HOUSING BILL

HC Deb 22 April 1952 vol 499 cc225-344

Order for Second Reading read.

3.54 p.m.

The Minister of Housing and Local Government (Mr. Harold Macmillan)

I beg to move, "That the Bill be now read a Second time."

This Bill follows the general review of the finance of housing which the Chancellor of the Exchequer announced in the debate on the Address in November last. The need for this review at this time arose primarily from two increases in the rate of interest on loans to local authorities which have brought the rate from 3 per cent. to 4¼ per cent. At that rate of 4¼ per cent., the local authorities are borrowing long-term money at a rate of interest which can be justified as being broadly in line with normal long-term rates. Nor is this in any way invalidated by the recent rise in the short-term Bank rate to 4 per cent., for there is no reason to suppose that the present rates of the Public Works Loan Board cannot properly be maintained.

It would be quite inappropriate for me, in introducing this Bill, to launch into a general discussion of monetary policy even if I were equipped to do so, for this is a subject, as Members well know, where controversy may reach a remarkable degree of obscurity and even of bitterness, for these high economic disputes are often carried on today with all the acerbity and pedantry of medieval theologians. Therefore, whatever may be said of the arguments for or against the policy of monetary stringency to meet an inflationary situation, it is clear that this policy is pursued for strong and compelling reasons.

It is not merely a piece of sadism or masochism by which we are torturing ourselves to no purpose, for if it succeeds it will be justified in every sphere of our national life. Nowhere can it be of more value than in the sphere of housing, for it will result, let us hope, in a reduction, or at least in a halt, in the increasing costs of house-building which have been such a malignant feature of recent housing history. When I am told, therefore—which, incidentally, is not true—that the increased rate of interest will put so many shillings on the rent of the tenant, I would remind the House that if this monetary policy succeeds it will do just the opposite, for it will prevent that general increase in rent which higher costs must in some form or another eventually involve. It may even lead to a reduction of costs and to a corresponding reduction of rents.

However, apart from this reason, it is obvious that an expanding housing programme can only be based upon a healthy national economy. If we cannot solve the urgent economic problems of the day, if we cannot deal with the question of the balance of payments, then good-bye to the whole housing drive—for even if the local loans on housing were reduced to 1 per cent. or less there would be no foreign exchange with which to buy timber, pulp and all the rest of it which go to make up the essentials of housing. Therefore, if this monetary policy can succeed in helping to avert national bankruptcy it will save not only the whole life of the country but also those social services of which housing today is perhaps the most important.

While this policy is developing, and until it can prove fruitful, we cannot, I submit, disregard the situation created particularly as a result of a rise of interest rates. This rise of interest rates, as it affects the Public Works Loan Board, leads to one of the by-paths of the great economic forest which I described before, and into which I may perhaps be allowed to stray for a few moments. I know that it has been argued by some very talented Members of the House, including ex-Ministers, that so long as the Budget is balanced, both above and below the line, the local authorities ought not to pay any interest at all on their loans supplied by the central government.

I think it was the right hon. Gentleman the Member for Battersea, North (Mr. Jay), who I do not see in his place today, who was the leading exponent of this view. It is quite true that when he was in the Treasury as a Minister he was never able to sell this idea to the Treasury. I read an account by one of the Parliamentary commentators of a great speech he made on the Budget, in which I read that he was to be known in the future as "the slogger." He never succeeded in slogging the Chancellor of the Exchequer of his own Government on this matter.

The argument, though possibly tenable in theory, is, therefore, somewhat irrevelant. In any case, like so many very clever arguments, it proves too much, because if it were true then it makes no difference whether the current rate of interest is 10 per cent., 5 per cent., 4 per cent., or any per cent. one likes to take. All this can be disregarded according to that theory and all the loans made by the central Government to the local authorities would be free of interest; but since no Government, not even that adorned by the right hon. Member for Battersea, North, has taken this line, I can see no reason why the local authorities should borrow at less than the appropriate long-term rate of interest.

If they are to pay interest at all surely they ought to pay the appropriate rate of interest. There is a great deal to be said for and against family life, but if one is to have children, it is perhaps well that they should be legitimate.

Mr. R. J. Mellish (Bermondsey)

As the right hon. Gentleman has made some caustic remarks about my right hon. Friend the Member for Battersea, North (Mr. Jay), would he be kind enough to let us know whether he intimated to my right hon. Friend that he was going to give us this knockabout turn?

Mr. Macmillan

Yes. I intimated that to him just before this debate began, and he told me he would be present; but for some reason he is not.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

I am very interested in the argument that it is inappropriate to give a subsidy by way of cost-free loan. I gather that the right hon. Gentleman says that in appropriate cases interest ought to be charged. Could he tell us what is the distinction in policy which he draws? When the Bank rate went up originally the Public Works Loan Board rate was raised, but when it went up a second time it was decided that it was unnecessary to raise the Public Works Loan Board rate.

Mr. Macmillan

That is just the point I dealt with in the first part of my remarks. I said I thought it should be attuned to the long-term rate of gilt edged, and I saw no reason to suppose—and I think the market today supports me in this view—that this rate of 4¼ per cent. is inappropriate to the long-term rate on the gilt edged market at the present time.

We have to consider how the immediate burden of the housing costs should be distributed. In this matter of housing finance, there are three parties—the taxpayer, the ratepayer, and the tenants of the council houses; but if no other counterbalancing action were taken the burden of the increased costs would fall on the general body of ratepayers, although each council could, at their discretion, shift the burden by increasing the rents either of the tenants of new council houses or by spreading the necessary increase over the tenants of all council houses.

I have heard it argued that those who live in subsidised council houses, especially new ones, have an unfair advantage over their neighbours. I have been much criticised in this matter. I have observed that this criticism is often made by armchair critics who are generally quite satisfactorily housed themselves; but in any case, so far as the many millions of our people who live in rent restricted houses are concerned, they surely have no right to point the finger of scorn at the tenants of council-subsidised houses. Until it is possible—as perhaps it may be when the supply of housing accommodation begins to become more nearly balanced with demand—to untangle the immense mess caused by the various rent restriction laws, these millions of people are, in a sense, subsidised at the expense of their private landlords. Therefore it is not for them to raise any objection against the subsidising of new council tenants by this machinery.

Taking the broad view one has to consider everybody as a whole and I submit that this subsidy is broadly fair. To do the opposite—to impose the whole burden of the results of the increased cost of housing upon the tenants of the new council houses—would be out of proportion to what these new tenants ought to be asked to bear and out of relation to what the broad body of tenants are paying over the whole field. It is to avoid this result that this Bill has been introduced by the Government. Over six years have passed since a housing subsidy Bill was introduced into this House, so I may perhaps be allowed to go into rather more detail than if this kind of Bill had been more frequent.

I think it is important to recall to hon. Members the precise detail. From time to time periodic reviews have taken place between the Government and local authorities as to the need for revision, upward or downward, and these reviews have subsequently been laid before the House of Commons; but, in fact, there have been no changes in the standard rate. It is true that in 1949 some additional subsidies were introduced for certain special purposes, but the main structure of the plan and the amount of the standard housing subsidy has remained unchanged.

There have of course, been great variations at the times when these reviews were made, both as to conditions and as to costs. This will become apparent when I explain to the House the principle upon which the subsidy was based then and is being maintained now.

The purpose of the subsidy is a simple one. It is that houses should be provided for these new tenants at rents they can afford to pay and which may be regarded as reasonable in the prevailing conditions. To achieve this the deficit, after fixing what is a fair rent, has to be provided partly by Exchequer grant and partly out of the local rates, and it has always been, since the beginning of this system, in the proportion of three-quarters from the Exchequer and one-quarter from the local rates.

This principle has been accepted as equitable ever since the war and I do not propose to alter it. Nor do I think that anyone who values the position of local government and its place in our national life would wish to see this proportion changed; for to do so would be to take away the sense of responsibility, and the actual responsibility and, therefore, the independence of the local authorities.

A 100 per cent. Exchequer grant, as the House will readily see, would ultimately mean that my Department would have to undertake directly the tasks which are now entrusted to the 1,500 housing authorities up and down the country. At no point in my discussions with the representatives of the local authorities or with any other responsible person, so far as I know, in or out of the House, has it ever been suggested to me that there should be any variation in the division of the burden.

We come now to the question of how this deficit should be calculated. I venture to recall to Members the accepted procedure. The standard housing subsidy has always been based on the cost of what is called the "standard house" and this is taken as a plain three-bedroom house. My predecessors in office, whether Conservative or Socialist, regarded this as the most practicable arrangement in order to get a fair result—just taking that standard house instead of trying to get a minute allocation between all the different kinds of what I think are called "accommodation units." The local authorities have always accepted this and there has never been any quarrel about it.

To fix what should be the amount of the subsidy, agreement has to be reached on certain premises. These are broadly three in number. First, there is the average capital cost of the notional house: second, the average cost of maintenance, and, third, what has to be taken as a notional rent.

The rent has always meant, of course, the net rent, irrespective of rates, I venture to emphasise the word "notional," because for the purpose of the calculation of the subsidies we operate upon this notional basis. It is not a rent which is actually paid, necessarily, by any particular person in any particular house. Indeed, there may not be an individual who pays a notional rent, just as there may not be, in the calculation of the average height and weight of the population, any average man. But these fixed points have to be taken and must first be considered in order to lead to a fair conclusion of what the subsidy ought to be.

In the year 1946 the capital cost was taken as £1,100, maintenance was taken as £7 8s. and the rent as 10s. There come the years that follow. Of course, in the first happy days, those happy days of 1945 onwards, when the first light of civilisation broke upon mankind, it was confidently expected that full employment, low interest rates and a steadily inflationary situation would soon result in a general fall of prices. It was therefore assumed, and indeed said, that at every stage forward in this pilgrimage to Utopia a reduction of the subsidy would be possible.

But, alas, the harsh facts of life have reasserted themselves and, in point of fact, every one of the three items in this notional equation have had continually to be moved upwards. At each successive review it had to be agreed with the local authorities that the capital costs had risen. In 1949 it was to £1,350 or more, and in 1951 to £1,500. At the review which has just been held, it was agreed, on the old calculation, that the cost of the notional house should be taken as £1,575. In the same way, the allowance for maintenance has risen from £7 8s. to what has been now agreed for the purpose of this calculation—£12.

It will be abundantly clear to hon. Members from these figures that the only method by which an avoidance of an increased subsidy could have been justified at those intervening reviews, since the passing of the original Act, would have been that the third item, the notional rent, should also be considered as having risen. For it must hardly be conceivable that my predecessors would have wished that the whole additional cost, if that were not done, should fall upon the rates.

It is quite clear what was their view because, speaking in the House, the right hon. Member for Ebbw Vale (Mr. Bevan) seemed to accept a figure in 1949 of between 13s. and 14s. as the notional rent for the purpose of calculation. In 1950 the then Parliamentary Secretary accepted 14s. 3d., which, he said, was 10 per cent. of the average wages. By November, 1950, the same right hon. Gentleman allowed from 14s. to 15s., and in the review of May, 1951—that is, 11 months ago—the only basis upon which a refusal to raise the subsidy could possibly have been justified would have been to accept a notional rent for this purpose of 16s. These periodic rises in the notional rent were justified by my predecessor, and I believe rightly so, as having regard to the general rise in wages and the general rise in the price level. On the same principles, for the purpose of this calculation, we have taken 18s. as the notional rent.

I thought it well to explain this procedure and this system once more to the House, because it is a long time since we first started it, and I think many hon. Members may have forgotten it, or, indeed, may not even have been aware of these principles. It was clear to me, on first taking office, that a new review would be necessary in the summer of this year in any case, but, of course, owing to the rise in the interest rates, it became necessary to bring forward that review and to make it as soon as possible.

Mr. Aneurin Bevan (Ebbw Vale)

Before the right hon. Gentleman leaves this part of the discussion may I ask him a question? Whenever I have spoken on this matter in the House I have always been able to give the House the relationship between housing costs and general costs. Is the right hon. Gentleman able to tell us today what is that relationship?

Mr. Macmillan

What does the right hon. Gentleman mean by costs?

Mr. Bevan

The general rise in prices.

Mr. Macmillan

I have given £1,575 as opposed to £1,500, and I am coming to some reductions which will be made in the calculations. Then there is the notional rent at 18s. and we have taken the maintenance at £12.

Mr. Bevan

The right hon. Gentleman has not followed my point. Probably it is my fault. Always, when there was a criticism of the rise in housing costs, I have been able to show, in the past, that the rise in the cost of houses was less than the rise in the wholesale index. Is the right hon. Gentleman able to tell us today what that relationship is?

Mr. Macmillan

No, Sir, but I will try to give a precise calculation on the information made available to me. I think it is clear from the figures I have given, and from common knowledge, that these figures are related to the general rise in price levels which has taken place. I am coming to the savings on houses, which is another point, quite different from the method of calculation. I will come to it in a few moments.

While I accept, as a premise, the £1,575 as the capital cost, calculated on the same principles as in the past, I have made this alteration. We hope that many of these houses will be built more cheaply. Of course, there will be special conditions in which they may be more expensive, but those are provided for in the subsidy arrangement, since we are taking, as we have always done, a cost which includes not merely the building of the house but also the cost of land and the layout and those expensive items, water and sewerage, and the rest.

I think we must recognise—for we cannot get away from it—that if housing development is to be carried out in the right places, it will become more expensive, because some of the easier sites and some of the more accessible sites have already been exhausted. Moreover, we have to consider the claims of agriculture, we have to consider the claims of amenities, we have to consider how best to preserve the assets of this small island—and surely the whole House is with me in that.

I will say frankly, therefore, that in many cases, if we are to do that properly, we ought to face building on more difficult and more expensive sites. Even if it means a larger initial expenditure, that will be wisely laid out in the long run. That is on the sites and the choice of them, but I am hopeful that savings in the cost of building the house itself can be made—and indeed they are being made—by general co-operation.

Mr. J. A. Sparks (Acton)

How can that be done?

Mr. Macmillan

I have therefore agreed with the local authority representatives after the fact-finding investigation, that the figure for the old design and old standard house should now be £1,575, but we have agreed, for the purpose of the subsidy, to assume a saving of £50. This is a modest deduction and I believe we can make more savings by more modern methods and by wiser design; but that figure is only for the purpose of the calculation, and we thought it was fair. I think it was agreed that it was fair. Perhaps it has been a little too generous to make a reduction of only £50.

Like everything else I do, some will say it is too high and some will say it is too low. Some will complain that I am too generous and some that I am too mean, but, in the same way that the average maintenance of £12 may be a little too high in some areas or a little too low in others, the figure has been agreed as reasonable. I must re-emphasise that, in taking the notional rent: that figure is not, nor is it intended to be, a precise rent to be charged to any particular person.

The local authorities will fix the rents of their houses as they have always been at liberty—and, indeed, under an obligation—to do. They will take into account many factors in this decision, some of them general and some of them purely local. They may choose to average the rent in some cases between their housing estates, old and new; others may be unable or unwilling to do so. Some may prefer to make contributions from the rates over and above that which they are bound by statute to make; others may feel that is not possible. No doubt, flexibility in this, as in many methods, is right; but for the purpose of this calculation this rent is taken.

Mr. Bevan

I am certain that all hon. Members would like to be quite clear about the calculation that the right hon. Gentleman has made. Do I understand him to say that he fixed his notional capital cost of a three-bedroom house at a certain figure and then assumed a reduction of £50 in that figure and then based his subsidy upon the reduced figure? If so, he is inflicting a capital cost upon the local authorities based on a high housing standard.

Mr. Macmillan

This, if it is true, is being inflicted with their complete agreement, which is, I am informed, the greatest body of agreement ever reached between a Minister and representatives of the local authorities' associations. My Department could well have maintained that we ought to have deducted £100—perhaps even more; but we have agreed, and they have accepted—as, I think, a generous settlement—a reduction of £50 from what would have been the cost of the notional standard average house calculated on the old system.

Mr. C. W. Gibson (Clapham)

If we are to assume a reduction of £50 or any other number of pounds in the notional capital cost of every house there must be some change in the house to be built. What changes in the structure of the house are assumed in arriving at this figure? That is very important.

