. As a matter of fact exactly the opposite was the case. The announcement of the cut to become operative in October took place in December, but in the first quarter of that year the price fell by as much as £23 a house. Therefore it will not do to tell us that it is the fall in the number of houses being built that really brings about the fall in price, because the price kept on falling although for months in that year the number of houses and the demand kept on steadily rising. The right hon. Gentleman had some other suggestions to make to account for the fall. He thought there had been a drop in the price of materials, in the cost of the labour, and some diminution in the size of the houses. I mention them in case any other hon. Member brings them up again to-day. I hope they will tell us exactly what they think are the figures which account for these several differences. So far as my information goes, if you put them all together and make liberal allowances, they will not come to as much as £50 a house. But we have here a difference altogether of £112 a house.

Now let me come to the argument upon which the right hon. Gentleman based his case for leaving the subsidy where it is on the 1924 houses. He says that it you make these breaks in the subsidy there is a scramble before the cut becomes operative, to finish as many houses as possible; there is a squeeze for getting done in one month what normally would have been done in two or three; and there is the reaction which of course must follow that building activity. I agree. I agree also that it is undesirable, and that it would be very much better to have a steady and continuous rate of building, rising and rising steadily. But how are you to avoid it? If the difficulty is to prevent making any break in the subsidy, are we going on for ever with the subsidy hanging round our neck? Is it to be supposed that we are never to get back to anything like an economic rate of building? That is an altogether too pessimistic view, when we see that the result of one cut is to bring down the price of houses from £451 to £339. It would not be reasonable to suppose that another cut will bring as big a reduction as that. The law of diminishing returns must come in. But I am not at all convinced that we have yet reached the bottom of the market.

When, the right hon. Gentleman said that the number of houses has fallen to a lamentable extent compared with the year before, there are two points to which I would call attention. The first is that the year 1927 is not a fair year to take as the datum line. That was a year, as the right hon. Gentleman himself said, in which there was this tremendous rush of housing activity, which in a single quarter produced 90,000 houses, whereas the previous output had been about 40,000 a quarter. Therefore, if you are to compare future building with that year, you are making a comparison with an altogether abnormal year and a comparison which is no fair comparison at all. I do not know what you are to take as a fair datum line, but it has been generally suggested that about 100,000 houses would be sufficient in any given year to provide for the natural increase of population and the wastage which occurs by the demolition of old buildings or their falling out of habitation. If that be so, even in 1928 the result is by no means unsatisfactory, because of course the figures that the right hon. Gentleman gave were figures of State-assisted houses only, and if you taken the figures of the total number of houses built in the country, you find that in 1928 there were no fewer than 166,415, and it is evident from what was said by the right hon. Gentleman that he anticipates that that number will be considerably exceeded this year.

The second point I put in the form of a question. It is a question to which I have never been able to get a satisfac- tory answer or indeed to get any answer at all from the party opposite. This is the question: How can a cut in the subsidy possibly force local authorities to reduce their rate of building unless it has had the effect of putting up the price to them? Why should they reduce the rate of building unless they have to pay more for the houses than before? But I have shown that you have here a fall of £112 in the price of the house. The cut which was made is the equivalent of £25. Add to that the contribution by the local authority, of half, and you get a total of £37 10s. to be deducted from the £112. That leaves the local authorities better off by £74 10s. per house. In these circumstances, I say it is perfectly clear that if there has been a diminution in the rate of building it cannot be due to the effect of the subsidy.

It must be due to some other cause, and I invite the Parliamentary Secretary to the Ministry of Health or anybody who is going to reply from the other side, to explain how they can maintain that the cut in subsidy forces local authorities to reduce the rate of building, when as a matter of fact they are so much better able to place houses at a cheap rate than they were before. The right hon. Gentleman is going to call a halt in the policy of the late Government. I say that on his own showing, and, according to his own argument, his present position is indefensible. If he believes in my policy he ought to allow the reduction of subsidy to go on, and if he believes in his own he ought not to leave the subsidy where it is but increase it. The right hon. Gentleman, however, is playing for "safety first." He may suffer the fate of those who fall between two stools. But when he told us that he felt almost ashamed to trouble the Committee with so small a matter as this, I really thought he was diminishing the importance of his proposal beyond what was justified. If we look at the Memorandum, we find this: The additional cost to the Exchequer consequent on the modification proposed will depend on the number of houses provided after 1st October, 1929. If 100,000 houses subject to special conditions are provided in the year to the 30th September, 1930, the additional cost to the Exchequer due to the proposed modification of rates of contributions will amount to £150,000 a year for 40 years. If you capitalise that amount at 5 per cent. it means a capital sum of £27,000,000, and if the same policy is continued for five years, and the number of new houses remains about the same, you find that the capital sum involved amounts to £135,000,000. That is a very large sum of money, and while of course I do not think anybody would grudge the expenditure of very much larger sums than that, if we were satisfied that they were being usefully employed, I think that in this case it is practically certain that this money will not go for the benefit of those who are crying out for cheaper houses, but will merely be distributed in some way throughout the various branches of the building industry. I do not think I have any more to say this afternoon. When you get a change of Government you naturally expect a change of policy, and I recognise that hon. Members opposite are entitled now to put their ideas to the test of practice since they are in office. Having made my protest, I, for one, feel now disposed to see whether hard experience will not bring that conviction which solid argument has failed at present to convey.

Mr. E. D. SIMON

We have listened to two exceedingly interesting speeches setting forth two fundamentally opposite views between which the country is divided on this very vital question of how to provide houses at rents which the working classes can pay. I was not privileged to listen to the Debates in the last Parliament, but I remember very well those of 1924 when the same difference was discussed by the same right hon. Gentlemen. I remember very well the Act introduced by the right hon. Gentleman the Member for Shettleston (Mr. Wheatley) which was supported by the Liberals and strenuously opposed by the Conservative party. As some indication of what was expected by the right hon. Gentleman who has just spoken, as a result of the increased subsidy then granted, may I read the following quotation from a speech on the 1924 proposals by the Noble Lord who was formerly Member for Twickenham: This Bill is a gigantic—I do not want to use the word 'fraud'—but a gigantic farce, put before the people of this country in order to induce them to believe that the Labour party will get houses under the pro- visions of this scheme, while they will not get one."—[OFFICIAL REPORT, 23rd June, 1924; col. 200, Vol. 175.] That is what hon. Members on those benches were saying in 1924. What did that Act in fact produce? Did it or did it not produce houses? The extremely interesting figures quoted by the Minister of Health to-day are a complete answer to that question. In that year, only 36,000 subsidy houses were finished. When that Act—which was not going to produce a single house, according to some hon. Members, had been in force for three years, the number of subsidy houses finished in the three years was 212,000, or 173,000 more. That seems a complete answer to the Einstein theory which we have just had set forth, that increased subsidies do not mean increased building.

Mr. CHAMBERLAIN

I must not be misrepresented. I never said that. I said that the question of subsidy to some extent governed the price.

Mr. SIMON

As long as the right hon. Gentleman admits that increased subsidy means increased building, I am perfectly satisfied. In addition to the increase of subsidy the bargain made by the right hon. Gentleman the Member for Shettleston with the building trade was an exceedingly important part of the scheme in 1924. The subsidy alone would never have done what was accomplished. Up to that date, all efforts to build a reasonably large number of houses had failed because the building trade was not capable of carrying on its ordinary work in addition to building the houses. Therefore, the merit of that Act—and I should like to say that it was far and away the best thing which the party opposite, with our help, did during 1924—was that it increased the subsidy, it increased the demand, and it made a bargain with the building trade under which the building trade agreed that they would endeavour to extend their capacity to meet the increased demand. Whatever else may be said it must be agreed that the building trade met their side of the bargain magnificently. That is not too strong a word to use. The figures which the Minister has just given show this to be the case. All those extra houses were obviously not built by the people who were in the building trade in 1924, and if we look, not at the unemployment figures, but at the figures of employment in the building and allied trades, it is interesting to note that in each year after the 1924 Act was passed, about 60,000 more men were drawn into the building material trades and contracting trades. In three years after the passing of the 1924 Act, 180,000 more men were employed in those trades than had been employed in them in 1924. I venture to think this is the biggest thing which any Government in this country has ever done for employment, and I am rather surprised that the Lord Privy Seal never even mentioned this question of housing in his long and interesting speech when he was dealing with the question of how to get more employment. Surely it ought to be possible to do something of the same sort now.

As long as the right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain) left the 1924 Act alone, each year we were getting about 50,000 more houses than the previous year, and about 60,000 more men employed. Then the right hon. Gentleman began to apply his Einstein theory. He cut the subsidy from £9 to £7 10s. with the dramatic effect to which the Minister of Health has referred that instead of building over 200,000 houses the number of subsidy houses built was cut down to 100,000, and is still in the first five months of this year, at rather less than a rate of 100,000 a year. I am very glad that the right hon. Gentleman does not dispute the fact that the raising of the subsidy in 1924 caused the very magnificent increase in the rate of building to which I have referred and that the cut of the subsidy in 1926 caused a drop, as a result of which, the laboriously built up figure of 200,000 has gone down to 100,000. I think it is only fair to conclude that if the right hon. Gentleman had not taken that action and had left the 1924 Act as it was, we should have had last year 100,000 more usbsidy houses built, and we should now be building at the rate of 200,000 a year instead of 100,000 a year. It is also fair to conclude that as a result of the application of these Einstein theories we have today in the country about 150,000 subsidy houses less than we should have had if the right hon. Gentleman had done nothing except ordinary administration and allowed a free course to the Act of the right hon. Gentleman the Member for Shettleston.

We have heard a great deal about the 800,000 houses built by the Conservative Government. The right hon. Gentleman the Member for West Woolwich (Sir K. Wood) apparently still thinks he built them. We claim that the Act for which we share the credit with hon. Members opposite, was quite definitely the cause of the building of these 800,000 houses, and that the action of the right hon. Gentleman in 1926 was the cause of only 800,000 being built instead of the 950,000 which we ought to have had. Not content with cutting down the subsidy two years ago and reducing the rate of building from 200,000 to 100,000 the right hon. Gentleman the Member for Edgbaston apparently was so pleased with this result that he proposed to cut it down again to see what would happen. The declared policy of those who sit on these benches is to build 200,000 houses a year, of which probably 50,000 would be private enterprise houses; and if that programme is to be fulfilled, it means that we must have 150,000 subsidy houses built each year. How are we going to get this result? Obviously, not by cutting the £7 10s. subsidy to £6. That obviously would be disastrous and fatal. We are entirely in favour of maintaining the subsidy at its present figure. [HON. MEMBERS: "Why?"] Because we want to build this number of houses every year. I will come to the question of price in a moment. There is one point in the Memorandum issued by the Ministry of Health which is rather disappointing. The last paragraph illustrating the probable result of maintaining the subsidy says that if 100,000 houses are built the cost will be £150,000 a year. I hope that does not mean that the Minister of Health is going to be content with building 100,000. Our policy is to build 200,000 houses a year, and if the right hon. Gentleman is going to be content with only 100,000, it will be our duty to do what we can to stimulate him in dealing with this matter. I hope he will be able to assure us that he is not content with this figure of 100,000 houses.

