NEW CLAUSE.—(Cessation of application of Acts to certain dwelling-houses.) (Hansard, 11 April 1933)

§ Lord EUSTACE PERCY
I beg to move, "That the Clause be read a Second time."
The real difficulty about all rent restriction legislation is how to devise any method of preparing for the decontrol of the houses concerned. This Bill registers the breakdown of the attempt to secure some gradual decontrol of controlled house property. That, it seems to me, leaves the state of the law and the state of the policy in a very serious position. You are always in this dilemma. If you have no gradual system of decontrol, as under the previous Acts, if you allow the decontrol of vacant premises, you merely throw on to the market in small quantities a particular commodity, a decontrolled house. The price of that commodity—the rent of the decontrolled house—tends to rise because of the shortage in the supply. On the other hand, if you ever contemplate a moment of complete decontrol without any gradual decontrol leading up to it, while you throw on to the market a great mass of houses, the rents of which will consequently tend to fall, yet the very size of your operation will tend to create tremendous dislocation and hardship which this House, and any Government which is in power, will always try to revoke. We have always seen the fear which has moved this House even in 2508 decontrolling the Class "A" houses, where there has been a very considerable addition to the supply in the last few years.
My contention in the proposed new Clause is that there should be some system of gradual decontrol which retains control over the amount of the rent but which gives the landlord power over his tenant and a limited power over the user of the house. I propose in the new Clause that the landlord should be enabled to enter into a deed of covenant with the local authority by which he would covenant to continue to charge no more than the permitted rent for a period of years longer than the period of restriction provided by this Bill, but, in exchange for that covenant to keep the rent of the house down, he should acquire the power of dealing with the house and of improving his house property as long as he did not change the user of it, and kept it as a house to be let to persons of the working classes; and in addition, he would acquire the power, where the house was old-fashioned, of replacing the house as long as the house which he built in replacement also was restricted to the same user, except and in so far as the local authority might consent to a change of user.
I know that the general scheme of gradual decontrol has been decided upon by successive committees, including the committee on which I sat some 10 years ago. Committees are not infallible, and all our experience of committees is that they tend to be frightened of any new proposals. It is true that any proposal of this kind is open to the objection, "Oh, the landlord will always find means of getting round his covenant. He will always find means of extracting key rent and so on." So far, no committee has ever considered the possibility of the landlord entering into a contractual relation with the local authority, so that the landlord would run the risk, if he was caught in any such underhand dealing, of having all his house property re-controlled as a penalty. If an additional guarantee were required it would be possible in such a covenant to exact from the landlord a compulsory deposit against an infraction of his covenant.
It will be observed that in the new Clause where I lay down certain provisions which shall be contained in the 2509 covenant, I leave it to the Minister to prescribe the form of the covenant, and he might add any restrictive conditions of that kind that he might please. I realise all the objections to the proposal, but I do ask the Committee, and especially those Members who believe that control of rents by the Government by statutory enactments must in the nature of things be a temporary and emergency measure, to consider whether the time can ever come when you will be able, politically, to throw the whole mass of these houses on to the market, without any sort of control, in one dollop. If you cannot do that, if you do not foresee the time when this House is ever likely to take that step, it is essential to look ahead and to devise some form of gradual decontrol. The evil of rent restriction, especially in present times, with the fall in the rates of interest, is not the restriction in the amount of the rent and that is why I should have no objection in a Clause of this kind to prolonging the period during which the landlord will be bound to exact no more than the permitted rent without the consent of the local authority. The real evil of the system of rent control—no matter how many provisions you may insert in a Bill for allowing the landlord in certain circumstances to do repairs, re-condition, and so on, or to obtain possession—is that you prevent the improvement of house property by the landlord, except in extreme circumstances. You create an enormous amount of hardship among tenants by the process we are acquainted with in every agricultural village of the widows of tenants staying on in commodious houses while young married people urgently desire sufficient accommodation in decent cottages. You prevent that redistribution of housing accommodation in a humane way which is one of the essential interests of every district in the country, you prevent improvement, you prevent the flexibility which is necessary in order to enable existing housing accommodation to meet the needs of the population. I would ask the Government very seriously to consider my proposal, novel though it may appear, even though it may have been rejected in some form by a previous committee.

Sir H. YOUNG
With much of what the Noble Lord has said I think we shall all find ourselves in agreement. I must express my appreciation of the great care and ingenuity with which he has adapted his scheme to the conditions he desires to meet although, as I shall endeavour to show, it is not infrequently the case that one tries hard, as he has tried, to do what is perhaps in the nature of the case impossible. I agree with his analysis of the situation, although perhaps it was not correct in his reference to Class "B" houses. As regards the future, the noble Lord says, "When will you ever be able to decontrol by this Bill?" Surely, we shall be able to decontrol any class of house of which there is an adequate supply. Just as we have control because the supply of houses is inadequate, when the supply is adequate to meet the demand we shall be able to decontrol.
Let me deal with the Noble Lord's scheme for gradual decontrol. There are great difficulties of machinery. In the first place in order to avoid the danger that the decontrol of the actual tenancy may be used as an instrument of oppression the Noble Lord calls in the local authority. I do not think that the local authority can discharge that function effectively. You would make them a partner with the owner in all these houses and under conditions which would prevent them exercising their functions effectively. From the point of view of the ratepayers the amount of labour which would be involved would be hardly commensurate with the results achieved. There is another objection from the practical point of view, and that is that it is clear that the new Clause, even if we adopted it, would be inoperative, but I cannot see landlords as a whole agreeing to a very considerable reduction of their rights and advantages which it would entail without any commensurate return, They would have to lose control for 10 years instead of five, lose some of their rights in regard to Class "B" houses and also be subject to the obligation of reletting any Class "C" house whenever it fell into vacant possession. I feel that the scheme would be inoperative, but I do not lay stress on its practical disadvantages.
I lay stress upon this point, that the new Clause errs against the fundamental 2511 principle of rent control in the interests of the tenants. It is the fundamental principle of rent control that the actual tenancy shall be protected, not only the house—and I admit that the Noble Lord's scheme maintains the house—but the tenant as well, and the Noble Lord's scheme does not protect the tenant. It is a cardinal principle of these Acts that you shall protect the actual tenant, give him protection, and if for any reason he is obliged to leave a controlled house you have to give him alternative equivalent accommodation. The new Clause would not give him alternative equivalent accommodation. That is a vital objection to it and must prevent the Committee accepting it now.

§ Lord E. PERCY
I notice that the Minister of Health does not lay too much stress upon the practical difficulties, and that his main objection to the new Clause is that the basic principle of the Rent Restriction Acts is to protect the tenant. I would reply that the basic principle has always been to control rents, to give security to the tenant only for the purpose of controlling rents. Until we return to that original principle, until we realise that what we ought to try to do in this legislation is to keep down prices which ought not to rise, so long shall we fail to return to a proper system of housing in this country.