Mr. Macmillan

The changes are developments of the brilliant ideas and admirable designs set in motion by our predecessors. [Interruption.] I really cannot deal with both parties of the Opposition at once. I am surprised that hon. Gentlemen opposite come back for punishment on the housing question. I should have thought that they were tired of it. But we are ready for them.

Mr. Bevan

A perfectly sensible question has been put, and the House wants enlightenment about it. The right hon. Gentleman should not throw such silly rhetoric in reprisal. What we want to know is this. What particular items in the notional house have been responsible for the reduction of £50 in the capital cost?

Mr. Macmillan

I have given the answer. [HON MEMBERS: "No."] I have given the answer—the development of the designs, instituted by the former Minister of Local Government and Planning, to give the same amount of circulation space, the same Dudley standards, with less expenditure. I am very grateful to the hon. Gentleman the Member for Welling-borough (Mr. Lindgren) and his colleague for having started these admirable ideas.

Now I will proceed to summarise the subsidy proposals in the Bill. The Exchequer contribution, the general standard amount, is increased from £16 10s. to £26 14s. Consequential or similar adjustments are proposed in the other subsidies. The subsidies for flats on expensive sites have been recalculated on precisely the same principles as before, crediting a notional rent of 21s. 6d., which is the same proportionate rise in the notional rent as in the last calculation. Then, of course, certain higher subsidies for houses in low rented areas and in heavily burdened areas will continue to be paid, as hon. Gentlemen know, at discretion.

There are one or two other cases I ought to mention. The higher subsidy which was formerly available on all houses for members of the agricultural population was universal. I am now making it discretionary, because I am not satisfied that in every case this subsidy was wholly passed on, and it really could not be quite justified in the old form. Nevertheless, it will be continued for groups of houses in isolated areas wherever the rural authorities are put to larger expense in meeting these special requirements.

The subsidy of £15 a year for 40 years is payable for houses for the agricultural population built by persons other than local authorities. The Act of 1946 excluded from this arrangement cottages which are occupied under a contract of service. Clause 2 (1) of the Bill will withdraw this limitation. There is a similar prohibition against the making of reconditioning grants in respect of such houses, and subsection (2) of the same Clause withdraws this prohibition in respect of houses occupied by members of the agricultural population. I know that there are some people who do not like the contract of service system, but that really is another and much wider question. I cannot see why we should wish to deprive people who do live in such cottages from having good ones, new ones, or modern ones.

The last of the subsidies to be mentioned is the extra subsidy for houses built on expensive sites—that is, sites on land costing £3,000 an acre or more. This was recalculated on a more generous basis assuming a density of 15 to the acre. It is right to say here that this is the only point in the subsidy proposals on which some of the representatives of the local authorities pressed me to go a little farther. Bearing in mind, as, I think, we all ought to, the importance of an admixture of houses with blocks of flats in this form of development—and the need for such an admixture has been generally accepted—the basis of this extra housing subsidy has now been adjusted to take account of these facts.

Clauses 3 and 4 of the Bill deal with arrangements for the disposal of council houses—disposal covering both sale or lease.

Mr. Charles Pannell (Leeds, West)

It seems to me that we are getting on rather quickly. Many of us are still wondering about the right hon. Gentleman's method for computing subsidy, and I think it is necessary for the House to understand all this at this stage before we pass over this matter. We really ought to know the figures if we are to make calculations of our own.

Mr. Macmillan

I have given the answer to that already. It is raised from £7 8s. to £12, and the new calculation has been agreed between us and the local authorities.

Clauses 3 and 4 of the Bill deal with the disposal of council houses. I cannot in this matter claim to be introducing any new principle. I am not bringing in any new law, for the local authorities have always had, under the existing law, the power to dispose of their houses with the consent of the Minister, and until 1945 their applications for consent were dealt with in accordance with the statutory provisions.

If there has been any new principle I think it has been introduced by our predecessors, when they announced as a matter of policy that they would not give consent to any such houses being sold or leased. Well, we disagree with this view. We think that where a tenant desires to purchase a house and the local authority desires to sell or lease it to him the two contracting parties should be allowed to carry out their desires, so long as they are upon appropriate terms and appropriate conditions.

Mr. M. Turner-Samuels (Gloucester)

This provision is not restricted only to council tenants. It is a provision that a house may be sold to anyone.

Mr. Macmillan

No. I am coming to that. The hon. and learned Gentleman is quite wrong about that. [HON. MEMBERS: "As usual."] All I am doing is to decide to administer the law. Of course, it would not be sufficient merely to revert to the operation of the old law without having regard to the new conditions in the postwar world, which make it necessary to make certain new regulations; for the existing provisions in the Housing Acts must be amended; and that is what these Clauses do, because they require the local authority, if it sells any property, to obtain the best possible market price.

I do not think it would be right that the local authority should be, as it were, a kind of profiteer in the scarcity value of the house, if it is to be sold at all. I think that would be unfair. Clause 3 will enable the local authority to sell the house with the consent of the Minister which may be given either generally in relation to a scheme or in relation to a particular set of houses.

This power to sell at a reasonable price, however, on the one side, must be married by an equal provision on the other because it would be unfair to allow speculators to buy these houses at a fair price and then to resell them later on at the scarcity price.

Mr. Ivor Owen Thomas (The Wrekin)

Would the Minister explain whether under the proposed freedom to sell such houses any limitation is to be laid down as to their purchase by people other than those living in them?

Mr. Turner-Samuels

Would the Minister—

Mr. Macmillan

Perhaps the hon. and learned Gentleman will allow me to get to the end of what I am saying.

The Clause provides that in making any such sale—this is to meet the first point—the local authority can limit the price at which the house may be resold, and it may limit the rent at which it may be let on lease during any period not exceeding four years from the date of the original contract. This rent will then, of course, become the standard rent for the purpose of the Rent Restriction Act.

Mr. Turner-Samuels

rose—

Mr. Macmillan

It would really save a great deal of time if I could finish with this part of the Clause, and then any questions not dealt with I or my colleague will try to answer later.

As I say, this rent would then become the standard rent. The Clause further provides that the local authority will have the right to buy back the house within the period of four years if the purchaser should wish to sell it.

Mr. I. O. Thomas

Why four years?

Mr. Macmillan

That seems a reasonable time in which to prevent the temptation of the profiteer or speculator and yet allow the purchaser to feel that he had some possibility of reselling his house within a reasonable time.

If this statutory system should commend itself to the House, then a scheme to operate it will be discussed between myself and the representatives of the local authorities. What I have in mind in the regulations and scheme is to give them a wide discretion, to say that they may sell provided the price at which they sell safeguards their corporate financial interest as the local authority, on the one side, and provided it takes efficient measures against profiteering by people on the other side of the contract.

Quite apart from the sale or disposal of existing council houses to their tenants, the new provisions provide that the local authorities may build houses for immediate sale outside the subsidy arrangements. I am sure that this is a wise thing to do because in the development of some of these large estates it is really very important—and I think it is generally agreed to be important—to obtain a mixed development. I think this will help to do what we want to do in this way. I quite admit that the Opposition are opposed in principle to house ownership by individual owners and to municipalities playing any part in assisting house ownership.

Mr. Geoffrey de Freitas (Lincoln)

At the present time.

Mr. Macmillan

I hope they will agree that it was right to make this kind of provision, and that, even in their view, when the time comes for what we now propose, it would be right and proper to have this provision to safeguard both sets of interest.

Mr. Sparks

May I refer the right hon. Gentleman to one point which justifies us in opposing this proposal? He will realise that in built-up areas, where the housing shortage is acute, for the local authority to alienate the great majority of its existing council houses would only intensify its problem, because by doing that they would be unable to effect the transference of families from larger to smaller accommodation and thereby absorb people on their housing lists.

Mr. Macmillan

I look forward to a great deal of discussion on this Clause at a later stage, and I recognise the hon. Gentleman as an expert in these matters.

I can, perhaps, deal better with all the details at a later stage, but I want to emphasise that there is a great difference between laying down as a principle that a Minister will never agree to any such sale. I am not saying that I will agree to all of them. All I say is that I withdraw the general prohibition. In such cases where a claim was put forward by a local authority which seemed to me to be unwise it would be my duty—and my attention would be called to it by my officials—to give reasons why I did not think it was a scheme to which I should give my consent. But that is entirely different from a general veto by the Minister on the rights of local authorities.

Mr. Turner-Samuels

If the Minister gave his general consent he would not be asked about the matter at all. While I am on my feet, would the right hon. Gentleman please come back to the question I asked before, and which he did not answer: to whom can these properties be sold? I indicated that the sale would not be limited to the tenants, and I would like to hear from the right hon. Gentleman if that is right. What is his authority for contradicting that statement?

Mr. Macmillan

We do not propose to evict tenants from these houses and to sell them to somebody else. I think this can all be perfectly well dealt with, and will be dealt with, in the regulations. They will, of course, be sold to the existing tenants unless the hon. and learned Gentleman proposes to evict the tenants in order to sell the houses at a profit. That does not seem to me to be a good plan.

Mr. Gibson

The Bill does something more than merely remove the veto; it alters the law. It says that the local authorities must get the best price possible. Does the Minister visualise the houses being sold by the local authorities at less than the actual cost to themselves?

Mr. Macmillan

No, I do not, and that I will deal with in the regulations. I think the words I used were that they should cover and protect the financial interest of the local authority in every respect, but that they should not allow them to be profiteers. In the same way, the purchaser who bought with the advantage of a fair price, with some fixed relation, perhaps, to the rental value, should not be allowed to profiteer in the scarcity market. I think that is as far as I might be asked to go in detail.

There are one or two things I want to say of a general character. This Bill only deals with part of the mechanism of the housing programme and does not pretend to introduce any new principle or to create any new organisation. Therefore, I shall not deal with the general housing situation, which, no doubt, there will be many other opportunities to debate. What the provisions of the Bill seek to do is to make it possible on the financial side for the municipal housing programme to be continued without undue burden on the tenants or the rates.

I do not think there is really any disagreement about that. Had we been continuously in office since 1945 we might have organised the housing programme on a different principle. But I think it is wise to take things as one finds them, and to make that rapid progress which I hope to make I much prefer to preserve a substantial continuity in the existing arrangements.

After all, the need for more houses is apparent to anyone with the slightest knowledge of the condition of the people. But it is not only a social problem; it is not only a human problem. It is an economic problem of the highest importance, for an increase in housing is essential for the re-deployment of our industry, for re-armament, for export and for our whole economic survival. In my Department we are continually being asked for new housing accommodation, for workers for these new factories or installations; they come from the aircraft industry, from the Royal Ordnance factories, and especially to supply more houses for miners. The same issue arises in agriculture, to encourage home food production.

But, of course, throughout the whole industrial field, apart from these special cases, this is true, for modern industrial production disperses work to a remarkable degree in sub-contracts of all kinds, and there is no sizeable place in the country which may not have to man-up and play its part in re-armament or the export drive. In this age it is of vital importance to be able to switch from the production of one line of goods to another, and it is not always possible to bring the work to the workers.

Thus, quite apart from any other consideration we need more houses—apart from the home and social considerations which appeal to us all so strongly—as part of our economic industrial effort. We need a margin of free accommodation in many areas of the country and we must not slacken until we can achieve it. This, I should have thought, was common ground between us all.

What divides the House is sometimes whether more new houses can be secured, in present circumstances, than we have been able to secure in past years. Hon. Gentlemen opposite—and I certainly respect their sincerity—believed that the utmost practicable target, in view of the other pressures upon the economy, was something of the order of 200,000 houses a year. Yet, curiously enough, in the very midst of this economy, alleged to be so over-strained that it could not go beyond that figure, they had little hesitation in introducing a re-armament programme of £4,700 million. That seemed to me a very inconsistent reading of the economic situation. Of course, in face of the re-armament campaign, and, above all, in face of the balance of payments crisis we have a very grave situation to face perhaps more difficult than those of our predecessors.

I want to make only two final points to meet criticisms which I sometimes read or hear of, not so much in this House perhaps as out of it. First, do not let us suppose a production of 300,000 houses of a year, even if we were able to reach it, would signify that we were making some abnormal effort in the sphere of housing. Why, we regularly reached that production and exceeded it in the years before the war for an appreciably smaller population, and accompanied at that time with unrestricted work on repair, improvement and conversion. Our aims, therefore, are not unduly ambitious, and the sights would have to be raised much further before we could be accused of singling out housing for some special favour or undue emphasis.

On the other hand I must admit that we cannot ask for some special first-cut of the cake or a unique slice of the available resources, and then just hand it over to housing to do all that we can do. We have to achieve our end by all kinds of different means—by pinching and scraping, if you like; by making deft use of such material as we can find or such substitutes as come to hand, by the speedy use of opportunities between the peaks of over-demand and over-intensity, by working faster, by getting out at any rate of the idea that there is a limited cake to be baked in this world of effort and energy and that if somebody takes a larger slice here somebody else there automatically has a smaller slice for another purpose. That is not true.

We believe that given the inducements greater productivity can be produced to satisfy more than one need and to play its role over the whole field. So I have tried to get away from the idea of the fixed "ceiling," of the fixed minimum, the clamped-down, narrowing "ceiling" which is so distressing to those who have to work it, and to give people the idea that the more effort they make, the harder they work, the better they go at it, the more they will be asked to do and the more contribution they will be able to provide to this great problem.

I say, in this respect that, whilst we must, of course, have a broad and general strategy under which we are to work, we must have these experiments towards freedom. At any rate, the housing drive must go forward, and I venture to commend this Bill—the details of which we can discuss further at the appropriate stage—to the House of Commons as of value, and, indeed, as an indispensable contribution to the common purpose that we have in mind.

4.46 p.m.

Mr. Geoffrey de Freitas (Lincoln)

This Bill, with something good in Clause 1 and rank Toryism in Clause 2, is a sign of the conflict in the Conservative Party between good and evil, and in the battle of the party opposite the Minister for Housing and Local Government is clearly in the "middle way." No doubt he remembers the last French elections when so many candidates, to avoid being called extremists, called themselves "Centre," and when many of them went further than that and claimed to be "Extreme Centre."

I found the right hon. Gentleman's speech in one important matter, which I shall deal with first, extremely disappointing. There was no sign that he was ready to apologise to the House for misleading us last month, on 19th February, when, in reply to my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop), who asked whether the increase in the housing subsidy is guaranteed … to cover the whole increased cost to local housing authorities of the new rate of interest."—[OFFICIAL REPORT, 19th February, 1952; Vol. 496, c. 26.] he said "Yes." Now, of course, it does not.

Let us take a real house, not a notional house. With the result of the Government's dear money policy the cost of providing one council house—just one—has, in many cases, risen by £1,000. It is that sum which is the difference in the loan repayments at 3 per cent. and at 4¼ per cent. of a loan of £1,600, which is the average price of a three-bedroom house being built at this moment in the South.

I can work it the other way quite easily. If we say that a loan of £16,500 is needed for an estate of 10 houses, the interest at 3 per cent. amounts to just over £19,000, but at 4¼ per cent. it amounts to just over £30,000, which is £11,000 difference, or over £1,000 per house. This extra £1,000 interest per house will be only partially covered by the extra subsidy; that is to say, £612 from the Exchequer and £204 from the rate contribution, leaving nearly £200 to be found either from the rates or from the Housing Revenue Account or the new tenants.

Let me give an example from the City of Lincoln, which is building about 300 houses a year at a cost of £1,600 each, and had hoped to afford to build at least as many as that every year. The additional cost to the citizens of this Government's policy is heavy. In the first year, on 300 houses, the increased rate subsidy of £1,020, plus the increase to be found by additional rates or additional rents of another £800, is £1,820. The next year, that figure is doubled, if they still build 300 houses; it is £3,640, and so on every year as they build 300 houses.

So, owing to the Government's deliberate policy, rates and rents must go up, and if this Government is still in power in four years' time, which heaven forbid, in the fourth year, if they continue building these 300 houses a year, the citizens will have to find over £7,000 in addition. In the town halls today and in the country generally tomorrow, the question is asked: Is that how the Conservatives keep down the cost of living?