I come to the question of price. I listened with great interest to the figures given by the Minister. A fact which we cannot dispute is that at the time of the Wheatley Act the non-parlour house cost £450, and it has now gone down to

5.0 p.m.

£339. It is admitted that about £50 of that reduction is due to the smaller size of house, and the real reduction is about £.60. It is perfectly true to say that, so far, every time the subsidy rose the price increased, and every time the subsidy was cut the price went down. But surely it would be unscientific, and contrary to every Einstein theory, to say that because a thing happens twice it always will and must happen. There is another very important condition which the right hon. Gentleman has forgotten. He rather laughed at the question of supply and demand, but surely that is the fundamental fact—

Miss WILKINSON

Would the hon. Gentleman enlighten the Committee as to why he insists on continually dragging in Mr. Einstein?

Mr. SIMON

Because I am trying to deal with the matter scientifically. It is true that the price has come down to £339, practically the same figure, the rock bottom figure, as that to which it came down in 1922, and that is important, because building experts, to a great many of whom I have spoken, are of the opinion that that is the rock bottom figure and that there is now full and free competition. Competition can drive a figure down to a certain level, a level at which people can exist, but you cannot drive it down much below that level without everybody going bankrupt; and there are many people in the building trade in financial difficulties today. The figure has now come down low. If you increase the demand when that demand is beyond the capacity of the building trade to deal with it, then competition ceases to become effective, and prices may go up even to the extent to which they went up in 1919, but today conditions are totally different.

In 1927 the building trade expanded itself to the extent of building over 250,000 houses, including private enterprise houses, or 200,000 subsidised houses. They built up to their capacity. Now the number of houses has been cut down to 100,000, and competition is very keen indeed, and if you try to increase the number to 250,000 or 300,000 houses, prices will go up, but it seems reasonable to think that if you increase the number up to 150,000, you are still well below the capacity of the building trade, and competition will still be full and free in effect. If you get a rapid increase up to that figure, there will be a slight temporary increase in price, but it seems to me that the right hon. Gentleman has forgotten the question of the relation of supply and demand, which to us, on these benches, is the crux of the whole thing. The building trade is easily able to deal with 150,000 subsidy houses a year, and I hope the right hon. Gentleman the Minister of Health will do all he can to get up to that rate of building. I think it is reasonable to think—and I have consulted economists and experts of all kinds—that you can get back to 150,000 houses without any permanent increase of price above the present level.

One other point about prices. I take it that the Committee will agree that what we want is a family house, a three-bedroomed non-parlour house. A really economic local authority can build that house at about £400, including the land, that is to say, £350 for the house and £50 for the land and drains. The economic gross rent of that house is 14s. a week. By means of the subsidy of £7 10s., that is brought down to 10s. gross rent, and that is beginning to be a reasonable figure, within the reach of the ordinary artisan with a family.

Mr. MacLAREN

Does that include rates?

Mr. SIMON

Yes. A gross rent of 10s. is somewhere near the 9s. that hon. Members opposite were aiming at in 1924. It can be done by an economic authority at the present time, but can it be done by the method of the right hon. Gentleman the late Minister of Health, the method of bringing down the price? He would have to bring down that price from £400 to £200, including the land and drains, in order to be able to let that house at 10s. You can go on cutting the subsidy for ever, but it is utterly out of the question, with keen competition in almost every branch of the trade, to build a decent three-bedroomed house, which to-day costs £400, for £200; and anybody who will take the trouble to do a simple arithmetical sum must admit that unless that house is built for £200, if you abolish the subsidy, you cannot let it at 10s. gross rent. That is the crux of the whole thing.

We, on these benches, believe it is necessary to build a large number of houses at 10s. gross rent, and we do not believe that is enough if you are really going to tackle the slum problem. We believe there is a large number of unskilled workers in the slums, with families of three and four children, who are paying round about 7s. rent now. There are no houses into which they can move at reasonable rents, and you are never going to get those people, who are estimated to have about 2,000,000 children, out of the slums until you build decent houses for them at somewhere about 7s. gross rent. You have either to leave them in the slums, which we, on these benches, would never agree to do, or you have to build cheap houses for them. You cannot build a decent house even at 10s. by cutting the subsidy or by the method of the right hon. Gentleman the late Minister of Health, and it is still more inconceivable that you can ever attempt to do it at 7s. All these things can only be done by modern methods, with a subsidy, and we look forward with great interest to the Bill which the right hon. Gentleman has promised to introduce in the Autumn, because it will be a very difficult matter indeed to devise a method of housing slum dwellers, with probably 2,000,000 children, without undue expenditure.

In conclusion, I was very glad, as we all were, to hear the words of the right hon. Gentleman in introducing this Motion that this is by no means his idea of a complete Housing Bill. In fact, he went rather far in apologising for it as a small Measure. We regard it substantial Measure, but if it had been proposed as the sole Measure, we should have been exceedingly disappointed. As a step towards a larger and more comprehensive Bill, I very heartily welcome it, and I look forward, as I have said, with much interest to the Bill that we shall see in the Autumn.

Mr. WHEATLEY

My first words in this Debate are words with which I am sure the Committee will agree. I want to tender my hearty congratulations to my right hon. Friend and old colleague, the Member for Nelson and Colne (Mr. Greenwood), on his promotion and on the concise, clear statement with which he introduced this Motion to the Committee. I also want to extend my congratulations to the hon. Member for Withington (Mr. Simon), who has just addressed the Committee. All of us who have taken an interest in the housing problem rejoice to have him with us again, and our joy is not reduced by the fact that he won his seat at the expense of the other party, not at the expense of the party that sits on these benches. I could not wish for a finer eulogy of the Act for which I was responsible than the one to which we have listened this afternoon, and I should be very cold indeed if I did not feel thrilled with satisfaction when the hon. Member described, in beautiful language, language bristling with knowledge, the effort that I made during my period of office.

Having said that, I want to express my views rather clearly regarding the Measure that is now before the Committee. I am encouraged to be frank in my criticism by the appeal which was made by the Prime Minister on almost the opening day of this Session, when he invited the House to give free, frank, and fearless expression to its views, and to pool those views in the national interest, so that, as a National Council, we could from that pool get a real, sound, progressive, national policy. I take it that the appeal was not made merely to the Liberals and the Tories, because if the blend of national policy that we were to get from a mixture of Liberalism, Toryism, and our Front Bench was to be the national tonic, I should doubt very much the future health of the nation. I take it rather that the right hon. Gentleman took the view that not only the principal parties, but groups and individuals in this House, should be more candid in the future than they have been in the past, and I hope that his appeal will meet with a very generous response, because, if it does, it will have the undoubted effect of giving us in this House a higher standard of political honesty; and I am quite sure that the nation will not suffer from knowing exactly the views held by the Members of the House of Commons. Therefore, I take the opportunity of telling the Committee exactly what I think of this Measure.

The importance of the subject requires no elaboration. Housing is undoubtedly one of the questions that should be kept in the very forefront of our national consideration. It is one that affects, daily and intimately, the lives of our people and the future of the community, and, therefore, I am glad that we are having this discussion before we retire for our holidays, in order that we may have the benefits of the free ventilation for which the Prime Minister appealed. I must say that I am rather disappointed with the Measure that has been submitted to us this afternoon. I followed my right hon. Friend rather closely. He was, as the hon. Member for Withington pointed out, rather apologetic, and he invited us to live contentedly on something that was going to happen at a later stage in the Session. I expected him to say that he intended, in the larger Bill that would be presented to the House, to undo the Tory action of 1926, but he just stopped short when he was becoming most interesting. He gave us any number of reasons why we should modify the cut of 1928, but he did not tell us that he had any intention of modifying the cut of 1926.

But the Prime Minister, as has been pointed out already, made it perfectly clear in his election campaign that he intended to undo the evil perpetrated by the Conservatives in 1926, and that he wanted to restore to health and vigour the Act of 1924. He declared himself as being very enthusiastic about that Act. He described it, in one of his speeches, as the crowning achievement of the Labour party, and, therefore, we hoped that when he would get into office we were going to have that crowning achievement restored to its early, vigorous, pristine glory. [Interruption.] We are told we are getting half a loaf, but we are getting modified the half of the Tory policy that has not yet come into operation. Yet all the criticism we have heard is against the Tory policy that is in operation, and I want to know whether the Tory policy that is in operation is not infinitely more serious, and, if injurious, infinitely more injurious, than the policy that has not yet been given effect to.

I do not think that my Government can even plead on this occasion that they are in office but not in power. The party are 100 per cent. stronger in the House and in the country than they were in 1924. The official Opposition are in a state of suspended animation. The party below the Gangway have not expressed any hostility to the restoration of the subsidy of 1924, and I am sure that in the present Parliamentary circumstances, if the Government wished us to restore the subsidy of 1924, the Committee would agree rather than proceed to the defeat of the Government. The Minister of Health himself in a speech just prior to the General Election led us to believe that the subsidy would be restored. He told us at a meeting in Leeds that, as a result of the reduction in the subsidy—not the reduction which he is proposing to modify to-day, but the reduction in the subsidy which he is not proposing to modify—the country has 150,000 houses less for letting purposes than it would have had. Surely, we were led to believe by that speech that, when the Labour party came into office, the policy hat led to a reduction in the output of houses represented by the figure that I have mentioned would be reversed, and that effect would be given to the undoubted policy of the Labour party.

What are we asked to do this afternoon? We are asked to perpetuate the Act of 1926 and the policy which led to the deplorable reduction in house building that has been so eloquently described by the late Minister of Health and the hon. Member for Withington. This reduction is to continue, and the unemployment which is naturally associated with it is to continue; and I hope that the Committee will not leave out of account the very close relation between employment in this country and the housing question. I often think that many of our activities in regard to unemployment are perfectly ridiculous. The one thing in which there is a shortage at the moment is housing accommodation for the working classes. That does not apply to shipbuilding, coal mining or the steel industry, or anywhere else. In all other industries, unemployment is due to a surplus of the commodities which the industries produce, and you are running about looking for a way of placing the people who have been dispossessed by the huge output in those depressed industries. That, however, does not apply to housing. Housing is the one necessary of life of which, at the moment, there is a shortage.