Mr. H. Macmillan

The hon. Gentleman accuses me of misleading the House of Commons, which I accept from him but would not accept from anybody else. His statement is completely inaccurate and mine was completely accurate. So far as the rate of interest itself is concerned, it is covered by the housing subsidies under this Bill. Of course, there are cases which may arise, and which must arise, which are not related to the rise in the rate of interest. My promise was related precisely to the cost of interest, and let me say that my argument will, I think, prove that the Government's policy will reduce the rise of prices which has gone on during the late Government's period of office from £1,000 to £1,520.

Mr. de Freitas

The exact point that I am making is that this is a rise in cost as the result of the Government's increase in the rate of interest. I have just quoted the figures.

Mr. Macmillan

False figures.

Mr. de Freitas

As the right hon. Gentleman says that I am misleading the House, I ask him to get his Parliamentary Secretary and officials to work it out. Let me give the figures again. At 3 per cent. it is just over £19,000 for 10 houses, and at 4¼ per cent. it is £30,000, a difference of £11,000. It is £1,000 extra for every house, and I quoted the figures for a city which hopes to build 300 houses a year.

Mr. Peter Roberts (Sheffield, Heeley)

rose—

Mr. de Freitas

The right hon. Gentleman took rather longer than he might have done because of interruptions; there are so many hon. Members on both sides of the House who want to speak that I hope that I may be allowed to make my case.

Mr. Roberts

Is the hon. Gentleman suggesting that on a £1,500 house, the price is now to be £2,500 in view of the extra £1,000 he talks about?

Mr. de Freitas

I tried to put the matter slowly and simply. [An HON. MEMBER: "It is all wrong."] If any hon. Member can prove I am wrong, I shall be delighted to acknowledge it. At present, the case is that as a result of this Government's policy the cost will go up every single year, on the figures I have quoted.

Lieut.-Colonel Walter Elliot (Glasgow, Kelvingrove)

Would the hon. Gentleman answer the question asked by my hon. Friend?

Mr. de Freitas

Perhaps the hon. Gentleman will repeat his question.

Mr. Roberts

The question I am asking is this: When the hon. Member says that the price is going up by £1,000 a house, is he suggesting that a house which previously cost £1,500 will now cost £2,500?

Mr. de Freitas

I am quoting the interest rates; the difference over 60 years on 3 per cent. and 4¼ per cent. Surely I have made my point. It is a difference of over £1,000 per house. I was quoting a £1,600 house and that if the hon. Member works it out, he will find that I am correct. It does not mean that it costs £2,600 at once; it is over the long period of a 60-year loan.

Mr. H. Macmillan

If the hon. Gentleman took a £1,800 house, he would get even a better figure. He is getting a figure on a basis never accepted previously.

Mr. de Freitas

I do not want to get unduly parochial, but I shall be delighted to see that in my local paper, because the cost of a house there is £1,600 built by a Conservative council, and they are the people from whom I got these figures.

Mr. Macmillan

The hon. Gentleman says that I misled the House. That is absolutely untrue. I applied exactly the same process of calculation as has always been applied. Of course, some houses cost less and some more. In fixing the subsidy, we always base ourselves on the average and, broadly speaking, any increase of burden which comes along from the increase in the rate of interest is met by the housing subsidy.

Mr. de Freitas

The right hon. Gentleman accused me of false figures, and I accused him of misleading the House. Shall we leave it at that, and get on with the debate?

Mr. Ian Horobin (Oldham, East)

rose—

Mr. de Freitas

There are many hon. Members who want to speak.

This enormous rate of interest imposed by the Government will have to be paid by rent and rate increases, and there is no way of getting out of that. The Government have no excuse for this at all. I wonder just how much the right hon. Gentleman's colleagues in the Cabinet understood of the repercussions on local government when the Cabinet approved the raising of the rate to 4¼ per cent. Thoughts of local government finance and thoughts of the effect on the pockets of payers of rates and rents do not usually come to the mind of those who have never served on a local authority. I do not believe that any Member of the Cabinet has ever served on a local authority which is a very important point. How different it was with the last Government.

My hon. Friend the Member for Wellingborough (Mr. Lindgren), who is to reply to the debate for the Opposition, has just got himself re-elected to the Hertfordshire County Council because he finds there is not enough to do in this House with a Government which has so little legislation. I do not think that he would claim that the sweeping county council election victory was in any way due to the financial policy of the Government, nor would I claim that next month's successes in the borough council elections will be due to their financial policy, because the effects will not be felt by the people for a long time. Their policy is a delayed action bomb planted in the cellars of the town halls. When councillors realise what this raising of the rate of interest means, they will see what the result will be.

The right hon. Gentleman said that he saw no reason to suppose that the present Public Works Loan Board rate would have to be raised. I would like this assurance from him: Can the Government guarantee that should it turn out that that rate has to be raised, we will have an increase in the subsidies? That is a fair question. Since he told us that it is unlikely, and the Chancellor of the Exchequer said, earlier, "Not at present," I would like to know from the Government when they will guarantee to increase the subsidies if the rate is raised.

As to the rates of subsidy and the other figures in Clause 1, when we come to the Committee stage we should consider whether, for instance, the £8 in subsection (3) is really enough for maintenance because, as the right hon. Gentleman has said on many occasions, maintenance is very important. We should also consider the desirability of following the practice of Scotland in having increased subsidies for larger houses. Perhaps we have nothing to learn from Scotland in this respect, perhaps we have, but we should certainly consider the matter.

We should also consider a special rate of subsidy for houses for old people. Can we not solve the problem of the old couple with a grown-up family who go on living in their own house although they no longer need one with three bedrooms? If we could vary the subsidies and thus encourage the council to build those people a small bungalow with one or two bedrooms, and to buy their house at a proper value, it would help the family with two or three children to move in.

All over the country there are elderly couples living in houses too large for them to keep up, who no longer want to live in them but have to stay because there is nowhere else to go. At the same time, in Committee, in discussing the rates of contribution we might consider the fact that building costs in the south are higher than in the north. It is worth considering whether the subsidy should be weighted to take account of that.

When the Minister came to my constituency for an understandable reason during the Election, he said, "We shall redeem the pledge to build 300,000 houses as a minimum." He talked so fluently on housing that I took two bets. The first was that if we lost the Election he would be the Minister in charge of housing. I won that bet. The second was that he could not build 300,000 real houses in one year without cutting into the other building programme. The Conservative Election slogan in many places was, "Turn your hopes into homes." I hope I lose my bet about the 300,000 houses minimum—

Mr. H. Macmillan

You will.

Mr. de Freitas

I hope I shall, if the right hon. Gentleman can build them without so lowering the standard as to make a mockery of modern living conditions and without cutting into the building of factories and schools and Defence, and without changing the priority system by which, on the whole, houses go to those in the greatest need.

Mr. Harmar Nicholls (Peterborough)

Does the hon. Gentleman consider the Dudley Committee standard a mockery standard?

Mr. de Freitas

I would not consider that a mockery standard. If the Minister can get the houses without those changes I have mentioned, he will deserve credit, but let me take one point at a time.

On standards, we have had warnings from my right hon. Friends the Members for Bishop Auckland (Mr. Dalton) and Ebbw Vale (Mr. Bevan), and we had a warning in "The Times" in November that the present stringencies do not justify the building of houses by anyone of a quality which the nation will come to regret 20 years hence. That was a clear reference to the jerrybuilt rubbish turned out in the '30's. I am jealous of the reputation of the right hon. Gentleman in 20 years' time when he will be in the House of Lords.

On the danger of the cuts in schools and factories and defence, the right hon. Gentleman must not mortgage the future just to try to keep one Conservative promise. Let him look at what his colleagues have done, and let him be encouraged by there being safety in numbers in this respect. I beg him to remember the danger of selling council houses and thus tampering with the system of priorities in allotting houses.

I am told that in Dublin the Irish solve many of the difficulties of allotting houses by putting names in a hat and drawing them out. It is certainly a sporting approach to the problem. Last Tuesday I heard Monolulu describe the Prime Minister as twice as sporting as his horse, but it made me wonder what would have, been the solution to this if the Prime Minister had taken over housing as he has transport. Speaking for myself, I prefer to both those systems of lottery and ladder the system of priorities and fair shares and the queue. That is why we do not like the selling of houses referred to in Clause 3.

My right hon. Friend the Member for Ebbw Vale has said that the language of Socialism is the language of priorities. It is all very well for the right hon. Gentleman to talk about applying the law. We are not, of course, against selling council houses as such, but we are certainly against selling them at the present time. That is what we have said. That has been the policy which we have announced on more than one occasion. To sell houses at the present time is straight Conservativism, giving the advantage to the strong man who seizes the ladder—to use the phrase of the Prime Minister—rather than the other one who is waiting his turn in the queue.

During the Election the Parliamentary Secretary to the Ministry of Housing and Local Government wrote in "The People" of the injustice which could be inflicted on a soldier wounded in Korea if he were not allowed to buy a council house. I wonder how much comfort it is to that returned soldier to find that the Wallasey Town Council wants him to pay over £3 per week at the old rate—and, of course, they would be considerably higher now as a result of the second rise in the rate—to buy a council house.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Ernest Marples)

As I am to reply, would the hon. Gentleman be kind enough to give me the actual quotation?

Mr. de Freitas

Yes, I will pass it across the Table in a moment.

I mention this because the right hon. Gentleman sought to put into our mouths the statement that we were against any houses being owned by the tenants. That is nonsense. Today, as a result of six years of Labour rule, it is probable that more people own their houses than ever before, and there are certainly between four million and five million houses occupied by their owners. A substantial number of these come on the market for sale each year to be bought by people who can afford to do so.

The hon. Gentleman argued that they would only be sold to the tenants, not to anyone on the housing list. The implication is that no one on the housing list is worse off, but that ignores the fact that, as the years pass, there are a fair number of removals from council houses and, after removal or death, in the ordinary way a vacant council house comes back to the council and can be let to somebody on their list who is in need.

As I understood the Conservative Election manifesto pledge, it was that there would be no reduction in the number of houses and flats built to let. They can keep that pledge and reduce the pool of houses available by selling them off at the other end. The fact is that the present Government policy appears to be designed deliberately to induce local authorities to do so, because they are given every incentive, through the increased loan rate, to build the bare minimum of the cheapest houses and to sell off as many as possible of those already built.

Therefore, if we cannot alter the policy of the Government to sell council houses at this time, the least we can do is to examine this Clause carefully in Committee. We must see whether we cannot do something to lessen the mischief which will be caused. Perhaps we could extend the period of control to eight years. Perhaps we could make the restrictions obligatory and not permissive. Perhaps the houses, when resold, should be sold only to the local authority and not on the market. Perhaps, if a house is sold by the council, its new owner should be prevented from letting it to someone not approved by the local authority, so that there would be a check on the local authority list.

As the Minister can well imagine, Clause 2, which is considered on this side of the House to be rank Toryism, will be strongly opposed, especially by my hon. Friend the Member for Norfolk, North (Mr. Gooch), and his Friends from the rural areas. He will be supported by all of us, and we hope that the Minister will think again before increasing the number of tied cottages. Farm workers throughout the country are indignant about it. I have had more than one letter of protest from farm workers, and the latest one I had this morning was from a Lancashire Branch of the Agricultural Workers' Union.

Their indignation arises from the fact that these proposed subsidies or grants of public money are to be given to private owners to increase what has been a great social injustice in the countryside for many years, namely, the tied cottage. The farm worker must have a good house, and about that we are all agreed. The right hon. Gentleman spoke as though we did not agree with that. But why cannot the farmer grant his worker a tenancy and qualify for a grant of public money in the ordinary way, so that the farm worker can get some protection from the Rent Restrictions Act?

Judging from interruptions in the speech of the Minister, there are a number of my hon. Friends who wish to speak, and as we have to stop at 10 o'clock I will only detain the House for a few moments longer. I would ask the Parliamentary Secretary and those hon. Members who have taunted me about the figures to check them carefully and see if they are absolutely correct. I cannot say that we like this Bill, but it has some good in it. Therefore, we shall not divide the House on it but we shall let it through, hoping to improve it considerably in Committee and, above all, remove Clause 2 entirely.

5.12 p.m.

Mr. Robert Jenkins (Dulwich)

This being the first time that I have had the pleasure of addressing the House, I would ask for the indulgence which is usually given with such courtesy to a Member who is making his maiden speech, even on a controversial Bill. I may need more of the indulgence of the House than is usually given, because although I shall endeavour to steer clear of party politics and be unprovocative I may have to touch on some controversial issues.

I did not intend to follow the hon. Member for Lincoln (Mr. de Freitas) in what he said, but I should like to comment on his remarks that no member of the Cabinet had ever served on a local authority and because of that they know nothing about the problem of housing. I feel that I must correct the hon. Gentleman and support my right hon. Friend the Minister of Housing and Local Government.

The hon. Member for Lincoln said the Minister was wrong when he argued that the amount of money he was providing in additional subsidies covered the additional cost consequent upon the increased interest charges for loans from the Public Works Loan Board. I have been a member of a local authority, both county and borough, and I have checked those figures most carefully. Let me assure the hon. Member that he is entirely wrong and the Minister completely right. It may be that the hon. Member for Lincoln, as explained by the Minister, was thinking of some houses in his area where the charge is greater, but overall throughout the whole country the position is as the Minister himself said, and one figure does, in fact, balance the other.

My one excuse for speaking today is that as long as five years ago I played a minor point in focusing public attention on the question of selling houses to the sitting tenants. I should like first of all to refer to the only objections I have heard about the scheme apart from those uttered on the other side of the House today. One is a letter received by borough councils and housing authorities from the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) when he was Minister of Health.

He was replying to a request in 1947 from local authorities for permission to sell houses. A large number of local authorities in this country had asked the right hon. Gentleman for permission, and the officers of his Department, directed presumably by the right hon. Gentleman, replied in this strain on 9th October, 1947: I am directed by the Minister to refer to your letter and to state that in view of the importance of ensuring that as many houses as possible are available for letting, it is not in accordance with the present Government's policy that local authorities should dispose of their houses except in very special circumstances. The Council's proposals to sell cottages to such of the present tenants as may desire to purchase the houses in which they live is not regarded as exceptional, and the Minister is therefore unable to give the consent required. That point has been made this afternoon, but I suggest that the people who, in fact, desire to buy their own houses and are council tenants are not the people who are going to move out of those premises. Therefore, there will not be any vacancies to be filled from the housing list through people buying their own houses. As I said in 1947, that seems a very thin reason for denying the right to people who desire to buy their own houses, and which are at present owned by a council.

The only other objection I have heard—and I have been involved nearly five years in the consideration of this matter—is that it would create slums. It is argued that if a council permitted tenants to buy their own houses there would be mixed ownership and it would lead to slums. The fact is that nothing is further from the truth. There is mixed ownership in most estates throughout the country, and incidentally it might be that when a man owns his house he will decorate it in such a way that it will put the council tenant next door to shame.

I want to turn briefly to the question of the advantages of selling these houses to the tenants. The hon. Member for Lincoln said that the party opposite had no objection to selling houses to the tenants except that it was untimely now. To be in possession of one's own house is one of the finest things for any man or family in this country.

But there is another point. I doubt very much whether some Members of this House know that a council tenant can be given one week's notice to clear out and has no recourse to the courts. That power is rarely exercised but, in fact, a council tenant can be given that short notice, and council tenants know it can be done. The great benefit to the tenant in buying his own house would be that he would be gaining security of tenure.

Furthermore, throughout the country, in the past five or six years, council rents have advanced from 2s. to 10s. a week. There is the fear in the minds of some of the less well off people in this country that the rents of council houses will be increased again as costs advance, but if tenants are allowed to buy their own houses they know that what they are paying out per week will be for their own house and that will be the end of the story.

May I point out to the House the advantages of this scheme to the local authorities and to the State? There are 800,000 pre-war houses owned in this country by local authorities, and most of them are the object of subsidies paid by the local authority and by the State. If one of these houses were sold there would, in fact, be an end to Exchequer and local authority grants for that house. If we take the optimum figure as 800,000 houses, that would effect a £10 million saving in subsidies which the Minister could apply, if he were allowed by the Chancellor and the Treasury, to help to meet the additional housing subsidies he is going to give under the present Bill.