What have we had this afternoon? There has been criticism about £150,000 per annum being spent upon a system to produce more houses, while last week we were discussing a proposal to subscribe £1,000,000 a year for the employment of more or less slave labour in the British Colonies. While we have all this unemployment in the building industry, and this great need for a higher standard of houses among our people in our own country, we are sending a Minister to roam over Canada to try and get employment for the trained building industries workers in some perfectly unsuitable occupation in the Dominions. Can you imagine anything more absurd than that, when there are millions of people unable to get the maximum of health because of the standard of their housing accommodation? Instead of the Government facing that and applying common sense to it, and putting in trained workers to supply the needs of those people who require housing accommodation, they are wasting their time trying to train people to produce wheat in Canada or some other commodities in Kenya at a time when the world is baffled with the problem of how to dispose of its surplus wheat and surplus goods. It is high time we had an appeal to the House to throw aside party considerations and to put the State before party in order to enable us to get out of our national difficulties by applying to them a little political honesty.

In the speech of the late Minister of Health, there were some curious and conflicting statements. The right hon. Gentleman said that the way to reduce the cost of house building is to reduce the subsidy. Surely, the logic of that is to abolish the subsidy. If you believe that the subsidy leads to high prices, you are not acting justly in perpetuating that subsidy to the extent of a single penny. He rather pushed aside an hon. Member on these benches who asked, "What about Scotland?" After all, does not Scotland require their building costs to be reduced just as much as England? The problem in Scotland is even more intense and more extensive than in England, and yet the right hon. Gentleman, when he had it in his power to reduce building costs by reducing the building subsidy, reduced the subsidy in England and Wales, and presumably kept up prices in Scotland by maintaining the subsidy. When challenged on that, the right hon. Gentleman said that it was not his act, but the act of his colleague the secretary of State for Scotland. Are we to take it from that that we had two Cabinets sitting side by side, one presided over by the right hon. Gentleman and having its separate decisions, and another whose policy was promoted and sustained by the Secretary of State for Scotland? The thing is too absurd. I am amazed that the right hon. Gentleman, who is usually very clear and complimentary to the House, should ask us to swallow an absurdity like that.

If that is not the case, how can you account for the reduction in prices? You can always get prices down by stopping house building. I am not here to defend the Addison scheme; I do not want to say anything about it, for I had no responsibility for it. We know that hon. Members opposite have nothing to gain from that illustration of the working of the law of supply and demand. They come along and say, "The nation cannot have houses, because the cost of the houses has soared to something in the neighbourhood of £1,400. The remedy for that is to stop building,"—in other words, the nation is to have no houses because somebody has put up the price. That does not seem to me to reach the bounds of human wisdom and political ingenuity. If I had had to deal with a problem like that, I would not have stopped building, but would have found means to stop the profiteering. It is easy to bring down prices if you decide to do without the goods, but that is not the problem. The problem is how to satisfy the nation's wants under a system that invites and promotes poverty. That is the problem to which the Government of the day should have directed their attention. But the right hon. Gentleman says, "How do you explain the reduction in prices that has taken place without building stopping?"

I listened to a rather dreary Debate last week on Safeguarding, and when Members opposite were challenged as to whether a tax on imports would have put up prices, they said, "No, because if you give any industry a guaranteed market, the mass production that will accrue from having that market will prevent prices going up." They quoted the motor industry, where a tax had been imposed on imports, and the price in this country, according to them, had been reduced. They said that the explana- tion was that a guaranteed, secured market was given for motor cars, and employers were induced to put extra capital into the industry, and the result was that we had in Britain what has been obtained in the United States for the past 10 years. I agree that if you can give a guaranteed market for the goods of any industry to the people who are managing industry, output will increase to a limit beyond my comprehension. Anyone would agree with that, but whether the policy which hon. Gentlemen opposite advocate will produce these results is another question.

In the housing problem, however, we are not baffled by imports and exports; very few people import houses. Under the policy of 1924, the door was opened to an output in housing material and housing construction that was absent from this country in any former period of its existence. The hon. Member for Withington explained that the Labour policy was not an Act of Parliament, but a first-class industrial organisation. It was, if I may say so, a course that might very well be adopted in dealing with many industries in the country.

What is the housing problem? After all, you cannot get away from the relation between the subsidy and the housing problem, which is mainly a financial problem. It is not merely a question of house building, essential as that undoubtedly is; it is a problem of giving to the working-class a healthy house for which they can pay the rent out of the wages which they receive at the moment from industry. The right hon. Gentleman asked when the subsidy will stop. If he can tell me when the system of paying wages that will not enable the people to supply the necessaries of life will stop, I will tell him when there will be no need of a subsidy. The right hon. Gentleman in one breath maintains a system that keeps down wages and makes the price of labour cheaper by every improvement in industry, and in another breath he asks when we shall cease to require the means of a healthy life. You are not giving that means of healthy life to-day, and, therefore, you have to deal with the problem to some extent by taking something by taxes out of the pockets of the rich, and using that to reduce the price of the necessaries of life for the poor, and in that roundabout way to secure a better distribution of wealth.

There is no other way to do it. The whole system bristles with illogicality, unreasonableness and absurdities from top to bottom, and we have to deal with the system that we have. An ultimatum is presented to the Government by both sections of the Opposition that the one thing they have not to do is to introduce anything of a Socialist character. Capitalism has failed. I have never said that it was the party opposite or the party below the Gangway who had failed; it is the system which they operate that has failed, and it is bound to fail even under a Labour Government; and, when the duration of office of this Government ceases I hope that we will not be told that their failure to solve unemployment and other things is a failure of Socialism. You are insisting that Socialism shall not be applied to it. The one piece of Socialistic legislation that has been placed on the Statute Book is the Act of 1924. Members opposite have said that, as far as they can manage it, it will be a long time before there is an increase in the family. We must, therefore, go on with this one little Socialist child while they control the House of Commons.

I am sorry that the subsidy of 1924 is net to be continued. What was the understanding which we came to with the local authorities in 1924? It was that the policy should be to provide houses for the workers at a rent which they could pay. That was the policy of the 1924 Act. We were then paying for undesirable houses, and we decided that if they could not give good hefty houses at that rent the £9 subsidy would be paid. We appealed to the local authorities, with all the influence we possessed, to see that the first reduction in building costs should go to the reduction of rent. We have built hundreds and thousands of houses since that time, but they have not always come into the possession of the class for which they were intended. The housing problem cannot be solved while there is any considerable number of families who cannot afford to pay the rent which is being asked. It is no use talking about the proposal we are discussing being a solution of this problem, because it is no solution at all.

We said to the local authorities: "The first reduction that will take place in costs will go to bringing the rents of these houses down to the object which the Labour Government have had in view "—and the local authorities agreed—"and the following reduction will go to relieving the local authorities of the contribution that they are bound to make towards the subsidising of the houses." The tenants were to get the first benefit and the local authorities were to get the next benefit, and only when the tenants had good houses at rents which they had been paying for bad houses and the full burden had been taken off the local authorities, were the rich taxpayers of this country to be relieved of the housing subsidy. What has happened? Exactly the reverse policy has been adopted. Immediately a reduction took place in the cost of building the Conservative Government applied that reduction to the relief of the rich taxpayers by reducing the subsidy. The tenants still have to pay high rents and the local ratepayers are still compelled to pay high rates, but the super-taxpayers are having their contributions to the State reduced. That is exactly the opposite policy from that which was contemplated in 1924.

My criticism of the Labour Government this afternoon is that they have perpetuated the old policy. The subsidy has been reduced, the super taxpayer has been relieved. All the evils which have crept into the reduction of the subsidy are evils which have come from the reduction which took place as a result of the Act of 1926. The 1926 Act still stands. That is the finest testimony which the right hon. Gentleman the late Minister of Health can desire. We who in 1926 condemned him in terms which were sometimes vicious and often bitter for making that reduction in the subsidy come forward now and say: "Now that we are in office and in power we will perpetuate the policy you adopted in 1926." Can you imagine a greater tribute being paid to your opponent than that which is involved in this policy? The Government may throw their hats in the air and say they are modifying the Order of 1928, but they are modifying something which has not yet come into operation, something which has not yet done any injury; they are only destroying something which I believe would have injured the provision of houses in this country. The Government have no right to make the people believe that they are this afternoon undoing the evil which they blamed the late Government for having committed in 1926. If that resulted, as the Minister of Health says, in a loss of 150,000 houses in two years, then the perpetuation of the policy will lead to the loss of 150,000 houses in every two years that follows. The Government are responsible for the future loss; the late Government are responsible for the past loss.

Let us be quite clear about those things and, as I said at the beginning, let us be quite frank and quite honest. My hon. Friends from Scotland will be told, of course, that they have nothing of which to complain, because the cut that was to take place in Scotland under the 1928 Order will not take place, and they have still the 1924 subsidy. Is it necessary to warn them that we cannot continue one scale for England and Wales and another scale for Scotland? That may be done temporarily. The right hon. Gentleman opposite did it temporarily. He left the change out of the 1926 Order, but included it in the 1928 Order. If the Government are going to follow the same line of reasoning, they will include it in the 1930 Order. They have to bring England up or bring Scotland down, but there is no evidence in this Measure that the Government possess the necessary courage to level England up, and certainly the Government will be weaker in 1930 than they are in 1929. Hon. Members opposite will play with the Government until they have discredited them in the country. This is the day of the Government's power. To-day the Government could do anything. To-day the Government are not showing the courage that their supporters on these benches expect. If they displayed that courage and went on with their own policy, the parties opposite would not dare to wound them, however willing they might be to strike; but, after the Government have disappointed their friends by 12 months of this halting, half-way legislation, as one of my friends described it, and have been discredited in the country, then, 12 months from now, there will be no party in this House poor enough to do them honour.

Lieut.-Colonel FREMANTLE

I am sure we have all listened with a great deal of interest and, indeed, with sympathy to the right hon. Member for Shettleston (Mr. Wheatley). Those of us who have been through the successive phases of the housing movement since the War know only too well how he struggled to bring the housing question down to the level of which he has been speaking this afternoon. I may not be right, but I believe that he was perfectly genuine all the way through in his belief that his proposals would add to the number of houses built and also lower the cost. But he is not justified in taking only one-half of his proposals when considering what has happened. He speaks of the 1924 Act as if it were his complete scheme, but his scheme included dealing with profiteering, tackling the rises in the price of building materials and the costs of building, and bringing about a reduction. He must remember, as so many of us do, the bitter experience of that time. His scheme was a combined scheme; it was not merely a scheme for the building of the type of houses which came under the 1924 Act. There was also the Building Materials Bill—which did not materialise—which embodied his proposals for securing an arbitrary, comprehensive and strong grip on the building trades and forcing them to keep down to a certain price. His method, carried out in its entirety, is a method of absolute compulsion, compulsion not only in one direction, but absolute compulsion. He wished to apply that compulsion to the building trades complete, including those engaged in making building materials, the building operatives and the contractors. The Measure was brought in, but was found to be inoperable; it was found impossible to get it through in Committee upstairs. The Bill received its death blow and it was necessary to come back to an agreed solution between the building trades, the Government and the country as a whole.

His failure to secure that compulsion is the real fallacy in his argument. His argument would sound splendid if compulsion could be applied. I am sure there is one ruler above all others whose power he would like to have in his hands, and whose powers are necessary to the solution of his problem, and that is the ruler of Italy at the present time. Splendid as are the possibilities open to all of us for fulfilling our dreams if we had the despotic and autocratic powers suggested by the right hon. Member for Shettleston, I am afraid such powers will never be obtained in this country. That is no solution of the question, and it is a proposal which cannot be defended by arguments from the other side. The Government seem to be wavering between two arguments, one of them put forward by the right hon. Gentleman the Member for Shettleston which has only been half carried into law, and the other the argument which has been put forward by the right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain). I should like to deal a little more fully with the actual Motion because I know it would be out of place Co argue the Socialist proposition, which I am afraid would be ruled outside the terms of this Motion. I want to deal with the real requirements of the situation and to recognise, as we must recognise, whether we sit on the Front Benches above or below the Gangway, that we all want to increase the number of houses and to reduce the cost as much as possible. If we agreed with that argument, then we at once clear away a lot of declamatory rhetoric which, unfortunately, impedes our vision.

We are considering a business proposition, namely, whether we are going to build up to, and not beyond, the proper amount, and in what way are we going to reduce the cost. We must begin by pointing out what is the cost. I am afraid that the public are often deceived by the idea of a reduction from £7 10s. to £6 in the subsidy or from £9 to £7 10s. per house. I think we ought to be put into possession of the real proportions of the money we are taking by dealing with the gross figure. We say, for example, that the figure proposed involves an additional cost of £150 a year for 40 years, or a total of £6,000,000. Here we are looking only at the housing subsidies. The total cost of the original subsidy for English houses was £6 for 20 years, making £120 as the complete subsidy. Under the 1924 Act the subsidy was £9 for 40 years, making £360 for every house. The right hon. Member for Shettleston wishes us to go back to that subsidy, and he argues that it is criminal not to find £360 at once for every single house, or £500 for houses in agricultural parishes. The right hon. Gentleman would at once increase the amount paid to the builders by that sum, and in the case of Scotland he would increase the subsidy to a similar sum of £360 and £500 in rural areas.

It is one of the faults of the presentation of this question to the public that they do not realise the actual sum that has to be paid out of the Treasury, because it is not capitalised. I do not think that the public fully realise the total amount which is actually being spent upon housing. All medical officers—and I am one—recognise the gravity of the housing question, and we fully recognise that it is by improving the housing of the working classes that you can do more than in any other way, with the exception of education, to prevent the ill-health of future generations. Therefore, it is immensely important for us to get proper housing, but we must consider the cost. I do not think the cost of housing or the amount being spent upon it is allowed to influence the policy of the right hon. Member for Shettleston. The right hon. Gentleman said that the Government should not keep the subsidy at the lowest cost to which it was reduced by the 1926 Order, but why should the subsidy be kept at the cost introduced by the right hon. Member for Shettleston? If it is true that the money is found only by the rich taxpayers, why did the right hon. Gentleman not take more money in order to lower the cost, and not limit the amount to £500 in agricultural parishes?

Mr. WHEATLEY

It was due to my well-known moderation.

Lieut.-Colonel FREMANTLE

According to that, it might be argued that the proposal we are considering is due to the moderation of the present Government. It is all a question of moderation. Even the right hon. Member for Shettleston agrees that there is a limit to the amount we can spend, although he has no sympathy with the British taxpayer. I think it is also admitted that these charges are reflected upon the workers in the last resort. We have to meet the point which the right hon. Member for Shettleston seems to have avoided—that there is a limit to the amount of money that can be spent. We should also consider the point whether we are spending that money rightly. Hon. Members should think for a moment of the gigantic amount of money which is being spent upon subsidies and housing. I should not object if we were getting our money's worth, but I am bound to say, as a medical officer of health, that there are any number of practical health schemes being turned down because they will cost perhaps £1,000,000, £2,000,000 or £500,000, for the simple reason that the Government cannot afford to carry them out, and yet they are now proposing to increase the housing subsidy to the extent of £6,000,000 a year.

Mr. W. THORNE

You will save it in another way.

Lieut.-Colonel FREMANTLE

There appears to be either ignorance or indifference to the housing question, or else there is an ignorant defence of it regardless of the amount of money spent, to which we are opposed. We medical officers of health urge as strongly as we can that the Treasury should reduce the vast sums which were spent by the late Government upon housing in order to provide more money for other important health services which are calling out for treatment. I think hon. Members in their heart of hearts must realise that we are spending vast sums of money on one thing only, when there are many other matters which are more important as affecting the health of the people. The Chancellor of the Exchequer, speaking at Bournemouth the other day, gave a very interesting address to the National Savings Movement, and to the surprise of a good many people he talked about the wonderful thrift of these people and the extraordinary savings that have been possible by the working classes during the 10 years which had elaspsed since the War. The right hon. Gentleman also alluded to housing, and he used language which, to the surprise of many people, showed that he had an essential preference for houses owned and occupied by the working classes. That argument will show the supporters of the Government why we are taking a stand against this subsidy. We shall take a stand against subsidies, because we have maintained again and again that we want to see the working classes self-dependent and able to pay their own way.

The right hon. Member for Shettleston has argued in favour of continuing the subsidy until the workers are able to pay their own way. We agree that the workers should be able to pay their own way, but surely it is not the right way of enabling people to make both ends meet, to grant subsidies or doles. On this side of the Committee, like most other people, we object to any system that involves doles. We are working for their abolition, and we hope to sec that brought about some day. I know it is a long process. Meanwhile, we want to help any movement that will enable people to get rid of doles, and I am sure that is the view of the supporters of the Government. Hon. Members opposite frequently use the word "dole" in a bitter sense in their attacks upon the capitalist system, but we must recognise, and hon. Members opposite must recognise, that housing is a necessity of life. Therefore, we wish to help in every way we can such admirable movements as that of the House Building Society, which has made such great strides, and the system of private ownership, small dwellings acquisition, and so on, which have been helped forward by all parties in this House. We have to recognise that the ideal is to do away with the subsidy, but without lessening the rate of house-building or increasing the cost.

6.0 p.m.

My right hon. Friend the Member for Edgbaston has put the case quite clearly. We have had a slow and steady but definite reduction in cost and an increase in the amount of building during the last few years. The building industry has always said that steadiness in reduction of prices or increase of operations is best for trade, and every industry says the same, so that if you have for one reason or another a big subsidy, you can only reduce it slowly. If, therefore, the subsidy is to be reduced, let it be reduced slowly, and let the reduction be continued always at the same kind of rate. You may increase your rate a little, or lessen it a little, but let it be continued steadily, and the other consequences will follow in the same direction. We have got a reduction in cost, as everyone realises—even my hon. Friend the Member for Withington (Mr. Simon), whose interest and work in housing we all recognise to be of a high order. He recognises, as we do, that there has been this reduction in cost coincidently with the reduction in the subsidy. It may have been, as my right hon. Friend the Member for Edgbaston said, only partly due to the reduction in subsidy, or it may not be due to the reduction in subsidy at all, but it was coincident with it, and it is cheering to all housing reformers that that reduction in cost has been going on and the reduction in subsidy has been going on. The two things that we want to hold together are the continued reduction in cost and the continuance of the rate of building. Why docs my hon. Friend the Member for Withington say that it has now reached finality? That is the one point in his speech which cannot be defended philosophically, politically or economically. I do not think that he himself would defend the idea that the reduction in cost has reached finality. We none of us believe that finality has been reached, either in the cost of housing or in the cost of living generally, and we have to look forward to the reduction continuing.

The process, therefore, which has been carried on during the past six years, of gradually reducing the subsidy, is one that should be defended and continued, and I feel, with my right hon. Friend the Member for Edgbaston, that it is a pity that it is not going to be carried on in the way that he intended. His proposals were eminently pacific and in the sense of the Prime Minister's appeal to the House, to which reference has been made by the right hon. Gentleman the Member for Shettleston, that we should put away party feeling in these matters and act as a council of State. My right hon. Friend the Member for Edgbaston, when he came back into office in 1925, did not simply repeal the Act of 1924 and modify his own Act of 1923 as he thought necessary, but both grew together until the harvest, and the harvest was obtained from both. The result has been splendid, and we who are interested in housing recognise the good of the 1924 Act as well as the bad, and the bad of the 1923 Act as well as the good; the two have been working together. We want to carry on that process of working together.

The matter that is before us to-day is really not one of housing, but one of expenses. I believe that we shall not get the advantages suggested from a continuance of the subsidy at the present rates, and that, from this extra £6,000,000 which we are voting, we shall not get a reduction in cost. Probably a good deal of the increased subsidy will go elsewhere. The experience always is that everyone glues on to a subsidy where they can, and that it goes into all sort of circles where it is not required. If we on this side do not oppose this proposal, we nevertheless do not think it is wise or necessary or advantageous for housing, but, indeed, disadvantageous. We think that what is more advantageous is that the public generally should learn the result from the Government that they have sent into power, and that they should find out for themselves the truth of what we believe and maintain, namely, that those results which they expect will not follow from the housing subsidy.

One practical proposal is my alternative, which is that subsidies are necessary in certain areas and not in others, that they are necessary in certain cases and not in others, that they are necessary for certain classes of the community and not for others. If you give a gross subsidy like this, nine-tenths of it is wasted, and only one-tenth is useful. I have the authority, although it is not necessary to go into it now, and perhaps it would not be right to do so, of a large body of influential opinion that has itself recommended the application of a rent subsidy by local authorities where it is most required. If this £150,000 a year, or £6,000,000 in all, were given to the new local authorities under the Local Government Act, to use, whether in reduction of rent or in other directions, for the relief of householders who really need it, you would get 10 times the value for this money that you are going to get from this housing subsidy, and yet it is introduced in this form by a Government who believe that it will be of help in the housing question. I shall not vote against this proposal, although I think that it is a very unwise use of the nation's money.