Not only would there be savings in that way, but there would also be a substantial capital profit. From what the Minister has said today, he is not going to allow local authorities to profiteer but he is also not going to allow them to sell houses too cheaply. There is bound to be on the sale of any house a substantial capital profit, some of which could go to the State in repayment of the subsidy payments and some to the local authority.

There would be a very great saving in the cost of rent collection, a very important matter these days when local authority wages and salaries are rising. The Minister mentioned that some local authorities use, in addition to the subsidies, money from the housing revenue account to reduce the rents on other houses. Where that is occurring there would be a substantial saving to the rates apart from the housing revenue account. There would also be a saving in overhead charges and a reduction in the supervisory staff for repairs and maintenance.

There is nothing new in the principle of the Bill. The powers to sell council houses are contained in Clause 79 of the Housing Act, 1936, and in previous Acts of Parliament. There is nothing new in the practice of selling council houses. Before the war Southport, Wolverhampton, Cambridge, Birmingham and many other local authorities were selling houses.

There is nothing new about the working classes owning their own houses. Of the four million houses built between the wars approximately three million were built by private enterprise, mostly for sale, and the average rateable value of the three million was 10s a week.

There is nothing new in local authorities advancing money to those wishing to purchase houses from private builders. The Small Dwellings Acquisition Act, 1890, allowed local authorities to loan money up to the value of a £1,200 house. The right hon. Gentleman the Member for Ebbw Vale, in his Building Materials and Housing Act, 1945, increased the figures to £1,500, and in the Housing Act, 1949, he increased the limit to £5,000. There is thus nothing new in local authorities lending money for housing. There is an interesting aspect of the raising of the limit to £5,000. I doubt very much whether many people in the lower income groups would pay £5,000 for a house.

I wish to give the House a concrete instance of how this might work. It is an instance from a London borough relating to houses built under the 1919 and 1923 Acts. The houses were very expensive, being twice as dear as such houses were in the 30's. The average cost of the five and six-bedroomed houses was £1,159. The outstanding debt per house is £754, that being the cost to the local authority. The average weekly rent is £1 0s. 5d.

Should he so desire, it is possible for the Minister merely to say, "You may sell it for £754." That would mean that the rate subsidy paid up to the time it was stopped would be lost to the Exchequer. On the other hand, if the Minister said, "You can sell for £1,200," under the rate of interest of the Public Works Loan Board today it would only be necessary for the tenant to repay over 30 years at the rate of £1 8s. 2d. a week. I have obtained these figures from the Town Hall and had them checked very thoroughly.

With regard to capital profit, these days there is a great shortage of cash for all purposes, and the Government are trying to retrench and cut down expenditure. If the council were allowed to sell a house for £1,200 there would be a capital profit of £41 on the original cost and a capital profit of £446 on the net cost today. If the council were allowed to sell a five or six-bedroom house for £1,500 there would be on the net cost of the house a profit of £746, which could go either to the State or to the local authority.

The conclusion one must reach about this is that when council houses are sold to sitting tenants the State makes a profit in some way or another, the local authority cuts its overheads and the tenant becomes an owner-occupier. What is new in the Bill is that my right hon. Friend is prepared to give his sanction to the proposal, whereas the right hon. Member for Ebbw Vale, when Minister of Health, refused to do so on every occasion.

Furthermore, now that there is a shortage of houses Section 79 of the Housing Act, 1936, is to be amended so that councils shall not be allowed to profiteer because of scarcity nor be permitted to sell a house under its real value. If the principle is conceded—it has been done by the late Government and by the hon. Member for Lincoln today—that a person may be able to build his own house and it is admitted that it is lawful to purchase a house from a private individual for one's own occupation, surely it is merely a logical extension of those two fundamental freedoms to allow a family renting a council house to purchase the freehold, particularly as that enables the annual expenditure of public money on subsidies to be reduced by anything up to £10 million a year.

This is a permissive Bill. Many local authorities may not wish to implement it. Incidentally, at present many local authorities are not carrying out the wishes of my right hon. Friend about the granting of building licences to those who wish to erect their own houses now. The Division which I represent is one of the most recalcitrant in London in this respect.

No doubt the Bill will be described as revolutionary by some and reactionary by others, but the action of my right hon. Friend in bringing the Bill before the House is statesmanlike, there being an overwhelming balance of advantage to the tenant, the local authority and the State, and the Bill should be supported by both sides of the House.

5.30 p.m.

Mr. Aneurin Bevan (Ebbw Vale)

It falls to me to discharge the very pleasant duty of congratulating the hon. Member for Dulwich (Mr. Robert Jenkins) upon his maiden speech. He spoke with very great facility for one making his first speech in this House, and gave evidence of a very great deal of knowledge and experience of local government administration. Being a maiden speech, it suffered under the disability, which was obvious to the hon. Member, that he had to be unprovocative and non-controversial. If the most interesting speech to which we have listened is the hon. Member's estimate of those two qualities, we shall look forward to hearing further contributions from him.

The Minister introduced the Bill today in a speech, if I may be allowed to say so without appearing to be condescending, of very great lucidity. I think he was quite right in taking advantage of this occasion to explain once more to the House of Commons the principles on which housing subsidies have been granted since 1945. His lucidity was all the more attractive because it enabled us to follow some of his worse shortcomings rather better than if he had been more blurred in his speech. I propose to address myself to those shortcomings.

The right hon. Gentleman said that he was following the principles which the Government of 1945–50 had laid down. I want to ask him one or two questions in order to elucidate the situation. The subsidies have been reviewed from year to year, as the right hon. Gentleman has said, and in the course of discussions with the local authorities the notional rent of 10s. for the urban house and 7s. 6d. for the rural house had obviously to be departed from because of a general rise in prices. Nevertheless, it was always my contention, accepted by the local authority associations, that the relationship between the net rent in subsequent years and wages was the same as in 1945 and that, therefore, the burden upon the tenant had not increased.

The right hon. Gentleman, I gather, has followed the same principles today, but he let fall some words which worried me quite a bit. He said that he had discharged his promise to make good the increase in the rates of interest but not the other increases. That is a very curious statement. Perhaps the right hon. Gentleman would like to correct it now, because if that statement stands he confesses to a fundamental departure from the original principles upon which the subsidies were based.

Mr. H. Macmillan

indicated dissent.

Mr. Bevan

The right hon. Gentleman shakes his head, but Members on all sides will agree that it was a point of substance, because whenever the subsidies were reviewed previously they took into account not only the interest rates to local authorities, but the general overall costs of the house. The reason why the subsidies were not increased before was because the movement in net rent obeyed the general movement in increased earnings. But of course, the time was rapidly approaching when that would no longer be the case and when a further review of housing subsidies would have produced an increase in the subsidy independently of any increase in the interest rates.

Mr. H. Macmillan

What I tried to say was that we had followed exactly the same principles as in the previous review with regard to all the matters that came into review—the notional cost of building the house, the maintenance cost, and the rent—with the same principles in mind as the right hon. Gentleman quotes. I tried to deal with those things in the ordinary way. Then there was the increase which was due only to a change in monetary factors. I think the right hon. Gentleman will find that the broad result is that any other changes have been dealt with in the normal way, and the changes due to monetary changes have been dealt with specially.

Mr. Bevan

The right hon. Gentleman may wish to correct the impression be has given, but if he reads HANSARD he will see that there fell from his lips words which had no other interpretation than that all he considered he was under an obligation to do was to make good by increased subsidy the increased rate of interest, and not the other increase. If he wishes to correct it, I certainly would accept it.

Mr. Macmillan

I will look up what I said, but I think I know what I said.

Mr. Bevan

Oh, no.

Mr. Macmillan

It is a complicated question but I certainly did not intend to depart from what I tried to make clear and from what had, naturally to be prepared. I think the right hon. Gentleman will find that, at any rate, that is the result.

The broad principle goes on as before. We have tried to make this special correction to deal with the special case of the monetary changes. It is quite true that there were monetary changes before. I think the right hon. Gentleman will agree that they were not sufficient really to cancel out other considerations and, therefore, there has not got to be any change in the subsidies.

I think the right hon. Gentleman will find that what I have said is correct and that it certainly has been accepted by the broad body of public opinion in the local authorities. At any rate, I am grateful, because considering how violently I have been attacked from the other point of view for being so generous, it is a great help to be accused occasionally of a little meanness.

Mr. Bevan

I do not quite understand what the right hon. Gentleman means by his last statement. Do I understand him to say, therefore, that in his view, if there had been no increase in interest rates, there was no case for increased subsidies?

Mr. Macmillan

No.

Mr. Bevan

The right hon. Gentleman has now got himself into a tangle.

Mr. Macmillan

indicated dissent.

Mr. Bevan

What the right hon. Gentleman has said is this: That he has followed all the principles that were followed before, and he contends that the increased subsidy takes care of the increased cost of money to the local authority, and that is all.

Mr. Macmillan

indicated dissent.

Mr. Bevan

The right hon. Gentleman said that he considers he has discharged his obligation. I come back, therefore, to my question again. If there had been no increase in the cost of money to the local authority, would the right hon. Gentleman now say that he considers there would have been no case for an increased subsidy?

Mr. Macmillan

A review would have been held in May of this year and we would have agreed whether the subsidy should go up or down.

Mr. Bevan

The right hon. Gentleman is dodging in a most ungainly fashion, because what we on this side are trying to find out—and hon. Members opposite should be equally interested—is whether all the precedents have in fact been followed in this case, because I held the view, as I have just said, that the time was rapidly approaching when an increased subsidy to the local authorities would flow from the increased cost of building independently of any increase in the cost of money.

What the right hon. Gentleman has done is to deny any increase in the housing subsidy due to increased costs and to make good only the increase in the cost of money. That is what he has done, and what he has tried to do in his speech is to conceal that fact. But he made a very much more serious departure than that, and I hope hon. Members opposite will follow me in this matter because they will hear about it a lot more in the next local government elections.

What has the right hon. Gentleman said? He has said that, as heretofore, he accepted a notional house—I quite agree with him, that is the most sensible course to follow. One cannot take a particular house; one has to take the average cost of the three-bedroom house for the country as a whole—and that on that he fixed the subsidy. What we always did was to agree with the local authorities what was the average cost of the three-bedroom house throughout the country, and on that figure the subsidy was based.

In other words, the local authorities had been permitted to build whatever type of house they wished, under the guidance of the Central Housing Committee and the Minister, but the design of the house, the size of the house, was within the local authority's discretion on housing manual standards. The average house, therefore, was an emergent, a consequence of what the local authorities had done themselves by free action and the central Government accepted the responsibility of subsidising the result.

But the right hon. Gentleman has reversed the process. It is a principle of the utmost danger, undermining the self-government of local authorities by financial sanctions. He said, "I will take the notional house,"—it is very difficult to follow all his figures but I thought he said it would cost £1,575—"then I will reduce that figure by £50 in respect of the house which I think the local authorities ought to build."

Mr. H. Nicholls

I suggest that the right hon. Gentleman is out of touch with local authorities. There is no question at all of the Minister at the centre forcing local authorities to build smaller and cheaper houses. That is their intention and whilst the notional figure in past years would have been £1,575 I suggest that the real figure would be much more than the £50 which has been mentioned.

Mr. Bevan

The hon. Member ought not to abuse the courtesy afforded him by my giving way, because all he did was to adduce a perfectly irrelevant argument. I am dealing, not with what the local authorities will do, but with what the Minister has done. What he has done is to base his subsidy figure on a standard of housing to which he thinks local authorities ought to build. He jeered at my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) and said that my right hon. Friend had started these houses. But my right hon. Friend never at any time put the financial compulsion on local authorities to build them. That is what the right hon. Gentleman has done. He has said, "I will base my subsidies on a sub-standard house"—[HON. MEMBERS: "No "]—of course he did.

Mr. H. Macmillan

Of course, unlike the right hon. Gentleman, I am only in the queue while he is on the ladder, but I do not think he should call these houses "sub-standard houses." I hope that will be remembered as the design of these houses is that of his predecessor. What I repeat is that the reduction of £50 is not only accepted as fair by the local authorities but was regarded as something rather even more than overgenerous.

Mr. Bevan

The right hon. Gentleman really must not try to ride off on that. What he has now done is to base his subsidy on a prospective house and what we always did was to base the subsidy on what had been done. What was done in the past was that we always took what the local authorities had done, the kind of houses they had freely built by their own initiative, based on housing manual standards, and we based the subsidy on that.

What the right hon. Gentleman has done is to take a special type of house, inferior to other houses, assume that the local authority will build that house and that house alone and get a subsidy for it. In other words, if a local authority now wishes to build a superior house, still in accordance with housing manual standards, it can only do so at its own expense.

The right hon. Gentleman has the impudence to say that in doing that he has followed precedents. But there were various types of houses before; there were bungalows, there were houses with not two W.C.'s but one, there were houses with much smaller out-houses being built by local authorities at that time. I did not base my housing subsidies on the assumption that the local authorities would build only the most inferior type of house. As the right hon. Gentleman has said, we based our subsidies on the assumption that they would build the three bedroom house, the type that was being built at that time, a superior type.

What the right hon. Gentleman has done and asked posterity to judge—I am perfectly prepared for my housing record and his to be judged by posterity—is that he has introduced into housing subsidies the most mischievous principle. What he has said is, "I will take the lowest standard house which is tolerated. I will base my housing subsidy on that and if a local authority wants to build better than that they can do so at the expense of the local rates or tenants." He calls himself a housing Minister; he is a slum minister. If some other person follows in his footsteps—that is why we must record our objection to this at once—only inferior houses will receive subsidies and local authorities will be asked to find the difference between that and the superior house. The right hon. Gentleman, in presenting his proposal to the House today, has indicated a revolutionary departure in the financing of local authority housing.

Brigadier Terence Clarke (Portsmouth, West)

The right hon. Gentleman is jealous of us for building houses.

Mr. Bevan

I venture to say that not for the next five years will the Tory Government, if unhappily they are there, reach anything like the number of houses per year that we reached in 1947–48.

The Prime Minister (Mr. Winston Churchill)

indicated dissent.

Mr. Bevan

The Prime Minister should not shake his head because he knows nothing about the matter. If there is one subject he ought carefully to avoid it is housing. He is still looking for those steel houses, and if he makes the same mess of transport as he did over that it will be a very bad thing for transport.

The right hon. Gentleman the Minister of Housing and Local Government is a very dexterous gentleman. He knows that if the policies he advocates are carried out it will be disastrous for the country, but he has based all his calculations upon the assumption that local authorities will not take his advice. He made a speech in Manchester in which he talked of the number of houses going up and took credit to himself for having reached a most ingenious calculation, and said that, taking the past behaviour of local housing authorities, it is highly improbable that more than one in four private licences would be issued.

I gather—hon. and right hon. Gentlemen opposite may interrupt me here if they wish—that it is a good Conservative principle for 50 per cent. of the local authorities' allocation to be devoted to private licensing. I understand that no local authority would be rebuked if it gave 50 per cent. Therefore, the Conservative Party believes that the right policy for the country would be for all local authorities—

Mr. H. Macmillan

The right hon. Gentleman allowed, and thought it proper, that one in five should be the right ratio. Presumably he would not have rebuked any authority operating at one in five. In fact, with the very good judgment they showed, owing to the difficult conditions, his one in five worked out at about one in nine, or eight.

Mr. Bevan

The right hon. Gentleman cannot have it that way. I gather it would be regarded by the Conservative Party as a good local authority if 50 per cent. of its allocation went to private licence—[HON. MEMBERS: "No."] We are coming along. Therefore, right hon. and hon. Gentlemen opposite consider that a good local authority would be that authority which the least adopted the Tory principle? [Interruption.] Now we know where we are. We have at last got the guidance for the local authority elections. That is to say, the only way in which the country can protect its housing from the misgovernment of this Government is by electing Socialist majorities at the local elections.