Dr. MORGAN

In addressing the House for the first time, I hope that anything I may say that is not strictly in accordance with the customs of the House may be pardoned, out of consideration for the fact that I am a new Member. We have just listened to a speech from one who belongs to the same profession as myself, and the Committee will therefore excuse me if I say at the outset that we have, as we have in politics, two opposite views in the medical profession, the one reactionary and the other progressive.

Lieut.-Colonel FREMANTLE

Which is which?

Dr. MORGAN

I have listened with great care and attention to what the hon. and gallant Member has said, and he will excuse me if I say, as another member of a profession in which we are accustomed to conciseness, definiteness and order, that I was surprised at the vagueness, indefiniteness, and almost in-coherency of what he has just said. The bulk of his speech meant that the housing policy which is proposed to-day—a housing policy which was put in operation for a considerable time by the Government which he supported—is an extravagant policy. The hon. and gallant Member says that the expenditure on housing which is now proposed is wrong. The late Minister of Health asked the question, "Is the subsidy always to go on?" Our answer is, "Yes, as long as overcrowding goes on." We have had a speech from an expert on the housing question, the hon. Member for Withington (Mr. Simon), and anything that he has written or said will always be received with great respect by those who know anything about this question, either from the social or from the medical point of view. In order, however, that the Committee may have some idea of the conditions, I would like to read two quotations from the Report of a Special Committee appointed by the National Housing and Town Planning Council on the subject of overcrowding. The hon. and gallant Member for St. Albans (Lieut.-Colonel Fremantle) has talked of this policy as an extravagant policy, and one on which we are spending too much money—in a country which is not poor. Here is a quotation from the Report to which I refer: Glasgow slums are described in the Annual Report of the Scottish Board of Health for 1926. The commissioner appointed to hold the local inquiry writes as follows: 'It is impossible to draw any picture which could adequately describe the conditions under which we found human beings living in practically the whole of the houses which we inspected. There were, it is true, differences in degree, but all were hopelessly unfit for habitation …. The majority of the houses were dark, many of the tenants having to burn gas all day, winter and summer …. Damp was present everywhere, the walls and ceilings in a large number of houses being literally soaking. Everywhere we noticed an almost total lack of sanitation, conveniences being few, and, for the most part, out of repair and in some cases leaking down the stairs and even into the houses …. Dilapidation is rife throughout the areas; ceilings are falling down, woodwork is rotting away, there are holes in the walls of houses through which the street can be seen, and the plaster work of the walls is loose and broken.' We know of these conditions, and that is why we want money spent on housing. I could bore the Committee with such quotations, and yet hon. Members opposite insist on talking about the extravagance of spending money on housing. Here is another quotation: A very revolting feature of the slums is that the majority of the houses are infested with bugs. Some time during the long life of these old houses the pests have found an entrance probably through the carelessness of a past tenant, and it is practically impossible to eradicate them. Crumbling plaster and broken woodwork afford adequate hiding places in which they breed indefinitely. The most careful tenant can only keep the number down by constant vigilance, killing those which appear on the surface of the walls and ceiling. Rats are also a source of trouble in many old houses"— as in politics— into which they easily find their way through defective drains and broken floors. The Report of the Scottish Board of Health already quoted states that the houses in the Glasgow slum are 'a hunting-ground for vermin of every description. Fleas, of course, abound, but we found also that practically every property we inspected was bug-ridden. The tenants complained that they could get no peace from these pests, which drop upon their faces and crawl over their persons and their beds at night, and which fall into their food during the day.' I wonder whether, if bugs fell into the food of the hon. and gallant Member for St. Albans, he would say that the spending of money on housing was an extravagant policy? The hon. and gallant Member, in his final remarks, made an excellent suggestion, which, however, was not his own, although he said it was his alternative policy. It is well known, and has been published in many books on slum clearance. He suggested rent subsidies or family allowances, but that is the only contribution that he made to the discussion. Here we have a professional man who has been a medical officer of health, and who ought to know about housing conditions, coming here and making a speech as he made, at a time when people are crying out for houses, when they are living in conditions of overcrowding, when what we call family life is practically in abeyance, when the Housing Acts are inoperative, when children's whole moral is being disturbed by the conditions under which they exist.

I was surprised at the speech of the late Minister of Health. He has a reputation outside the House, and one is told that when one comes to the House and hears him speak one will be convinced that he is a real authority. What has he said to-day? I listened with avidity to what he was saying to see whether I could get any words of wisdom from him, but I found nothing. He tells us that 1927 was an abnormal year. He does not tell us what year was normal. He asks, "Will the subsidy benefit those who are most in need of houses?" Those who need houses most are not at present benefiting most from the housing policy. That is the real problem to which we have to bend our minds, to see how those who are down-trodden, the lowest down, those whose wages are so low that they cannot afford to pay the rent we ask for our subsidy houses, should be helped in some way by rent subsidies or family allowances. I congratulate the Minister of Health. The right hon. Gentleman the Member for Shettleston (Mr. Wheatley) criticised him, but give him time. We know he wants time to turn round. We know that he promised something in the matter of slum clearances and I only hope, in dealing with them, he will give some consideration to the question of family allowances and rent subsidies. The late Minister of Health has dealt with the finance of recalcitrant local authorities, but he has not dealt with those local authorities who have not carried out their housing duties. I know a local borough council with a majority in favour of the policy he holds which has not built a house under the Wheatley Act or the Chamberlain Act. The only houses they have built were under the Addison Act. We are told the policy of the Government is extravagant. We do not think it is. We want the Minister to increase the subsidy still further and to see still more houses built, and the tenant who wants some home life will bless his name.

Mr. KEDWARD

I congratulate the hon. Member who has just spoken on a speech which showed a good deal of insight and knowledge of the question, and was marked by a tone of deep hope. There are one or two questions I should like to ask, because I realise the difficulties, having served as chairman of a housing committee, and having been up against a good many of the questions that are troubling the people who are trying to solve this problem. I should like to feel that we could have the subsidy of 1924, but I should like to be assured by the Minister that the subsidy is really going to benefit the people for whom it is designed. We are paying a subsidy and there are heaps of people who do not need subsidised houses who are living in them. I will give two illustrations. A woman in one of the poorer parts of London came to me and asked if I would intervene, because she had been turned down by the London County Council in reference to her application for a house. They were living in two rooms, and they have five children. She was asked what were her husband's earnings, and said they were £3 3s. a week. The answer was that it was quite impossible for them to pay 17s. 6d. a week, their wages were not sufficient; so they went back to their two rooms with their five children. A friend of mine, a schoolmistress earning £300 a year, taking with her a friend earning £200, gets a subsidised house and gets outdoor relief in bricks and mortar for 40 years. Next door to them is an ex-naval pensioner whose income is £300 or £400 a year and who runs a little car. Beyond that is an ex-inspector. All three of them are side by side in subsidised houses.

If the money is to be spent along those lines and you are going to let the houses to people whatever their income, and get people with £200 or £300 or £400 a year battening on the State, and receiving a rent subsidy for 40 years, that is not Socialism, as I understand it, and it is certainly not capitalism. That sort of thing is lunacy. We want to examine the matter with a very great deal of care, and see that we are not pouring out the resources of the country upon people who do not need it and have never asked for it. There should be some careful examination of the incomes of the people to whom you are going to let the subsidised houses. Unless you do that, you are going to condemn these poor people for whom some of us want to speak to years more of dwelling in slums. During the next five or six years some of us hoped that this policy would have touched the question. Fur many of them there is not a gleam of light through the long dark years and this is a thing that is urgent. You want to begin here and now. There is one small area in London with 7,000 registered applicants and 400 new notifications every year. Ought we not to begin with those people? Ought we not really to say they shall have preference over all others? I should like an assurance that we are to have a bold policy. I was hoping we should have had some indication of the lines upon which it is going to travel.

Another question on which I should like to hear something from the Minister is that of sub-letting. I was responsible for getting a tenant into a subsidised house. They were poor, and the difficulty was that they had only about 15s. worth of furniture and, as they could not make it go round they confined themselves to the same space they had occupied before, and let the remainder of the house. When I heard of this I went to them and found out that the sub-tenant was paying nearly as much as they were, so that they were living rent free. I said "I do not think you ought to do this." The tenant said, "I have had it done on me for the last seven years, and now I am going to get a bit of my own back." Are you going to let that kind of thing go on? If so, it is going to wreck the whole of your policy. There should be safeguards with regard to people with incomes adequate to pay for their own houses, and you should stop this system of sub-letting at high rates. If we can do that, we shall make some progress.

Now I want to refer to rural housing. There is no proposition before the Committee, even with an increased subsidy, which is going really to touch the question of housing in rural areas. What are you going to do for people who have an income of 30 odd shillings a week? [An HON. MEMBER: "Give them a rise!"] It is all very well to say that, but you have to deal with the matter. There is no proposition before the Committee to give them a rise. I have been into these dirty little insanitary houses in the country, many of them with the rain coming through the roof, and there is an urgent need for a small type of house suitable for pensioners who do not want much accommodation, and others living in villages. It is not beyond the wit of man to devise some means of satisfying the urgent needs of housing. The country has not had its fair share allotted to it of the houses that have been built during the last few years. I hope the people in the rural areas will be considered, and I hope we shall cut out some of the people who are living in subsidised houses, and when you have done that, you will have a great deal more money to spend on the people who really need them and whose case is urgent. I hope we shall not go on wasting the resources of the country on people who can well afford to pay their own way, and confine our attention to giving the subsidy and increasing it to the amount necessary to give these people a chance of a decent, happy and clean way of life.

Mr. MacLAREN

I have heard all the speeches that have been delivered so far, and I find there are three points of view that have been put. I am not so sure that I agree with any one of them. I consider that the hon. Member for Withington (Mr. Simon) is one of the most dangerous Members of the House. He is disinterested, and well-intentioned, but wrong-minded. There is no man more dangerous in society than the man who does not know exactly how to solve a problem and is bent on doing it the wrong way. His speech was a great disappointment to me, because I have heard so much about him. It may be that he has forgotten some of the brilliant ideas he used to have. To-day I listened, but nothing was forthcoming. Much that he said has been said many times before. It seemed to me he was rather going along the line of a great expenditure on subsidies without regard to the taxpayers. The hon. Member said something was wanted on the lines of the Act of 1924. The right hon. Gentleman the Member for Shettleston (Mr. Wheatley) is always interesting, and when one accepts his premises his logic is devastating, but when his premises are wrong his logic is a mental exercise, and he never arrives anywhere.