Indeed, the right hon. Gentleman hopes that local authorities will not be as foolish as he has invited them to be. I was hoping today that he would give us some figures as to the distribution of private licences. I should like to know where they are, because in the last part of his speech he talked about the economic effects of housing, and I quite agree.

On the last occasion when we discussed this matter I pointed out to the House the seriousness of allowing builders and building materials to be used in those parts of the country economically least desirable, and of denying them to the industrial areas of the west and the north where there ought to have been more houses to rent. I should like to know who has been taking up these licences and where? I can guess—

Mr. H. Macmillan

Perhaps I ought to apologise, because I was not present at the Question time yesterday when the right hon. Gentleman asked a Question about returns. I think he knew the answer, because he was responsible for the returns, but I ought to inform him that, unfortunately, the system of housing returns which he asked about has operated since his time in the same way; and the full quarterly return cannot be published, in accordance with the rules he laid down, until about the first week in the month of May. But I am happy to say I hope the full returns, with every detail, will be ready by about 5th or 6th May.

Mr. Bevan

I am not quarrelling about that. And when the right hon. Gentleman says it was started by me, of course it was—because I wanted to educate the party opposite in housing statistics. For the first time in the history of housing in this country we gave monthly reports, setting out all the details month by month. Never had the Conservative Party a better opportunity of being educated about housing, and never did they take so little advantage of it.

I did not want the general figures from the right hon. Gentleman. I know very well he could have scored a point at once by giving the figures for March, because they are high. They always are, and to those who do not understand they would look very impressive. But local authorities always hurry up with their returns in March so as to get the advantage of the subsidy.

Mr. Macmillan

So they did last year.

Mr. Bevan

Of course they did. The figures are always up in March. The right hon. Gentleman should listen. What we believe is that there have been very many more licences going, as I said on the previous occasion, on the fringes of the deep rural areas, which will work to the disadvantage of agricultural housing.

I submit to right hon. and hon. Gentlemen opposite that this is a very serious matter. There is no single question facing this country which is more serious than that of domestic food production. I would challenge them to deny that there have been far more houses built in the last five years in the deep rural areas of Great Britain than in the previous 50 years. That can only be done by denying the right of the urban authorities on the rural fringe to grant too many licences and thereby absorb too much building labour and materials.

Therefore it would have been interesting to see the distribution of licences at this time, because we are anxious to find out whether the operation of the system will have the consequences we fear. I should have thought that the right hon. Gentleman would vary this principle at once. The one in five ratio, as I said before, was regarded by some local authorities as far too generous.

Many local authorities granted no licences at all. I think that for a long time the great local authority of Bristol granted no licences. Nor did many of the other blitzed areas, because they considered such was the housing need of local populations that emphasis ought to be placed on houses to rent.

That is the reason why I deplore this encouragement to local authorities to sell their houses, not because I do not believe a person ought to own the house in which he lives. I believe that is desirable—[Laughter.]—certainly, I said so last time. I see no reason why a man should not own his own home—and I see no reason why he should own someone else's home. Indeed, as has been said today, in the course of five years we encouraged local authorities to lend money, and we operated the Small Dwellings Acquisition Act more effectively than the party opposite.

The reason why we considered it undesirable that local authorities should sell houses to the tenants was because we did not want local authorities to reduce the pool of rentable accommodation, which is an essential condition in this crisis. It has always been considered by every student of this subject that at a time of economic crisis the mobility of the labour force depends directly upon the availability of rentable accommodation. Nothing immobilises a labour force more than inability to sell a house, or to be compelled to make a forced sale of a house in certain circumstances. So we consider that the housing policy of the Government is not directed to helping to solve the economic problems of the country, but only to satisfying the doctrinaire private enterprise theory of the party opposite.

I have one thing more to say. It seems a deplorable thing that we should once more consolidate the tied cottage. The landlords of this country and many of the farmers have had a very good deal at the hands of the State. The housing provisions for re-conditioning are very generous. Most farmers today could recondition their cottages and wipe off the capital cost in about 10 years. Very few other people have that advantage. I was talking to some farmers the other day and they were shocked by this further provision. They asked what was wrong with the existing provisions. They could re-condition a cottage and all they had to do was to create a tenancy.

Surely there is nothing wrong with freeing agricultural workers. Why does the right hon. Gentleman want to give this additional subsidy and annoy the psychology of the agricultural worker? [Laughter.] The hon. Member laughs, but he has been speaking in this House for agricultural interests all through the bad agricultural years, when his party was in power.

It seems to me to be an affront to the psychology of the agricultural worker to give the owner of his tied cottage State money with which to re-condition the cottage and still keep it tied, when the worker could have the money, could be freed, and we could make a tenant of him and give him the benefit of the Rent Restriction Acts.

I consider that the public relations of the right hon. Gentleman are excellent. He speaks very well. He makes his crusading speeches about housing in the country, hoping all the time, that like the bemused audience in the theatre, they will be looking at his mouth and not watching his hands.

6.1 p.m.

Mr. Henry Brooke (Hampstead)

I welcome the opportunity of following the right hon. Member for Ebbw Vale (Mr. Bevan), because I want to argue the case which he has devoted himself to denying; namely, the case that the local authorities in this country can be trusted to know their job.

I would refer only in passing to Clause 3 of the Bill, because, unless one accepts that no confidence at all can be placed in the discretion of the local authorities, it is obvious that this House should pass Clause 3, as it enables the Minister, for the first time, to lay down certain necessary conditions and at the same time free local authorities from an obligation to sell their houses at the highest market price obtainable regardless of conditions, which it is quite clearly not desirable in the public interest that they should be compelled to do at the present time.

It is on Clause 1 that I want to concentrate my speech, because the right hon. Member for Ebbw Vale said a great deal about a proceeding in which he did not take part and I did. I was a member of the local authority deputation which, first of all, consulted among itself, and then met my right hon. Friend the Minister to discuss his subsidy proposals, which in the normal course—as was done by the right hon. Gentleman opposite during his time at the Ministry—were laid before the local authorities in draft form before bringing them to Parliament.

I myself welcome the new subsidy rates, and I was quite unable to follow, as I think the House was, the arguments of the hon. Member for Lincoln (Mr. de Freitas), by which he strove to show that very heavy additional burdens would fall on the local authorities as a result of this Bill.

Mr. de Freitas

I am shocked if a man in the hon. Gentleman's position in a local authority does not realise that heavy burdens will flow, and I am quite certain that, before the debate is over, a Member of the Government will be getting up and admitting that my figures were quite correct.

Mr. Brooke

The hon. Member and his local authority may know a great deal about this, but I revert to the point that, as the hon. Gentleman knows perfectly well, the representatives of the Association of Municipal Corporations, the Urban District Councils' Association, the Rural District Councils' Association and the London County Council do not enter into discussions on complicated matters of this kind without first having consulted their own financial advisers about the effect of proposals the Minister is putting forward. The plain truth about this—and I was in these discussions, and the right hon. Gentleman opposite was not—is that both the financial advisers and the members of the local authorities who met the Minister were satisfied that the new subsidy proposal would do what the Minister claimed it would do.

I feel a sense of freedom regarding the figures which I did not think I should possess, because they were originally given in confidence, and I could not mention them now if the Minister had not already done so, but, if the right hon. Gentleman opposite and the hon. Member for Lincoln will work out the figures, they will find that the loan charges on £1,525—the notional cost of a three-bedroomed house—work out at approximately £70 a year. To that has to be added the sum of £12 for repair and management costs. The Minister said he was accepting a figure of 18s. as being a reasonably fair rent such as would, in fact, be charged by local authorities, which would bring in a revenue of some £46 a year. If we subtract £46 from £82, we obtain £36, which is practically what the total new subsidy amounts to.

Therefore, I trust that the hon. Member for Lincoln will think again, and will go to his local authority and ask whether, if they disagree, they will thrash the matter out first with the Association of Municipal Corporations before appealing to their Member of Parliament.

Mr. de Freitas

I do not want to wrangle on this point, but, if the hon. Gentleman will look at my figures, he will find that they are perfectly correct.

Mr. Pannell

Will the hon. Gentleman allow me? I, too, have the figures of the notional house before me, and the difference, vouched for by the financial advisers, is that, if we consider the increased interest rates which have been laid on, and then consider the subsidy settlement, there is a loss to the local authority per house per annum of £1 18s.; that is, on the figures used in the discussions, equivalent to about 9d. per week in rent.

Mr. Brooke

I think the two hon. Gentlemen opposite are having a quarrel with the financial advisers of the local authorities and not with the Minister, and I very much regret that those hon. Members who know so much about the matter did not take the opportunity of consulting with their local authorities at the time when these proposals were actually being framed. No doubt, between now and the end of the debate, the Parliamentary Secretary will have had an opportunity of working out the figures given by the hon. Member for Lincoln and will deal with them. I am sorry to see that the right hon. Member for Ebbw Vale has left the House.

Mr. Walter Monslow (Barrow-in-Furness)

My right hon. Friend has just been called out urgently.

Mr. Brooke

I entirely appreciate that. Perhaps his hon. Friends will explain to the right hon. Gentleman that I mean no discourtesy in dealing in his absence with the allegations which the right hon. Gentleman made as to the treatment given by the Minister to the local authorities.

The figure of £1,525 that has been mentioned is not, in any sense, a figure which has been forced upon reluctant local authorities throughout the country. London, I agree, is reluctant to accept it, because it is impossible to build in or around London as cheaply as it is in other parts of the country, especially when we have not only to pay men the London rates, but when the men have to be transported out to sites in the home counties, because sufficient building labour is not available on the spot.

I feel sure I shall be supported by other hon. Members in testifying that the proposed reduction of £50 on the agreed figure of £1,575 as the reasonable cost of a three-bedroom cottage is not challenged by local authorities throughout the country, and that we have just listened once again to another example of an ex-Minister in the last Government saying that local authorities cannot be trusted to know their job. [HON. MEMBERS: "No."] It is not anyone on this side of the House who, as the right hon. Gentleman alleged, is seeking to interfere with the local authorities.

We now have the extraordinary spectacle of an ex-Minister of Health, who has been accustomed to deal with local government in the past, saying in this House that the present Minister is undermining the independence of local authorities by financial sanctions, when there is no single local authority in the country which takes that view.

Mr. G. Lindgren (Wellingborough)

A large number of local authorities are at this moment taking that view. Since the negotiations took place local authorities are feeling the effect.

Mr. Brooke

I do not think the hon. Member quite appreciated the context in which I was speaking. I was speaking about this reduction of £50 in cost that can be achieved. That is what the right hon. Gentleman the Member for Ebbw Vale was challenging.

Mr. Lindgren

I do not want the hon. Member, who is generally so fair, to get away with it. Every local authority which is building houses today since the increase in interest charges is, as the result of the new subsidy, one shilling and sometimes shillings a week worse off unless it reduces the standard of the house it is building.

Mr. Brooke

It is possible that we are at cross-purposes, and I take it that the hon. Member does not challenge this statement—that it is possible and reasonable for a local authority, by adopting the proposals which were advocated in a circular sent out when he was at the Ministry, to achieve a saving of £50 or more a year per house. That is the only point at issue here.

All the argument from the other side of the House today has been that the subsidies should be raised further. Perhaps one of the most spectacular pieces of Press comment was a leading article in "The Times" some weeks ago which suggested that the subsidy should not have been raised at all, or at any rate not so much. Frankly, I do not agree with "The Times." I look forward, as indeed hon. Members on both sides of the House possibly do, to the hope one day of returning to the situation of those years before the war when subsidies were concentrated on special needs that had to be met. If we can reach a time when local authorities can concentrate on slum clearance and the remedying of overcrowding, with the help of subsidies, we shall all rejoice. But that time is not here yet, and London housing authorities, even before the rise in interest rates, have been having a hard struggle to make ends meet, taking into account the former amounts of subsidy, the rents they are able to charge, and the high cost of building.

I cannot help thinking that the writer of that article in "The Times" was comfortably housed himself and had no close appreciation at first hand of the kind of problems which have to be faced constantly by people like myself who are members of London housing authorities. So far as London is concerned, it is utterly unrealistic to imagine that the subsidies could have been left unchanged, or that some increase of subsidy much less substantial than what the Minister has proposed would have met the case.

I was glad to find that we have not had arguments today from the benches opposite that the Exchequer subsidy should have been used to make good the full amount of the increased cost. I feel certain that it is a sound rule of local government that in matters such as housing subsidies the local authority should itself bear a proportion of the cost. No self-respecting local authority would press for 100 per cent. assistance in a matter of this kind, because the inevitable result, as we know from past experience, would be that 100 per cent. interference by the Ministry would be claimed as the price exacted for 100 per cent. assistance.

I should like to make some observation on the relative sizes of the subsidies for flats and houses on expensive land. The subsidy for flats tends to be a generous one. I do not know whether hon. Members have worked it out, but on city land where the site cost is £15,000 an acre the new subsidy will mean that each flat receives a subsidy of approximately £2 a week from public funds—a colossal figure. Nobody could suggest seriously that that sort of subsidy ought to be increased in present circumstances. I am anxious that the whole system of subsidies should be so devised as to maintain a proper balance between houses and flats on expensive land.

I was brought into contact with this matter vividly a year or so ago because the right hon. Gentleman the Member for Ebbw Vale, when he was the Minister, appointed me chairman of a subcommittee which did its work and eventually presented an agreed report to the present Minister, who has been good enough to commend it to local authorities. The subject of that inquiry was the social needs and problems of families living in large blocks of flats. The work opened my eyes, and I think the hon. Member for Clapham (Mr. Gibson) who was with me in this inquiry will confirm what I say. It opened our eyes to the fact that outside the London area remarkably little flat-building has been done so far, except in the three cases of Leeds, Liverpool and Manchester. The overwhelming majority of flats built in this country since the war have been built in the London area.

In that report we presented figures showing that even on land where, for financial reasons, it is essential to achieve a high density, it is yet possible to include quite a fair proportion of two-storeyed cottages or three-storeyed terrace houses among the flats, and at the same time attain the average required density.

The other point relevant to this Bill which emerged from our study was that in London after the war there seemed to have been not enough effort made by either the London County Council or the Metropolitan borough councils to explore fully the possibilities of this mixed development, and an astonishingly high proportion of all the new dwellings built in the county of London since the war have been flats and not houses.

I do not think anybody wishes to see London redeveloped with flats alone. The subsidy arrangements as between flats and houses should be so planned as to achieve two objects. One is not to give encouragement to a provincial city to eat up a great deal of valuable agricultural land around its perimeter, if in fact it has sites within its boundaries which it quite reasonably could develop with blocks of flats to a fairly high density. I do not want London to teach anybody else their business, but I hope this comment of an outside observer will not be considered discourteous.

It seems to me to be good public policy that in large cities a certain amount of flat building should be regarded as a necessity. The continuous consumption of agricultural land in large quantities by small houses built on the perimeter of cities must be deplored unless there is no other way of fulfilling the housing need. It is not for me as a Londoner to judge precisely what will be the effect of these new subsidy rates on building in the provincial cities, but I for one would not deplore it if they did give some encouragement to cities which have not yet thought sufficiently about flats or which, perhaps, have some horror of flats, to consider whether it is not reasonable to overcome that inhibition and build a certain number of flats, for we in London have proved that council flats can be built so as to provide good social and family life. But at the same time, surely nobody would maintain that flats are suitable for all kinds of families.

What I fear is that these new subsidy rates will further discourage the London local authorities from making experiments with the building of houses.

Mr. Gibson

indicated assent.

Mr. Brooke

I see the hon. Member for Clapham nods his head. He will be aware that at a meeting of the London County Council only the other day, the Housing Committee reported that with the new subsidy there may be a financial advantage to the council in the provision of flats. Surely that is just the bias which we do not want to create. Would it not be more advisable to create a bias, if at all, in favour of this mixed development of houses with flats, than to make it profitable for the London County Council or for any Metropolitan borough council to build flats universally?