The right hon. Gentleman the ex-Minister of Health—he and I have never agreed in this House, and I do not suppose that we ever shall—maintained that the reduction of the subsidy was shown in the cost of houses. When the subsidy fell, the price of houses also fell. I quite agree with the right hon. Gentleman the Member for Shettleston when he said: "If the reduction in the subsidy is reflected in the price of houses, namely, that prices fall, then why not be logical and wipe out the subsidy altogether?" Hon. Members opposite, if they were on this side of the Committee, would not have removed this subsidy; they would have been afraid. They know full well what constitutes the housing problem just as well as Members of the Labour party. What is the housing problem? It is a question of low wages and high costs. That is it, boldly and bluntly stated. When you see people go into respectable, model, up-to-date houses, you find that their wages are not sufficient to meet their obligations. It should be the first function of wise administration to cut down whatever contributory causes there may be so as to bring the houses within the ambit of those who receive very ordinary wages.

May I give to the Committee my own experience in Stoke-on-Treat? I am a Member of the Corporation of that town, and we have the Government subsidies. I never agreed with the subsidies. Subsidies are like Protection: they feed people who ought to be dead. When we knew that these subsidies were coming along, my colleagues on the council and I set to work to see how we could build, not one of your accursed non-parlour houses, but a three room and kitchen house, with bathroom, so that it might be let at 10s. a week. When we added the rates, we found that the rents of the houses had to be increased to 19s. 6d. per week, throwing the houses right beyond the grasp of those who desired them. We tried to cut out certain things, and found that with rent and rates included we could bring the amount down to round about 15s. 6d. a week. Here is a contributory cause upon which I should have thought that the hon. Gentleman opposite who sits in this House as a Liberal would have followed his leader. I remember the attitude of the Leader of the Liberal party many years ago when I was a Member of that party and took an active part in it. We did not then talk about subsidies. We did not believe in the idea that there was a bottomless pocket, called the taxpayer's pocket, out of which—

The DEPUTY-CHAIRMAN (Mr. Dunnico)

I would remind the hon. Member that the only question which can be discussed on this Motion is the continuance of the subsidy or not. The hon. Member is not entitled to give a dissertation upon the land or rating problem.

Mr. MacLAREN

I am not touching the land problem, but the herecy which is now prevailing on the benches opposite. I commend the speeches of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) to the hon. Member—the speeches delivered between 1909 and 1910. If he will read them, I shall not be accused of getting out of Order. He did not keep up the old Camp-bell-Bannerman traditions to reduce or to remove whatever contributory causes there were which were enhancing the price of houses. When the Conservatives were on this side of the House, they observed that prices were inflated by contributory causes and by local rates. They brought in a great de-rating scheme. The present Parliamentary Secretary to the Ministry of Health and the present Minister of Health got up in their places when they were on the Opposition side of the House and appealed to the then Conservative Government to extend their de-rating benefactions to housing—a most natural thing to do. As far as this discussion has gone, there has not been a single word said about that matter.

The DEPUTY-CHAIRMAN

If it had been brought in, it would have been out of order.

Mr. MacLAREN

I claim that the rates where levied on houses are one of the reasons why the cost of housing is higher than it ought to be. If the late Government had been bold enough to extend their policy of de-rating to the housing of the people, they would have done something towards securing the solution of the problem of housing, which would have been more fundamental than this Fabian conception of pouring public funds into subsidies. From my experience as a member of a corporation, I find that when the subsidy was high the ramp was greatest among the builders. The moment they heard that there was a big subsidy in sight, they got ready. That will always happen—I do not blame them, human nature being what it is—the moment the Government come along with subsidies. I see signs of it in the Press at this moment. I almost observe a sort of close co-operation beginning to form itself in some areas between certain brick building fraternities and dealers in building materials, getting ready because my right hon. Friends are in power, and they believe that a new subsidy is coming along. I hope that my right hon. Friend does not believe that it is possible to solve this problem by an intemperate, overbalanced attempt to do something which might contribute, not to housing, but to this trade impetus which makes housing impossible. My right hon. Friend the Member for Shettleston said that my right hon. Friends on the Front Bench were very reactionary, and that what they were doing by this Motion to-day was nothing short of perpetuating the cuts of 1926.

It is an easy thing when you are not on the Front Bench on the Government side of the House to be fiercely critical. I could be critical too, but I want to have compassion on my friends on that Bench. I am hinting at the lines which I would take. I would cut off whatever contributory cause of the inflation in the cost of housing there is, and I have said that rating is one of them. I will say quite frankly that I do not like the tendency or indication of the Motion which is on the Paper to-day. There was much in the speech of the Minister of Health to-day to indicate that he was foreshadowing possible schemes which the Government were likely to bring in, and which, I must confess, left me a little apprehension. But having to come into office, having made pledges in the country and not having had time to cut down the thicket and growth of various Acts of Parliament passed by the last Government, there is nothing left for the Government to do in the short period of time between now and the rising of the House than to bring in a Motion like this. Does the right hon. Gentleman opposite suggest for a moment that within a short time, from to-day until the rising of the House, the Labour Government can bring in an alternative policy cutting athwart all that was done by him and his colleagues in the late Government? I do not think that that is possible. I am not altogether condoning what has been said, and to-day I am partially critical. At least, I have to extend sympathy in a new situation.

At the same time, I must hint that the road of subsidies is a disastrous road to pursue. I still hope that there are hon. and right hon. Gentleman on the Liberal benches who have the old Radical idea with regard to this housing problem, and who will not be carried away with this idea of subsidies and State pampering. I hope that there are Liberals who still believe in the old Radical policy of uprooting monopolies and giving the natural growth of houses and other things a chance. I still hope that there are some hon. Members generally critical enough to assist me in the near future in trying to get down to the real cause of bad housing. I have said that it is due to bad wages and high costs. I have yet to learn that subsidies increase wages and lower costs. I can prove, as I think any hon. Gentleman in this House can prove, that subsidies inflate costs by encouraging "rings" and monopolies in building materials, and lower wages by the amount of taxation levied to create the funds necessary for the subsidies to be distributed through the State. The other day, when watching the processes of the subsidy in Stoke-on-Trent, we observed this. The State collects the subsidy in the form of taxation by very expensive means in London and sends it to our Division for housing. We send the rate collector along to value the house, and, as soon as he has valued the house, he claps the rate on to the house. At the present time, the subsidy is not solving anything. It is childish to the last degree. It is almost distressing when one realises that housing experts in this House still believe in this nonsense. It is distressing to think that there are housing experts here giving voice to sentiments of this character.

Mr. VAUGHAN

I should not desire to take up the time of the Committee upon this subject were it not that I feel that I have a direct contribution to make by reason of a lifelong experience. At the outset, may I claim the sympathy of the Committee, because I labour under two great disadvantages. First, I am one of a race that is celebrated for its retiring disposition. I am a Welshman, though not of the type represented by the Leader of the Liberal party. Secondly, I sat at the feet of a very prominent Member of this House, the late Sir William Harcourt, nearly 30 years ago when he was Member for the West Monmouth Division he prophesied that I should one day become a Member of this House. It has been a very long time coming. I can only blame the electors for that, but hon. Members will understand the sentiment and the romance that influences me as I address the House for the first time. I have looked through the glass doors of this House for nearly 30 years. Perhaps I may be allowed to quote the words of a well-known hymn, and say: I looked at Heaven, and longed to enter in. Contrary to the usual experience, my realisations are far exceeding my expectations. I find an air of Heaven present, partly because of the Godlike patience that you, Mr. Deputy-Chairman, and Mr. Speaker, manifest and, partly, because there is an air of eternity about the Debates.

I will now drop down from the celestial to the terrestrial. I happen to be a building contractor. That is why I have risen to take part in the Debate. I would like to say, as respectfully as I can, that I have no sympathy with the scientific, astronomical or financial suggestions made by the ex-Minister of Health, and by several hon. Members. If houses can be built for £339, non-parlour type, or £400, as the hon. Member for Withington (Mr. Simon) said, there is to reason why the sum cannot be kept down to that figure, and that the subsidy shall go, not to the profiteer, but in direct reduction of the cost of the house at this moment. In my profession—I always call my trade a profession, and it is a respectable profession—a man has to be, not only a jack of all trades, but a master of all trades. He has to learn the art of using the spade. He has to be able to do the work of a labourer, and he has to be an expert down even to the work of a lawyer. Everybody well knows that, as a class, we builders are pre-eminently benevolent and philanthropic. No body of men in this country labours as we do for the good of the community, without hope of reward.

The Minister of Health, for whom I have respect, used the word "scamping" in regard to building work, and he was right; but we only scamp when Members of this House compel us to scamp. Very rarely will you accept a tender unless it is the very lowest. What are we to do? We have our families to keep and we have our rates to pay. If we do not always comply with the specification, blame yourselves for upholding a system of which we are such slaves. If, under the shadow and expectation of a subsidy—I agree with the remarks of the hon. Member for Burslem (Mr. MacLaren) on this point—we gradually raise our prices, and if instead of quoting £339 to a local authority, now that a Labour Government has come in, and the wheels will go round again, and we run up our prices until within six months we shall be quoting £1,000, can you blame us? We are the exponents of private enterprise, which is the life blood and gospel of both the Opposition parties. If we seek whom we may devour, please do not blame us. We are the helpless victims and you, gentlemen, in particular, compel us to practise the art of self-preservation. I should like to refer to the builders' merchants, who act as middlemen between the manufacturers and men like myself. I absolve them almost entirely. They, again, cannot help themselves.

The DEPUTY-CHAIRMAN

I am afraid that the hon. Member cannot enter into a general discussion. He must keep himself to the Resolution.

Mr. VAUGHAN

I was trying to explain, and I hope that the Minister of Health will realise it in future, if he does not realise it now, that it is possible for the cost of houses to be kept down to the price which prevails to-day. In order that the subsidy may go to the immediate relief of the tenant, and more particularly the poor tenant—that is desired by every hon. Member who has spoken this afternoon—it may be necessary to go on the lines suggested by one hon. Member who referred to compulsion in the production of building materials. Why not? If we do that, we shall be doing what hon. and right hon. Gentlemen opposite boasted of doing in war time. I can guarantee that there is no more patriotic body of men in this country than the workers in the building trade, and they would be quite willing to be nationalised, or controlled, if you like. Have agreements, certainly, if you can, but if you cannot come to agreement, they will be quite willing to be compelled in some form or other, if only houses can be built for their poorer brethren and sisters.