I quite appreciate that the Minister, as he said, is making the upward steps in the scale of subsidy for houses on expensive land rather more favourable than they used to be, as site costs rise from £3,000 to £10,000 an acre, but unfortunately he has not tackled what I think is at the root of this trouble. It is the fact that in these subsidy arrangements flats built on land at anything over £1,500 an acre begin to qualify for a higher rate of subsidy, whereas houses do not begin to qualify for any higher rate unless the land costs £3,000 an acre or more. Consequently, the houses can never, as it were, catch up with that disadvantage.

I have analysed these figures as carefully as I can, and, having done so, I submit that the effect of these new subsidy rates will be to make it much more attractive to urban local authorities to build all flats and no houses where the site costs are between £1,500 and, say, £7,000 an acre. And yet that is precisely the land, in the outer boroughs of London, where one could achieve the accepted densities under the development plan whilst still including quite a good proportion of houses. I fear greatly that if this Bill goes through unchanged, the necessary encouragement to the London local authorities to try for mixed development will not be there.

It is extraordinary that the Ministry should continue to make this mistake. The Labour Government of old made exactly the same mistake, cutting right across the advice given in the Housing Manual, and continued in all other housing publications, that local authorities should seek to carry out experiments in mixing houses and flats on expensive land. I am not attacking one party or the other, or one Government or the other. The same criticism that I am making now was made in another place on 11th April, 1946, and I think that the then Opposition was as dissatisfied with the then Government's handling of this matter as, I am afraid, I still am dissatisfied with the present Government's handling of it.

The position is that on land at £3,000 an acre, a local authority will get from the Exchequer a subsidy higher by £36 12s. a year if it builds a flat rather than a house, and on land at £7,000 an acre a local authority will get a subsidy higher by £31 14s. a year. That is too great a bribe to local authorities to go in for flats entirely. I trust the local authorities will resist this temptation. I believe that the London County Council, with the help of the hon. Member for Clapham and myself, may be induced to resist it, but I submit that we ought not to be putting that sort of temptation in front of local authorities, and that we should be so designing the subsidy system that, in apportioning flats and houses to expensive sites, a local authority can reach its decision on social and planning grounds alone, without being swayed by financial considerations solely stemming from the subsidy arrangements which ought to be quite extraneous to the decision.

6.26 p.m.

Mr. C. W. Gibson (Clapham)

First of all, may I follow the hon. Member for Hampstead (Mr. H. Brooke) and say that I think we all agree on the need for mixed development in all our housing schemes, but would add that in London that is a much greater problem than anywhere else in the country, if for only one reason. The average price of land inside the county is over £10,000 an acre; that is what the London County Council themselves have to pay. On that basis it becomes financially, and practically, impossible to build many cottages. What we have to do is to work a few in where-ever we can, and that is what the L.C.C does.

Incidentally, the effect of this new subsidy is becoming fantastic. On flats built on land worth £10,000 to £12,000 an acre, the subsidy under this Bill will be £81 4s. a flat for 60 years. It will be considerably more than the flat cost to build in the first instance, but unless some such subsidy is paid, then local authorities like the L.C.C. will have to stop building.

The criticism I want to make about this Bill is this. No one really wants to oppose it, but it ought never to have been necessary, and had we not had this rather silly increase in the rate of interest it would not have been necessary—at least, not to the same extent. It seems to me to be Gilbertian to raise the rate of interest on housing loans to 4¼ per cent. and then to say, "We will give you a subsidy which will cover broadly the cost of the extra interest charges." That is what has been done.

Incidentally, it does not completely cover the increased cost to the local authorities. I shall be giving some figures on that in a moment. All that it really does is to give a few more pounds to the bankers and to put a bit more money into the contractors' pockets. It does not in the least help the local authorities. In fact, it will cost all the local authorities a good deal more money.

Mr. H. Nicholls

Did I understand the hon. Gentleman to say that it was only an increase in interest rates which warranted an increased subsidy? The right hon. Member for Ebbw Vale (Mr. Bevan) has already said that increased building costs have justified an extra subsidy.

Mr. Gibson

The point I am making is that the effect of this subsidy, which, I agree, the Minister has shared out between the State and the local authorities on the same principles as those adopted by my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) when he was Minister, has been a very considerable increase in the cost of local housing. Although the Minister was anxious to make plain that he did not say that we were to get from the State all the increased cost of housing, the impression which was given was that the State would bear the whole of the increased cost.

I should like to quote from HANSARD a Question put by the hon. Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) on 19th February of this year. He said then: Are we to understand that the increase in the housing subsidy is guaranteed to be sufficient to cover the whole increased cost to local housing authorities of the new rate of interest? That seems to me to be quite clear and plain. The answer was, "Yes, Sir." That question was followed by one from the right hon. Gentleman the Member for Battersea, North (Mr. Jay), who asked a similar question, in answer to which the Minister said: I have answered perfectly straightforwardly the question put to me. The answer is Yes, Sir.'"—[OFFICIAL REPORT, 19th February, 1952 Vol. 496, c. 26.] That did not mislead me. I did not believe even then that we were to get all the increased interest charges out of the Treasury; but it certainly misled a good many people in the country and if there is misunderstanding in the minds of local government representatives the Minister has himself to blame for it.

The fact is that it does mean a very considerable increase in the cost. For instance, the London County Council—a very wealthy organisation—will itself have to bear an increased rate charge per year of over £46,000 on an output of about 9,000 houses which, because they are in the London area will inevitably cost more to build than in any other part of the country, partly because of the increased price of land to which I have referred and partly because the building trade workers in the London area receive a higher rate of pay; but mainly—or very largely, as was stated in one of the Reports presented by the Monopolies Commission—because the price of building materials was artificially forced up in the London region.

On several occasions "The Times" has called attention to the enormous increase in the price of building materials. One of the most amazing things, to me, is to hear the Minister of Works apparently boasting that he proposes to lift all control from building materials and prices. If he does we shall have an enormous increase in the price of all building materials used in our houses and that, coming on top of the increase in the interest rate—for which it seems to me there was no justification at all except the theories of the London bankers—makes it hardly surprising to find "The Times" on 3rd March, saying, with regard to the decision to increase the interest rates: The decision seems unwarranted by the facts of the situation, incompatible with a policy of reasonable disinflation, contrary to Conservative principles"— I am not worried about that— and, it must be said, to common sense. I must say that the whole thing seems to me to be a shocking example of a lack of common sense on the part of a political party which, historically, never has shown very much common sense. I should like to point out something else. There is a journal which represents and reports the feelings of the builders of this country—the "National Builder"—and in its April issue it says: The raising of the Bank rate to 4 per cent., making the cost of borrowing money even higher than before, and the increase in the cost of petrol will obviously make building work more expensive,"— the Minister was talking about reducing building costs— but it may be that the drastic cutting of food subsidies will prove to be the biggest single reason for higher tender prices later in the year. So the spokesman of the building industry is warning us that later in the year tender prices are to be still higher. That seems to me to be an obvious development which could have been foreseen by any Government which took the trouble really to think out what it was doing on this question of raising the interest rate and raising the rates of subsidy.

It is getting so ridiculous that as far as the London County Council itself is concerned there is a rate charge of £200,000 a year for housing alone and the subsidy per house is nearly double the weekly rent received. I am not against the subsidies. I think we must have them if we are to keep rents down to the level that the ordinary workman can pay; but a policy of releasing the contractors, the building merchants and the bankers—will have the result of pushing up prices so high that one has to have another subsidy; which produces a situation where we not only have dearer building but rents probably going up still higher—only means that, in the end, we shall have a repetition of the sad experiences which many of us went through in the years between the wars, when the market was allowed to go mad, prices went sky-high, the building of houses became impossible, with utter bankruptcy to the local authorities in London, and the Tory Government stopped all building.

That happened two or three times and I think we are heading for a collapse of that description again unless we can get back to the policies which were being pursued before this Government took office, of keeping a tight control on building materials, on building prices, their use and distribution, and getting the interest rates on housing loans back to the figures at which they stood before the General Election. Anything short of that is an encouragement to even higher prices for our building, higher rents and, as has been said,, to rent resistance, which will result in it being impossible to let some of the houses or flats for which a higher rent is already being charged.

I am told that even the paragons about which the Tory Party talk so much—the people who want to buy their own homes—are already refusing and handing back licences. Again, in the "National Builder" for this month, we find this in an editorial: In recent months there have been reported several cases of prospective house purchasers returning licences because of mounting house-building costs. The raising of the rate of interest will be the last straw for many more would-be purchasers who will now remain in, or seek, rented accommodation. I should have thought that that was an obvious development of the kind of policy which the Tory Party are following just now. Although, in view of the financial position of the local authorities, we cannot resist the first Clause of this Bill. I suggest that we must try to do something to improve it, if possible; but the fact will have to be driven home—and I think the local elections have shown that it has been driven home successfully—that if one lets the market rip, as so many Conservative Members of this House have advocated, then inevitably we will have enormous increases in the price of building materials and the cost of building construction.

That is what happened in Australia when they did the same sort of thing and that is what has always been the position in America. If that policy is followed we will price ourselves out of the markets, house-building and slum clearance will stop, and people will be in a worse position than ever before. If the Tory Party want to gain votes I suggest that they should adopt the Labour policy of controls on building materials and prices, and the strict regulation of building under a well thought out system of priorities, something similar to that operating before the Election.

We are returning to utter chaos and anarchy in the building industry, of not only dearer prices but unemployment, and a lot of bankruptcy among the smaller builders. While we ought not to resist the Second Reading of the Bill I think it will have to be very considerably improved. I think that the Clause relating to the giving of subsidies to tied houses is one of the worst I have seen in legislation in this House. It amounts to giving a double subsidy to the farmer and it puts the farm worker in the position of being almost an abject slave to the farmer. This Clause will have to be resisted, and I hope my hon. Friends will resist it.

Clause 3, which removes the inducement to sell only at the best possible price, will also have to be resisted. It is quite clear from what the Minister said, in a reply to an interruption I made when he was speaking, that he himself does not know at what figure the Government intend to allow local authorities to sell. Surely, even on Conservative principles, local authorities should not be allowed to sell houses to private owners at a loss to themselves. If that is the Government's policy, let them say so and we shall get a few more votes during the elections in the next few weeks.

Finally, I believe that the county council electors have shown quite clearly what is flowing through the minds of the people of this country about the Government's line of policy on housing as well as on other matters. I believe that the Tory Party will get a shock when the borough elections are held in a week or two, in spite of their attempt to try to work up some excitement about fares.

What will bring most support to this side of the House and to our friends in the country is the great efforts made by my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) in building up a housing organisation which has produced more houses at rents which people can afford to pay than have ever been produced in any comparable period in the history of this country. [HON. MEMBERS: "Oh."]Yes, and I hope that will be remembered. Indeed, I am sure it will be remembered by the people of this country when the time comes to turn this Government out.

6.43 p.m.

Mr. J. Enoch Powell (Wolverhampton, South-West)

I will leave the statistics with which the hon. Member for Clapham (Mr. Gibson) concluded his speech to be laughed out of court of their own accord. I observed that in what he had to say about subsidies he was riding rapidly in two opposite directions. First, he said we ought not to be raising subsidies to compensate for the increase in the rates of the Public Works Loan Board. Then he urged the Government to keep down the rates charged by the Public Works Loan Board, which, of course, means a subsidy of a different kind.

Mr. Gibson

I am sure the hon. Gentleman does not mean to misrepresent what I said, although I know he is an expert at doing so. What I was saying was that to force through an increase in the interest rates and then to cover it by an increase in subsidies is "Alice in Wonderland" economics.

Mr. Powell

But the hon. Member is presumably aware that the rate at which the Government were able to borrow money, when the Public Works Loan Board's rate was still 3 per cent., was considerably above that. There was, therefore, an element of subsidy being given. The hon. Gentleman is merely suggesting that the subsidy should be given in one form and not in another.

Mr. James MacColl (Widnes)

Would the hon. Member explain exactly what amount of the money advanced by the Public Works Loan Board is borrowed, and for what period it is borrowed?

Mr. Powell

The rates are roughly comparable with long-term interest rates.

Mr. MacColl

That is not an answer to the question.

Mr. Powell

It is a question of a loan of 60 years—that is, long-term interest rates.

Mr. MacColl

May I explain what I mean?

Mr. Powell

I shall be coming to this point at a later stage of my remarks and I should like to deal with it in context.

The hon. Member for Clapham also objected to the fact that local authorities would no longer be obliged to obtain the best possible price—that is, the vacant possession market price—for any house they sell. But the late Government themselves declined to pay the vacant possession market price for property which they bought. It is well know that in the Town and Country Planning Act the element of vacant possession value was eliminated from the purchase price which the Government were prepared to pay.

Mr. Desmond Donnelly (Pembroke)

I do not think that the hon. Member is being quite fair. Under the section in the Town and Country Planning Act which lays down the rate of the public purchase price, a notional figure is interposed assuming that the sitting tenant is there until 1954. As time goes by we get nearer and nearer to the open market price, which assumes that there is no sitting tenant.

Mr. Powell

Of course, but the fact is that property is bought at a price which is lower than its vacant possession market value, whereas the hon. Member for Clapham was saying that that was the price which local authorities ought to be forced to obtain for any property they sell.

Mr. Gibson

I am sorry to interrupt again, but I did not say that at all. At present, the law permits the local authority to get the highest possible price. What I was objecting to was the suggestion that that should be deleted from the law and that local authorities should sell at a loss to themselves. That is what I tried to get the Minister to explain when he was speaking. If the hon. Member is in favour of local authorities selling houses at a loss, then let him say so and let us know where we are.

Mr. Powell

What I am saying is that it would be unreasonable for the existing legal obligation to obtain the best possible price to be retained for the sale of council houses by local authorities.

Mr. Turner-Samuels

rose—

Mr. Powell

I cannot be expected to give way constantly.

There has been a good deal of confusion about the practical effect of the increase in subsidies, and this confusion has been in two opposite directions. In introducing the Bill, my right hon. Friend mentioned three variables which entered into housing calculations—the cost of building a house, the cost of maintenance and the rent obtained from the tenant. I should like to add two other variables to the equation—the rate of interest which is paid and the subsidy which is obtained from taxes and rates. Thus, in this matter we are operating, altogether, with five variables.

For many years, two of those variables—the interest rate and the subsidy—have been fixed and, therefore, as my right hon. Friend pointed out, the increases in the cost of construction and of maintenance have been taken up by the remaining variable, which is the rent—except, of course, insofar as local authorities have been able to cushion part of the impact upon the tenant by paying an extra subsidy out of the rates. The effect, and the precisely calculated effect, of this increase in the subsidy is to offset a new change in the variables—namely, an increase in the rate of interest. It does not deal one way or the other with any of the other changes.

In the remarks of the right hon. Member for Ebbw Vale (Mr. Bevan) a very important disclosure was made. The right hon. Gentleman—and I am sorry to have to refer to his remarks in his absence, but he is an important witness in this matter—said that until recently—he did not specify the exact point of time—the increase in rents necessary to offset the increase in costs had only been proportionate to the general increase in earnings, but that of late that situation had been changing. The increase in costs had been getting out of step with the general increase in earnings, so that it would have been necessary, had that gone on, to make an alteration in the subsidy, in the fifth variable, to offset the effect of the continued rise in costs.

As I understood him, the right hon. Gentleman criticised my right hon. Friend for having dealt in this Bill merely with the effect of the increase in interest rates and for not having also increased the subsidies to offset recent rises in the cost of building. Well, if it is the case that, as the late Administration's period went on, building prices rose out of line with the rise in the general level of wages, then that is one of the most serious condemnations of their housing policy that can be imagined. It is a condemnation in practice. So far from my right hon. Friend being ill-advised in not increasing subsidies to offset the rise in costs of building, he is going in the right direction in saying that those costs must, on the contrary, be brought down.

Indeed, the logical result of my right hon. Friend's policy necessarily is that costs will fall. If, with the same building labour force, if, with the same basic resources, we produce a greater number of houses, then it stands to reason—as a bald economic fact—that the general level of costs will cease to rise and will begin to fall.

So, quite apart from the important effect of his following out the policy of his predecessor and thus obtaining initially a prospective reduction in regard to house plans of £50 on the average council house—quite apart from that, the effect of my right hon. Friend's general policy is bound to be a stabilisation of building costs followed by an ultimate reduction. We should be going entirely in the wrong direction if we attempted to chase rising costs with rising subsidies.

Quite the opposite case was made in the leading article in "The Times" to which reference has several times been made. That article referred to the subsidies and said: This makes it the more astonishing that the Government's first move should be to raise council housing subsidies, not only by the small amount needed to offset the higher interest charges on local authority loans, but by nearly two-thirds. There is a very simple fallacy in this direction. The idea in the mind of the writer—and I think that this difficulty has been quite generally felt—is that whereas the rate of interest has only risen from 3 per cent. to 4¼ per cent., subsidies have been raised by practically two-thirds. Of course, this is a fallacy. The subsidy covers the margin; it covers the last portion of the cost of the house which is not covered from other sources. Therefore, the proportionate increase in the subsidy is far greater than the proportionate increase in total cost which it is designed to meet.

Let me give a very simplified illustration. If something costs £1,000 and there is a £100 subsidy payable on it, a 10 per cent. increase in the cost will require a 100 per cent. increase in the subsidy to offset that rise in cost. Hence the fallacy into which the writer of the article, and, I believe, many other people have fallen, of believing that this increase in subsidy has been far greater than is necessary to offset the increase in the Public Works Loan Board rate.

The increase was, of course, decided upon before the further increase in the Bank rate announced by the Chancellor of the Exchequer on 11th March. In some quarters it has been asked why the subsidies are not to be further adjusted in respect of that further increase in the Bank rate. In fact, the long-term borrowing rate has remained practically unchanged as a result of the policy initiated in the Budget. The change in Old Consols rates between 10th March and the present date has only been about ½ per cent. My right hon. Friend is, therefore, logically justified in keeping the subsidy at the level which was planned before the Budget.

These subsidy provisions of the Bill are, in a sense, as the House recognises, consequential—consequential upon the increases in the Public Works Loan Board rates. The other portions of the Bill are machinery. There are machinery Clauses for making practicable the sale of council houses; and there is the redressal of that extraordinary act of prejudice in the 1946 and 1949 Acts which denied the benefit of housing subsidy or reconditioning subsidy to those who occupy tied houses.

This piece of vindictiveness was all the more difficult to understand since hon. Gentlemen opposite do, in their more sober moments, recognise the necessity for this institution of the service house. In the minority reservations of the Ridley Committee Report on the Rent Restrictions Act the right hon. Member for Poplar (Mr. Key) and his friend, Mr. Buchanan, agreed that the institution of the tied cottage outside the agricultural sphere was useful and should continue. Even within the agricultural sphere they agreed it was necessary in certain types of farming—for certain types of agricultural employment. So that the principle that tied cottages are necessary has been recognised by hon. Gentlemen opposite.

Mr. E. G. Gooch (Norfolk, North)

Not all of them.

Mr. Powell

It has been recognised by the late Government, because the late Government were repeatedly urged by their party conferences to abolish the tied house, and they as repeatedly ignored that request—or mandate: I am not sure which it technically is. Therefore, the effect of legislation hitherto has been that persons living in conditions which hon. Gentlemen opposite recognise to be an unavoidable part of our system have been denied the advantage of reconditioning or of new housing. That is an injustice which this Bill redresses.

I want to make one or two observations in support of the criticism of my hon. Friend the Member for Hampstead (Mr. H. Brooke) of the effect which the new subsidies has upon the building of flats and mixed development. My right hon. Friend, in introducing the Bill, said that the new scales for flats and mixed development were on precisely the same basis as in former Acts. My criticism attaches to that basis itself. In 1946 it was pointed out, notably by Lord Balfour of Burleigh in another place, that the scale of subsidy put a premium upon the building of flats and particularly of large flats—tall flats. Even the 1949 Act, although it modified the premium upon very high flats, did nothing to alter the general preference which those scales give to flatted development.

In London, over the past six years, the general shape of housing finance has been that the losses on cottage development have been partly paid for by the profits—the gains in subsidy—on flat development. Until recently these were tending, at any rate, to offset one another. There has been a steady loss on nearly all cottage development, and usually there has been a substantial gain on development in the form of flats. Consequently, for financial reasons, there has been a premium upon maintaining a big percentage of flat development in the programme.

That effect still continues, and may, perhaps, be intensified by the present scales. I will give one example. It is of a five-storey development in central London. The proposal for it was recently before the London County Council. It involves a cost of over £700 per room, which, even at present levels, is a very high cost. Before these subsidies were proposed, on the old level of subsidies, there would have been a deficit of £29 a year per dwelling. The effect of these subsidies is not merely to wipe out this deficit, but to convert it into a profit of £10 a year.

That example is by no means an isolated one. It is an illustration of the way in which these scales put a premium on flat development on expensive land. I hope my right hon. Friend will call for evidence of the practical working of those scales and will not hesitate to modify them before the Bill receives the Royal Assent if he finds that the result is to over-encourage flat development.

Finally, we must recognise, although it would have been a mistaken policy not to offset by these subsidies the effect of the increase in the Public Works Loan Board rate, that, nevertheless, an immense and increasing sum of public money is being paid out to keep down the rents of council houses. In the long run that is only justified if these houses are going to people who financially need them or who cannot otherwise be re-housed in the course of slum clearance or de-congestion. Only my right hon. Friend's housing policy as a whole can justify the position of this Bill within it.

Towards that lightening of the local authority lists which must prelude an intensive attack upon slum clearance and congestion associated with financial need, through the agency of the subsidies, my right hon. Friend's policy has already made an important contribution. It is my experience, as it must be that of every hon. Member who takes a personal interest in the practical working out of these things in his own constituency, to be approached by persons on the local authority housing lists—persons often quite near the top of the list with perhaps only three or six months to wait—who say that it is not a question of rent, that they are prepared to pay an economic rent, and, indeed, are able and anxious to pay a deposit to buy their own house. They say that they have been forced to put themselves down for a council house because that was the only prospect they saw of re-housing at all.

My right hon. Friend's policy of increasing the total number of houses built, and within that total of increasing the proportion of houses which persons can buy or can rent at an economic rent, contributes directly to enabling local authorities to use the subsidies for the basic purpose for which they were originally intended and for which they should alone serve. The right hon. Member for Ebbw Vale had the impertinence to describe my right hon. Friend as a "slum Minister." I suggest that that title fits more appropriately the Minister of Health under whom for the first time for decades in this country no slum clearance whatever was carried out or attempted, and, indeed, under whose Ministry the slums multiplied faster than they had done since the First World War.

I will end with words from the speech made by the right hon. Member for Ebbw Vale when introducing the Housing Act, 1946, which this Bill amends: I am convinced that as the year develops the housing situation will show that the Government have the whole thing well in hand, and the people of Great Britain will realise that they have in office at the present time people who are really concerned about housing and not merely about making political capital about it."—[OFFICIAL REPORT, 6th March, 1946; Vol. 420, c. 460.]

7.4 p.m.

Mr. E. G. Gooch (Norfolk, North)

I propose to deal only with Clause 2 of the Bill, to which I offer the strongest objection on two grounds. First of all, I do not think that public money should be handed over to private landlords to spend on cottage property which has fallen into disrepair due to their own neglect. From 1926 to 1945, the Housing (Rural Workers) Acts were in force under which local authorities were empowered to make grants to private owners to help recondition such cottages.

In 1948, the Labour Government allowed these Acts to lapse, and I rejoiced at their decision. I and the National Union of Agricultural Workers, with which I am associated, have always been opposed to the principle of these Acts, and we have submitted both written and oral evidence to the Hob-house Committee which emphasised this inflexible opposition to grants of public money to private persons for the reconditioning of cottage property. We contended that there should be no grant made for reconditioning, but that local authorities should be prepared to advance money up to a certain fixed sum on loan, but that no loans should be made in respect of tied cottages. If employers wanted cottages from which they could eject their workers when no alternative accommodation was available, then they should build and maintain them at their own expense.

Other objections to the grants for reconditioning were expressed, and it was questioned whether on Socialist principles grants from public funds should be made for the improvement of property, especially when, as in the case of many rural cottages, it had been bought at a very low figure because of its condition. It was also pointed out that the majority of rural workers' cottages were built over 100 years ago—many of them well over 100 years ago—and that the technical difficulties of bringing the older type of country cottage up to modern standards were very great. Many of the cottages are structurally below modern standards of decent living and have reached the stage of decay when they are beyond adequate repair and reconstruction.

The opinion was also expressed—and it was a useful opinion I think—that in some cases reconditioning was being used to push aside the building of new houses as of comparatively little importance. May I again add that if reconditioning is not to be mere patching up, it cannot consist merely of minor repairs or alterations, but must involve the use of skilled labour suitable to the building of new dwellings?

I want to face up to a suggestion which has been made in certain quarters. In reply to the argument that there are some cottages of great structural value and architectural beauty which ought to be saved and modernised, I say that the young farm worker and his wife will invariably prefer a cottage of modern lay-out to the reconditioning of something half ruined though picturesque.

The fundamental question about the reconditioning of a building is not whether it is beautiful, but whether, when reconditioned, it is fit to live in. Any reconditioning of cottages in the countryside which it is desired to preserve for all time should, I think, be undertaken, not by the individual, but by the local authority. It is obvious that this is a matter which should not be left to private individuals, and, in any event, I do not think that public money should be used to patch up old cottages, however picturesque, which are already pretty near the end of their useful life.

I want to say a word with regard to something that was said by the Hobhouse Committee in its Report. That Report stated that the consensus of opinion of the bodies which gave evidence before it was in favour of reconditioning grants being resumed. It was not surprising that it should say that because the Central Landowners' Association, the National Farmers' Union and the Federation of Women's Institutes favoured the scheme The National Union of Agricultural Workers and the Sanitary Inspectors' Association—perhaps the only two bodies giving evidence before the Committee whose members did not stand to profit by reconditioning—were not in favour of grants from public funds being made for this purpose.

I should now like to deal with a point made by the hon. Member for Wolverhampton, South-West (Mr. Powell). which concerns my second objection. My strongest objection is to the giving of public money in the case of cottages held on a service occupation. The hon. Gentleman said that we on this side think there should be service cottages associated with agriculture. I have been in the limelight in agricultural circles for the last 30 years, and I ought to know something about it, and I challenge him to produce any evidence that I have ever expressed an opinion in favour of the continuation of tied cottages. I have denounced tied cottages for years, and I shall continue to denounce them until there is in office a Government which will end the scheme for all time.

The Hill Farming Act, 1946, began again the assisted reconditioning by private owners of rural cottages, but made one variation—and an important variation it was, too: that no grant should be payable in respect of cottages held on a service occupation. If the owner of a service cottage wished to obtain a grant to make improvements he had to be prepared to grant what is known as a restricted tenancy, which prevents the tenant from being ejected without an order from the court but does not make it necessary to prove that alternative accommodation should be available.

The Housing (Financial and Miscellaneous Provisions) Act, 1947, provided that a private owner could obtain a subsidy towards the cost of erecting a new house to be occupied by himself or a tenant. This meant that a farmer could obtain a subsidy towards the cost of erecting a new house to be occupied by one of his workers, again on the condition that the house was let to the worker on the basis of a tenancy, such a tenancy to be of a restricted character, the landlord having to apply to the court for possession of that cottage without proving existence of alternative accommodation.

The same principles were embodied in the Housing Act, 1949, under which assistance for reconditioning was not limited, as it had been formerly, to improvement in the houses of agricultural workers. All farm cottages erected and improved under the Act were brought within the ambit of the Rent Restrictions Acts. The cottages held on what I described as a "restricted tenancy" do not give the occupants of those cottages the security of the alternative accommodation section. The Conservatives fought hard in 1946 and 1949, during the passage of these Housing Acts, to secure subsidies and improvement grants for owners of service cottages. In the 1950 Election the Conservative campaign reached its peak when the party election manifesto, "This Is The Road," included a pledge to restore reconditioning grants to all tied cottages.

This Bill revives grants for the reconditioning of rural workers houses, including farm cottages where no tenancy exists, and from which a worker—and this is a point which is not generally known—can be summarily ejected on the ending of his contract of service. In other words, the moment a man's contract of service on a farm ends, he is a trespasser in his cottage and can be turned out by the owner of the cottage without resorting to the courts, not even having a policeman there to see fair play. That happens today in rural England, and it is because it happens in rural England today that I shall oppose this for all I am worth.

Mr. C. E. Mott-Radclyffe (Windsor)

The hon. Gentleman says it happens today in rural England. For the purpose of clarification, could he tell the House upon how many occasions that has happened in his own constituency, for the sake of argument, during the last year, or the year before, or both years together?

Mr. Gooch

The hon. Gentleman, who happens to be a constituent of mine but not a supporter, knows very well that I could, and I will produce the evidence for which he is asking. I have not got it here, naturally, but he can take it from me, as he knows very well, that evictions have taken place not so many miles from where he lives. I will refer to one in a moment. If he desires any figures of the number of people ejected or summarily evicted from their tied cottages, I will try to supply the answer to this question.

Mr. Mott-Radclyffe

The hon. Gentleman always says he will try to supply us with the answer. It would support his case a good deal more strongly if, before coming to the House and delivering his speech, he took the trouble to find out exactly how many cases of the kind he describes have really occurred.

Mr. Gooch

I will not only supply the hon. Gentleman with the number of evictions that have taken place, but I will supply him with the details. I hope that he will then be satisfied that such a thing as I have described does take place, and can continue to take place.

Mr. George Jeger (Goole)

Is my hon. Friend aware that I have in my hand a letter which I received this morning from one of my constituents in the village of Fairburn, near Leeds, West Riding, in which, asking me to oppose this Clause, he says: Would you please object to that grant that is being proposed. We have in our branch"— that is the branch of the Agricultural Workers' Union— three members, all good farm men, with eviction orders weighing on them. They have been given notice to quit. One has 30 years' service, another 15 years' service, and another 4 years. Notice to quit because of a difference of opinion between them and their boss, the farmer.

Mr. Julian Snow (Lichfield and Tamworth)

Is my hon. Friend also aware that I have three cases in my post at the present time?

Mr. Turner-Samuels

I, too, have a letter from the Gloucester Branch, in which the branch is complaining that agricultural workers can be evicted in this way.

Mr. Percy Wells (Faversham)

Is my hon. Friend aware that I have cases—

Mr. Speaker

Order. I think that in fairness to the hon. Member who has the Floor he ought to be allowed to proceed.

Mr. Gooch

Whilst I am very glad to have that evidence, I should like to be able to get on with my own speech.

Hon. Members opposite propose that public funds should be used to repair or recondition houses whose occupation shall be in the absolute control of the employer. This Bill also proposes to enable subsidies to be paid for new houses occupied by farm workers on a contract of service, namely, houses where no tenancy, not even a restricted one, exists. In their fight for the return of the facilities which the Housing (Rural Workers) Act provided, the Tories and the farmers, whose arguments will not hold water, claim that a farmer who availed himself of a grant under the recent Housing Acts lost control of the house so that a worker could take other employment and still remain in the house as long as he liked. That is absolutely untrue.

It is also contended—and the present Minister of Agriculture used this argument last year when the Livestock Rearing Act was considered in Committee—that unless farmers are allowed to have cottages which are held by workers on a service occupation they will refuse to repair or recondition their cottages without the aid of public money, and that therefore the Labour Government condemned farm workers to bad housing conditions. I want to face up to this, because it is what so many Conservatives say. That was saying, in effect, that we who oppose the reconditioning of tied cottages want to deprive the farm workers and their families of decent housing conditions. We do not want to do anything of the kind. We want to prevent further injustice being done to them. What the present Minister was saying, in effect, was that unless farmers are allowed to retain the right of summary eviction they will do nothing to keep their cottages in order.

There are plenty of other arguments that can be advanced against reconditioning grants, but the main argument against the proposal contained in this Bill is that it gives a new lease of life to the worst type of tied cottage. I am not surprised at this retrograde move on the part of the Tory Government. Members opposite approve of tied cottages. I have here their Agricultural Charter, which was issued some little time ago, and I have refreshed my memory by seeing what they say about tied cottages. They are quite honest about it. Members opposite approve of tied cottages, and in this charter, in 1948, they said that they would reintroduce grants and loans for the reconditioning of farm workers houses at the earliest possible moment.