They would be willing to be brought into one great organisation, on one condition, and that is that the profiteers who have so largely taken advantage of subsidies in the past shall not be allowed to pocket the profits in the future. I used to pay 1s. 6d. for a length of troughing, but when the rings and combines were formed they made me pay nearly 10s. for it. That is where the subsidy goes. I would like the Minister of Health to look to this aspect of the question. If it was necessary to nationalise or to control armaments works to produce guns with which to kill the Germans, because the profiteers were willing to agree to bleed this country when the country was bleeding from the attacks of foreign foes, why on earth cannot we if the necessity arises, bring in some system of compulsion in regard to the production of bricks and cement, the hewing of slates, and the getting of other materials for the housing of the people in my constituency and elsewhere? I thank the House for their courtesy in listening to me, and I hope that I shall have the pleasure of addressing the House on future occasions.

Sir KINGSLEY WOOD

Every Member in the House will like me to congratulate the hon Member upon his maiden speech. Certainly, he comes very well equipped to discuss this subject, and I shall study the observations which he has offered. I have no doubt that, from time to time, he will be able to give us many explanations of the building trade and the work of building contractors, which has been a mystery to a good many of us. I would like to congratulate my right hon. Friend the Minister of Health on the position which he has attained. I do not think there is any Minister, if I may say so, who has more richly deserved and more thoroughly earned his position than the right hon. Gentleman. He worked very hard for the Labour party during the last four or five years, and he made more speeches enunciating Labour policy than any other ex-Minister on the Labour side of the House. I am glad to think that those speeches will be read and re-read in order that we may see how the right hon. Gentleman is progressing with the policy which he so vigorously enunciated. I should like to express also a few words of congratulation to the Parliamentary Secretary. She has fully earned her position. I suppose there was no Member of this House who understood more and was able to explain better the famous formula in the Local Government Act than the hon. Lady. It is some consolation to many of us to know that she will be engaged in putting that formula into operation.

In discussing the Government's proposal this afternoon, I think we may congratulate the Minister of Health upon the position in which he finds himself, generally, in relation to the housing problem, compared to the time when he was Parliamentary Secretary in 1924. There is a great deal of division in this House as to our housing policy, and the Financial Resolution which we are now discussing raises the issue in a very acute form. It is right, when we have to decide between one policy and another, to look at what has been done and consider whether by a reversal of that policy anything like the success that has been achieved in the past is likely to be attained in the future. I do not think that any hon. Member, wherever he may sit, will say that it is a small thing that during the last four and a-half years nearly 800,000 new houses have been built. If the Minister of Health is able to assist in the erection of houses at anything like that rate, everyone in the country will say that he has done very well. One of the best compliments that was ever paid to my right hon. Friend the late Minister of Health was paid by the present Minister of Health to-day, when he said, reviewing the Act of 1923, that it had virtually done its work in providing houses for the lower middle classes. Un- doubtedly, that particular Act of Parliament has benefited that particular class of the community.

7.0 p.m.

The problem which faces the House of Commons to-day is not the problem of houses to let, but the problem of building houses which can be let at such rents as the poorer-paid members of the community can afford to pay. I ask the right hon. Gentleman and the Parliamentary Secretary, who is going to reply, whether this step which has been taken to-day is designed to meet that problem. I listened very carefully to the Minister of Health, and he stated that his ambition was to have a steady, continuous, and expanding volume of house building. That is not sufficient. You might have a steady, continuous, and expanding volume of house building in this country at such a cost that no member of what we may call the poorer-paid classes of the country could afford to live in the houses built. Would anyone here desire to go back to the days of the Addison houses when you had the highest subsidy paid in the history of this country, when prices went sky high, and when you had the highest cost of houses at any time in our history?

There are two right hon. Gentlemen whom I would like to have heard in this Debate this afternoon. One is the right hon. Gentleman who is now Parliamentary Secretary to the Ministry of Agriculture. I would have liked to have heard him speak free and unfettered, because he could throw a great deal of light upon those days, and, when the history of that Parliament comes to be written it will not be the right hon. Gentleman who will alone have the blame for the high cost of houses then. I would very much like to hear also the right hon. Member for Penryn and Falmouth (Sir J. Tudor Walters). There is nobody in this House who can speak with more practical experience of the erection of houses than the right hon. Gentleman. I doubt whether he would be prepared to subscribe to the remarkable policy and doctrine which was enunciated this afternoon by the hon. Gentleman who has had a great deal of experience of municipal housing, and I doubt whether anyone, who has been associated with practical house building, would subscribe to that doctrine.

Is this proposal this afternoon really going to lead to houses being let at rents that the poorer-paid members of the community can afford to pay? That is the test of these housing proposals and I am sure Members of the Labour party would desire that that test should be applied to these proposals. I can understand there being two bodies of opinion in this country, one which says that the only way to get houses for the lower-paid members of the community is by an adequate subsidy, and the other which says—and I belong to the latter body—that the sooner you get rid of the subsidy the better and the cheaper will houses be built. Why is it that nobody this afternoon has spoken with approval of the right hon. Gentleman's suggestion? The Labour party has said again and again, and the Prime Minister said only nine days ago, that the policy of the Labour party, so far as the housing subsidy was concerned, was to get back to the 1924 Act. This proposal certainly does not do that. If you really believed in subsidies and believed that they were going to provide for the lower-paid members of the community, then I could understand the right hon. Gentleman bringing forward that proposal this afternoon. The right hon. Gentleman behind me has given case after case of people who are occupying this class of State-assisted houses to-day. Why is that class occupying those houses? Because other classes of the people cannot afford to pay the rents. This proposal will not bring a day nearer the occupancy of those houses by tie very people which they were designed to benefit. No one is going to tell me that the continuance of this subsidy is going to make that difference.

I do not want to say anything severe about the right hon. Member for Shettleston (Mr. Wheatley) in his absence. Can anyone who says "Back to the 1924 Act" say that the 1924 Act succeeded in its main object? Its main object was to provide houses to let at rents that the poorer-paid members of the community could pay. No one can say that the Act of 1924 did that. I have heard it said that it is the reduction in the 1924 subsidy which caused the 1924 Act to fail in its object. That is not correct. There was no reduction in the 1924 subsidy for two years; yet during the whole of those two years there was no difference. I appeal for confirmation to every Member in this House when I say that there was no difference between the rents of the Wheatley houses and the rents of the Chamberlain houses. If anybody objects, let him put a question to the Minister of Health next week and see if what I say is not confirmed by the reply. I repeat, although there was this immense increase in the amount of subsidy to be paid and although I believe that the country is quite prepared to pay further sums of money in respect of housing subsidy if it will only do the work, that, notwithstanding that, in no part of the country during the first two years that the Wheatley Act was on the Statute Book and the housing subsidy had been very greatly increased, could you find any vital difference between the rents of the two classes of houses.

Mr. SIMMONS

On a point of Order. Will the right hon. Gentleman try and explain to the Committee—

The CHAIRMAN

The hon. Member must understand that questions and explanations are not points of order.

Mr. SIMMONS

My point of Order is that the right hon. Gentleman is misleading the Committee.

Sir K. WOOD

I must ask the hon. Member to forgive me if I unintentionally misled him, but I will repeat the point which I was endeavouring to make. It is the vital point of this Debate. It is the point whether or not a subsidy does bring about houses at lower rents. That is the whole issue. If it does not, it is no use going on with these proposals this afternoon. Let hon. Members put a question to the Minister of Health and ask whether, notwithstanding the very large additional cost to the State of the Wheatley Act, it did in fact provide houses at lower rents. We know that it did not and that the rents of the Chamberlain houses and the Wheatley houses are to all intents and purposes the same.

What are we going to get from these proposals this afternoon? I can quite understand their being condemned, as they have been by people who believe in the subsidy, because those people say that, if we believe in a subsidy, we should go back, as the Prime Minister said nine days ago, to the 1924 Act. They have been condemned also in other parts of the House by people who say—and I think there is overwhelming evidence for it—that the best means of getting back to a lower rent is to get a cheaper house. It certainly is a curious thing—and I do not see how it can be explained away, though perhaps the hon. Gentleman who is a building contractor can throw more light on it on the Second Reading of the Bill—that, when we have increased subsidies in this country so far as houses are concerned, the price has gone up. It has gone up not only when the subsidy has been increased, but I know case after case where the increase in the amount of the subsidy before the subsidy has actually come into operation has been added to the cost of the house. I have known equally well the reverse to take place. One may say that it is due to all sorts of costs, but there is overwhelming evidence that this question of the subsidy has a very direct bearing upon the cost of a working man's house in this country. On looking at the figures, any impartial person who can take a non-political view must be bound to come to the same conclusion.

I wish I could congratulate the right hon. Gentleman this afternoon upon the first effort which he has made. The first question for us this afternoon is whether we are going to go on with a policy of subsidy, and, secondly, whether we are going to go on with an increased subsidy or not. I can understand hon. Members saying on certain matters that one must give the Government time, but the right hon. Gentleman has had great experience in this matter, and no one on that side of the House has given more study to this great problem than the Minister of Health. He has been thinking it over for 4½ years and has made very definite pronouncements upon it. I hope this will not be regarded as a severe or an early criticism, but I say that we have had experience in the time the House has already been meeting that the Government are not fulfilling their pledges. Whatever difficulty there maybe about other pledges, there is no difficulty about fulfilling their pledges regarding the housing subsidy. They do not want a long time to think it over. This Motion, as the right hon. Member for Shettleston suggested, could easily have been drafted in the form of going back to the 1924 Act. There is no difficulty about it. The right hon. Gentleman has, however, made a most curious decision. It is a sort of half-hearted measure, neither one thing nor the other, and like all half-hearted measures it will fail.

I can understand a vigorous housing programme, and the policy of an increased subsidy in the hope that you will help the building trade in order to induce contractors to do their work, but this is neither one thing nor the other. What do the Government expect to get by this proposal? Do they expect to get houses at lower rents; and that is the test. If that is the idea then many people like the Minister of Health will be very disappointed. The right hon. Gentleman, with his ability and enthusiasm and his undoubted knowledge on this question, should consider the policy of doing away with subsidies as quickly as possible, reduce the cost of houses, as that is the only way to obtain houses at rents which the poorer classes can pay.

Mr. MacLAREN

Will the right hon. Gentleman also include an extension of the De-rating Act to houses?

Sir K. WOOD

I should not like to get into trouble with the Chair by dealing with that matter. If the right hon. Gentleman wants to spend money on houses then no one on this side of the House or in any part of it will grudge the money if it is properly spent. Let us also have a continuous and comprehensive policy for the abolition of slums. If the money is wanted it will not be grudged.

Mr. MARKHAM

You did not find it.

Sir K. WOOD

There is no one who has any knowledge of the housing problem who would not say that it was the first duty and the only practical policy of the Government during the last 4½ years to concentrate on the building of new houses. No man who has given any consideration to these matters will say that it would have been right to invite local authorities to embark on big slum clearances. The first thing you have to do in clearing away slums is to have a place to put the unfortunate people.

Mr. MARKHAM

Will the right hon. Gentleman explain the Rural Housing Act?

The CHAIRMAN

I think the discussion is getting a little away from the Financial Resolution.

Sir K. WOOD

Let me go back to my original suggestion. If there is any money to be spent let us spend it more in this direction than in giving subsidies. It is a remarkable thing that nine days ago the Prime Minister announced that the Government were going back to the 1924 subsidy, but to-day they are only carrying out part of that policy. I wonder if the Chancellor of the Exchequer has intervened in the interval. I can understand the Chancellor of the Exchequer saying: "What is the history of this matter. If I give you more money for a housing subsidy, we all know where it will go." What is the good of spending money in that way? If we have money to spend on housing let us spend it in a great scheme of development. Let no one think, however, that if you enter upon a big slum clearance scheme that you can have anything but very slow progress. Anyone who has had any practical experience of local authorities knows the delay that takes place, the most disappointing delays, in dealing with slum clearance schemes. Let the right hon. Gentleman address his mind to this problem and we will support him; but also to the reconditioning of houses. It is very easy on public platforms to say that the policy of reconditioning means keeping people in their present wretched hovels. What is the alternative? So far as slum clearances are concerned it is that you will be unable really to bring any practical assistance to a large number of the present generation at all. We have no desire to interfere with the right hon. Gentleman in getting this Resolution, but I hope that when we meet in the Autumn he will present a more worthy scheme than the proposal to-day. It has been condemned in all parts of the House. Let the Resolution go forward; but we invite the right hon. Gentleman in the Autumn to bring forward a much more practical and vigorous scheme which will prove more beneficial to the people of this country than this half-hearted and unsatisfactory proposal.

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Miss Lawrence)

I must confess that there are some peculiar difficulties which attend me in replying to this Debate. We have had a great many objections of a great many sorts, but I do not gather that any single Member proposes to support these objections by his vote, and that certainly throws a peculiar doubt on the Parliamentary proceedings. I will go through one or two of the minor points which have been raised during the course of the Debate. The hon. Member for Withington (Mr. Simon) at the end of his speech, in which he explained the housing question with a lucidity and force which everyone must admire, expressed some fear that the cost of the scheme, as set out in the Financial Memorandum, implied some limitation of the number of houses. I can assure him that he is wrong. The Financial Memorandum, in the most harmless platitude in the world, says that the cost will depend upon the number of houses put up, and it makes the equally platitudinous observation that if there are 100,000 houses the cost will be £150,000 a year for 40 years. I want to help the hon. and gallant Member for St. Albans (Lieut.-Colonel Fremantle) out of a little difficulty. He compared the amount spent on what are called the Chamberlain houses with the amount spent on the Wheatley houses, and he said that on the Chamberlain houses the subsidy was £75 and that in the case of the Wheatley houses it was £360. The hon. and gallant Member in the case of the Chamberlain houses capitalised the value of the annual allowance but in speaking of the Wheatley houses instead of giving the present capitalised value he had simply multiplied the annual amount of the subsidy, £9, by 40.

Lieut.-Colonel FREMANTLE

I did not multiply the subsidy. The subsidy was £9 for 40 years.

Miss LAWRENCE

Yes, exactly. The hon. Member multiplied the annual subsidy by 40. He gave the cost as £360. In dealing with the Chamberlain houses he gave the present value of the terminable annuity. The hon. and gallant Member can compare the total value of the two annuities or compare the capitalised value of both, but he must not have a capitalised value in the case of one and compare it with the annual subsidy multiplied by the number of years in the case of the other. Let me deal with the second class of objections. The late Parliamentary Secretary is very anxious to see a real comprehensive housing programme, and a fearless dealing with slum clearances. That is a delightful thing to see. But a repentance which is later than a death-bed repentance in the opinion of most theologians is unavailing. The hon. Member for Camberwell (Dr. Morgan) with his sincere and keen desire for housing reform made a very excellent speech. He dealt with the miseries of people who are living in overcrowded surroundings, and he asked for a quick remedy. Every word he said would have been appropriate to a consideration of the Bill which is foreshadowed in the Gracious Speech from the Throne. I must recall hon. Members' attention to this fact, that this is not that scheme. In the Gracious Speech a Bill was indicated dealing with housing and slum clearances. The proposal which we are putting forward this afternoon is not even half-way legislation. It is more modest even than that; it is standing still legislation. It is simply to prevent the situation becoming worse pending the introduction of the Bill in the autumn. The Prime Minister on the 3rd July explained the difference between these two Bills very clearly. He said: There will he a short Bill dealing with a continuance of the subsidy. It is merely legislation in order to prevent the situation becoming worse whilst we are preparing the legislation to be introduced in the autumn. This is simply to avoid the dislocation in the building of houses which will be caused if local authorities find the subsidy falling off in September.

I desire to address myself to the main argument of the right hon. Member for Edgbaston (Mr. Chamberlain). His theory is that if you put money for houses on the taxes you put up the price, but if you let the cost fall on the rates you do not. That is a very interesting theory and one which demands some elucidation. The right hon. Gentleman fell somewhat short in his explanation. He said that in June, 1921, the price of the Addison house was £695, that is before the subsidy was dropped, and when the subsidy was taken off the price dropped in June, 1922 to about £389. He paid himself the most magnificent compliment that any man ever did when he likened himself to Einstein and said that like that great man he had provided a test by which his theory could be proved. There is a good deal more to be said about this question of the price of houses. We did not begin the tale early enough. In 1919 the price was £717. In June, 1920 it rose to £843, and in June, 1921, when the subsidy was still on and nobody was proposing to take it off, it dropped to £695, and in the following year to £389. It is very odd that no one looked for the cause for the running about of the prices of Addison houses during the years 1919 and 1922. The answer, of course, is simple and it is that in those years the price of everything went up. I have here the wholesale prices index figure, which is the best measure of the value of money I know.

In those disastrous years the wholesale index price ran up to 322 in 1920. It dropped in 1921 to 197.7 and dropped again later to 159.9. That was what money was doing in those disastrous years. The argument that the change in the Addison subsidy had anything to do with it is not an argument that would have deceived the silliest people that ever went shopping in those years. There are business men listening to me now who know how prices ran up and dropped, equally calamitously, within a few years. Of course the price of houses went up and down, too. Much paper was blackened with much ink by learned gentlemen financiers and bankers, telling us why the wholesale prices went up or down. But they never mentioned the Addison subsidy. They talked of inflation, credit, currency and gold but they never noticed the Addison subsidy. Really it is absurd to talk about the course of prices in the commodity in that frightful period as being due to the Addison subsidy. I would remind the right hon. Gentleman that in 1920 his Department published a solemn inquiry as to the reason why the burden of the rates generally had risen so suddenly and I would recall the concluding words of the statement of the Department. They said it was in the main due to the cost of wages and material, but added: It seems, however, to be impracticable to isolate local authorities and local rates in such a way that they alone would cease to feel the effect of world wide forces which have diminished everywhere the purchasing power of money and have led everywhere to a greater nominal amount of expenditure. That is exactly what we are now saying about the fluctuations in prices of the Addison houses.

The Ministry were kind enough to institute, in this matter of prices and subsidies, what in the language of science is called a controlled experiment. You take two sets of things as nearly as possible alike and place them in identical circumstances, and then expose one and not the other to the influence of a single factor. That happened in the case of the Scottish and the English houses. They cut the subsidy for English houses and left the Scottish houses alone. If their theory was true, then English prices should have gone down and the Scottish price stood still. But they both went down, not exactly together—but both went down. The truth is that this question is a great deal more complicated than to be met by the simple method of looking at the figures with regard to the price of houses and the subsidy. Supply and demand does play a part; and, as has been said, in a very peculiar way. Demand does not increase prices until you reach the limit of the capacity of the builders. If you go beyond that and have a scarcity value a house may cost anything. But that limit is in itself elastic. If proper warning is given, the trade adjusts itself to the new conditions—and a stronger demand under such circumstances need not mean a higher price. There is hardly any limit to the number of houses that you can erect in a given time under proper notice. That is what I believe to be the correct relation bteween subsidy and price. If you stimulate suddenly an altogether disproportionate demand, of course you put up prices. If you suddenly and violently lower demand—you certainly will lower prices. Every business man knows that in certain circumstances it is worth while to take a price which just covers labour and material, to dispense with profit, and even not cover overhead charges for the sake of keeping the business together. But a steady and foreseen increase in demand may have no effect on price at all.

I think I have disposed of the right hon. Gentleman's theory. It means, in effect, that taxpayers' money raises prices and ratepayers' money does not. That is what the right hon. Gentleman has to prove if his theory is tenable. Then what are we to say of the demand that we should concentrate our building efforts with a view of getting rents down? What did the last Government do? They cut down the subsidy and they in consequence made the economic rent higher. If the subsidy had been left on, every penny of it could have been used by the local authorities so that the reduced price due to general economic reasons could have been used for the reduction of rents. But the Government took off the subsidy when prices were coming down from natural causes and they left the local authority in exactly the same position with regard to the extorting of economic rents. I ask hon. Members who are naturally impatient with regard to housing to remember that this small Bill is merely to clear the way for the future housing and slum clearance scheme.

I must conclude with a few words with regard to the language used by the right hon. Member for Shettleston (Mr. Wheatley). I can always make allowances for a man who has a great rhetoric gift and is carried away by the flood of his eloquence. It is a fault that we should all like to share. But it was an almost overwhelming exaggeration when the right hon. Gentleman spoke of our perpetuating the present system and of keeping it in force for ever. Really when it is a question of, it may be only three months, the word "perpetuity" is much too strong and a misuse of terms. I am sure that when the right hon. Gentleman sees his statements in the OFFICIAL REPORT he will feel that his undoubted rhetorical gifts have led him into some pardonable exaggeration.

Question put, and agreed to.

Resolution to be reported To-morrow.