The Government are faced with many urgent problems, yet they regard this as the appropriate moment to introduce a controversial matter of this kind. This Bill, if it still contains Clause 2 and becomes an Act of Parliament, will yet more firmly rivet the shackles of the tied cottage upon hundreds of farm workers, and thus continue to deny to them freedom in their own homes.

The Agricultural Charter says that the tied cottage system must be retained. It refers to tied cottages in the police force, the nationalised industries teaching and the Church. In not one of these does summary eviction operate.

The Prime Minister is quoted as being a tied cottage tenant. That is all in this book. I think that a 1s. is charged for it but it is not worth a 1s. because there is so much nonsense in it. The Prime Minister is quoted in the Agricultural Charter as a tied cottage tenant, but may I say that the Prime Minister as a rule gets five years' notice to quit. I do not know whether this one will, but as a rule he does. In any case, the Prime Minister in this country has another house to go to. Many farm workers do not get one month's notice to quit, and hon. Members opposite know that to be true.

The Agricultural Charter charges the Socialists with wilfully magnifying and distorting this problem for party purposes, and it adds, "We will always seek to prevent cases of hardship." What would the Tories have done in a case that took place not many miles from his residence, which I had to deal with, in which a man, wife and three children, one a few months old, were turned out of their house and spent a cold night in a church porch? The only way to deal with the tied cottage is to abolish the system, but this Bill merely adds to the problem.

I am not surprised that the National Farmers' Union should give a welcome to this Bill and use the argument that farm workers are entitled to proper housing accommodation, but they support the principle that the owner is entitled to dip into the public purse to provide the accommodation. I say, let the local authorities provide the accommodation to which the farm workers are entitled.

May I call attention to a statement made by one who is rather prominent in farming circles? This is what one farmer publicly stated about the Government's proposal. Although I am a farmer for profit"— wrote A. G. Street in "The Farmers Weekly"— and a member of the N.F.U., I must place it on record here that I am wholeheartedly on the side of the National Union of Agricultural Workers in its contention that no public money should be granted for the erection, repair, or reconstruction of tied cottages. In my view a certain number of tied cottages are essential to the efficient farming of the countryside; but these should be erected and maintained to a proper standard by the agricultural industry … any public money available for the erection or repair of rural cottages should be used expressly for free cottages. One of the greatest objections to the proposal is that the tenant of a reconditioned service cottage will himself be making a contribution through taxation towards the cost of reconditioning a cottage from which he and his family can be summarily convicted. I think this is scandalous. The Bill removes the limited protection given to some farm workers in housing legislation passed by the previous Government. At present, a house built with the aid of a subsidy must be let to a worker on a restricted tenancy, that is a tenancy which does not give the occupant the full protection of the Rent Acts, such as the proof that alternative accommodation is available before possession can be obtained, but which does necessitate application to a court for an order for possession.

If this Bill passes into law, it will restore the right of employers summarily to eject a worker from a house built with the assistance of public money, not only without it being shown that accommodation is available, but without an order from a court. Members opposite may consider that justice, and helpful to the speeding up of the vital food production campaign. I regard it as a glaring injustice to a large body of honest workers, and for that reason I shall do my best in Committee to see that Clause 2 is expunged from the Bill.

7.26 p.m.

Brigadier F. Medlicott (Norfolk, Central)

I am glad to have the opportunity of following immediately after the speech of the hon. Member for Norfolk, North (Mr. Gooch). I am tempted by what he has said to throw aside all my notes and to confine myself to dealing with the extraordinary series of statements and mis-statements which he has addressed to the House.

The hon. Gentleman made reference in particular to farmers desiring tied cottages so that they may be able to eject their workers from them. I can think of nothing further from the truth. The practical reason why landlords and farmers desire tied cottages is not to be able to eject the workers but to enable the workers to be on the spot and to perform their duties in the most convenient and efficient manner possible.

The hon. Gentleman also stated that some of the provisions for the granting of Exchequer assistance only served to provide profits for the landlords and the farmers, and I think he even mentioned the Women's Institutes, although what profit Women's Institutes can get out of Exchequer grants of this kind I am unable to imagine. He said that the only person who did not profit from the reconditioning of a rural house was the worker. Surely he is the only person who does profit from it, because there is no financial profit to the owner of the house. The money which is made available by the Exchequer is added to by other money provided by the owner, and the person who receives the benefit is the farm worker who lives in the house, which is better than it was before the grant was made.

I would also like to take up the point, which he dismissed so airily, of comparison between agricultural service cottages and the several hundred thousand service cottages owned by the nationalised industries. There is no difference in principle at all, because the tenancy or occupation in both cases comes to an end with the service. The hon. Gentleman made a great deal of play about summary ejection, and we all have sympathy with those cases, which are, in fact, quite rare, where people are turned out in the manner that he has described.

Mr. Turner-Samuels

Is the hon. and gallant Member really telling the House that when a farm worker's employment comes to an end he is allowed to go on living in that service house?

Brigadier Medlicott

That is the exact opposite of what I said. I said that in both cases the occupation comes to an end with the service. I could not put it more clearly.

As far as individual examples are concerned—and I should deplore it very much if there were many examples of the kind to which the hon. Gentleman referred—I have had the privilege of representing an adjacent constituency to his for 13½ years and I have never, during that time, had one case brought to my notice in which my assistance has been sought in a matter of this kind. I believe that is due to the fact that the farmers in Norfolk have a sense of responsibility and try to do their best for their workers.

Mr. Barnett Janner (Leicester, North-West)

The hon. and gallant Member is conversant with the legal position. Is it not a fact that what my hon. Friend the Member for Norfolk, North (Mr. Gooch), has said is correct, and that it is within the hon. and gallant Member's knowledge or he has overlooked the fact that in many instances people have been turned out of their homes, whether in his constituency or in any other constituency?

Brigadier Medlicott

I am not for one moment denying that there have been cases where service tenants have been turned out. I was only stating that the instances are, happily, far fewer than have been suggested. None of us regards the system of service occupation as perfect, but it was accepted completely by the Labour Government during their six years of unqualified rule. They had it in their power, at a time when they were able to pass some of the most complicated legislation that ever encumbered the Statute Book, to deal by a single Clause Bill—almost by a stroke of the pen—with the tied cottage and do away with it. I have some sympathy for the hon. Member for Norfolk, North, who has fought a very lone battle in this campaign, and had little assistance from the Government which he otherwise supported.

Mr. Turner-Samuels

Why subsidise it?

Brigadier Medlicott

The Labour Government accepted the principle of the tied cottage, and yet in 1945, when they came into power, they deliberately allowed Exchequer grants under the Housing of Rural Workers Acts to lapse and they put nothing in their place. That is a glaring example of the way in which party dogma was allowed to obscure the practical aspect of the situation. In consequence, for many years agricultural workers have been deprived of the advantages which pre-war legislation, passed by Conservative Governments provided for their benefit.

In common with other hon. Members, I received this morning letters from branches of the Agricultural Workers' Union, and I think the most amusing thing was the surprise shown by the hon. Member for Norfolk, North, when he heard of this surge of public opinion about Clause 2 (2). At the risk of hurting his feelings I must say that we cannot always accept him as spokesman for the entire agricultural industry. I know he will not mind—but perhaps he will mind—me saying that we must be factual about this. I understand from a statement he made recently that there are some 200,000 members of the Agricultural Workers' Union. On the other hand, there are 800,000 agricultural workers in this country, so that on those figures it looks as if the Union does not speak for more than one-quarter of them; or if we leave out the casual workers and take only the number of permanent workers, who are 600,000, the Union does not speak at most for more than one-third of the workers in the industry.

Large numbers of agricultural workers are in favour of the principle of the tied cottage, because it gives them a home at a nominal rent and in no circumstances does the rent exceed 6s. a week. The house is usually near to their place of work instead of at some distance from it, which would place them at great inconvenience in travelling to their work, as well as involving loss of valuable time.

I do not think I have been honoured before by any official communication from branches of the Agricultural Workers' Union on matters of public expenditure. I certainly never heard from them when the Labour Government spent nearly £40,000,000 on groundnuts in Africa, or when that Government was spending public money upon the extravagances of the Festival of Britain. I only hear from them when the present Government proposes to spend money on making their homes more habitable and more pleasant. Surely there could be no greater evidence that some of this indignation is very near to being synthetic and manufactured.

The hon. Member for Norfolk, North, and a number of other hon. Members on the other side of the House expressed indignation at public money being spent in this way. They seek to establish that there is an objection in principle to the spending of public money upon private property. In my opinion, it is about time that the owner of private property had a little in return.

I have taken some trouble to find the figures which show what was the total amount of public money spent under the Housing of Rural Workers Act in the years 1926–1945. Starting at the modest figure of £8,000 in the first year, it rose steadily, which shows the good work that was being done, to a total in 1945 of £181,000, this is a very modest figure of public money placed in private hands when it is compared with the fact that last year private individuals, through Death Duties, contributed £188 million to the public Exchequer. Surely if it is justified on grounds of high finance to take away such a colossal figure from private individuals, it is reasonable and justifiable that a modest amount such as is proposed in this Bill should be returned to them, especially when it is for such a good purpose as this.

In conclusion, I welcome this Bill. It is not only a valuable contribution towards the implementation of the Government's housing plans, but, in particular, as a representative of a rural constituency I welcome the Clause 2, because I believe it will do something which many agricultural workers themselves will welcome, and that is to provide improved amenities and additional accommodation for them, for their wives and for their families.

7.38 p.m.

Mr. Charles Pannell (Leeds, West)

I want to take up one point which was made by the hon. and gallant Member for Norfolk, Central (Brigadier Medlicott). It ill becomes one of the party opposite to sneer at the Festival of Britain. We heard much of it before the Festival took place, but on the morning of the opening ceremony the great majority of Members opposite were present, resplendent in grey toppers and frock coats, and almost claiming full responsibility for the Festival. There is a very curious difference between the fact that we had so much sniping before the Festival and then so much get-together afterwards, with the claim that hon. Members opposite were really responsible, that it was a non-party matter, and all that sort of thing.

Mr. Cyril Osborne (Louth)

Some of us never went there at all.

Mr. Pannell

I take that from the hon. Gentleman, because he is not a very sociable person anyway.

I wish to take up a remark made by the hon. Member for Hampstead (Mr. H. Brooke). I gave him notice that I was going to raise it, but I understand that this is the celebration of his wedding day, and it is much better that he should be elsewhere rather than listening to me. I want to take up the question of the calculation made about the subsidy, and if the Minister will follow me he can indicate whether I am in error or not.

As I understand it, the Minister estimates the cost of building a dwelling of 950 square feet at £1,525. The annuity payable on a loan of that size for 60 years at 4¼ per cent. to the Public Works Loans Board would be £70 9s. 3d. The average amount spent on repairs according to the returns submitted to the Minister, and at a figure which I understand he accepts, is £12 making a total of £82 9s. 3d. The average rent charged by local authorities is £46 17s. 3d. Therefore, the difference is £35 12s. Three-quarters of £35 12s. is £26 14s., the Exchequer subsidy, and a quarter of £35 12s., £8 18s., is the rate, fund subsidy.

It will be appreciated that the figures of £12 for repairs per house per annum and £46 17s. 3d. for rent are average figures for the country. Bearing in mind that the responsibility for repairs of local authority houses varies considerably—I shall say something about the variation later—£12 per house is a completely phoney figure in this argument. The Minister claims that if more than £12 is spent on repairs the local authority is at liberty to increase the rent. Hence the annual rent of £46 17s. 3d. or 18s. a week, is the average rent actually charged, excluding rates.

In introducing average repairs expenditure and average rents, the Minister has departed from what we understood was his pledge. He will remember that at Question time I accepted his good faith, and I will now put it no higher than that his understanding of what he said was not my understanding of the pledge he gave. We understood him to say that the new housing subsidy would offset the increase in the interest rates of the Public Works Loan Board chargeable to local authorities.

These are the figures. The annuity payable half yearly to meet a loan of £1,525 over 60 years at 3 per cent. Per annum—the old rate—was £54 19s. 3d., and the annuity at 4½ per cent. is £70 9s. 3d., an increase of £15 10s. owing to the increase in the interest rate. Hon. Members should note that last figure. Over the whole period of the loan on a house at £1,525, the repayment at the old rate of interest would have been £3,928, and at the new rate it is £4,228, a difference of £930 because the interest rates have risen. That squares reasonably well with the figures given by my hon. Friend the Member for Lincoln (Mr. de Freitas) in connection with the £1,600 house. I notice that my hon. Friend got many interruptions; I shall be interested to see if anyone challenges my figures.

The new Exchequer subsidy provided in the Bill is £26 14s., an increase of £10 4s. on the old Exchequer subsidy. The new rate subsidy is £8 18s., an increase of £3 8s. on the old rate subsidy. Therefore, the housing subsidies are increased by £13 12s.

If we take these figures together, we find that the loss to the local authority per house per annum, equating the recent interest charges increase with what we have given in subsidies, is £1 18s. per house, or 9d. increase in rent a week. Those are the figures that matter, and no one will deny them. I know the basis of the negotiations, and I have had the figures tested. I am not arguing from the point of view of whether the Minister did or did not carry out his promise. I am only arguing on the basis that the figures mean an increase of 9d. a week per council house under the new arrangement.

Mr. H. Nicholls

The hon. Member is pre-supposing that the local authorities will attempt to build the same sort of house. If they take the lead given to them and build cheaper houses, they will save money.

Mr. Pannell

The hon. Member betrays the fact that he knows nothing about the negotiations. I am quoting the Minister's own figures.

With regard to subsidies, I congratulate the Minister on one thing; he has been able to convert his Parliamentary Secretary. On a previous occasion his Parliamentary Secretary "went to town" on subsidies. I find a curious echo of what he said in the speech of the hon. Member for Wolverhampton, South-West.

What the Parliamentary Secretary said on 14th July, 1948, was: Now for the subsidy. So far as this is concerned, sooner or later, this Government, or the next, will have to face up to a serious problem because at present four out of every five houses are being subsidised by the State. Quite wealthy people are receiving a subsidy paid for by people without the same means. Surely, financial need should secure financial assistance and physical need should secure financial possession. There is no reason why Lord Nuffield should be able to get a council flat and that poor people like myself should have to contribute towards it. There is no reason why a Cabinet Minister with a salary of £5,000 should receive a subsidy and why I, with £1,000, should contribute to his rent"—[OFFICIAL REPORT, 14th July, 1948; Vol. 453, c. 1241.] I do not know whether that is the limit of the hon. Gentleman's income, but I let that pass. At any rate, there it is.

I understood it was common to both sides of the Chamber that we believed that council houses should now be let according to need and not according to income. I do not think there is any argument about that, but it is obvious that the hon. Gentleman who is now the Parliamentary Secretary was arguing in another way. We have also had arguments from the Government benches tonight suggesting that people who can afford to buy should be given an opportunity of doing so.

The Bill provides for an increase in the amount from rents for repairs—I want to address myself to the subject of repair problems—from £4 per house per annum to £8. This means either that rents will rise by £4 a year, or that additional deficits on the housing revenue account will accrue which will have to be made good by the rates fund, provided that the amount included in the rents for repairs is at the moment less than £8 per annum.

I consulted some national statistics on repairs. I now quote from the Housing Statistics, 1949–50, of the Institute of Municipal Treasurers. The latest figures were published last Saturday, but they are likely to be based on estimates, and the figures which I have here are probably more realistic. The average contributions to the repairs fund of local authorities vary from £1 18s. per year, at the lowest, to £24 per year at the highest.

Sir William Darling (Edinburgh, South)

Name the boroughs.

Mr. Pannell

I shall come to that. I will deal also with the Minister's constituency and that of his Parliamentary Secretary. The £1 18s. a year contribution is at Cardiff, where a resolution was passed—one can imagine the complexion of the council—in favour of ceasing all housing repairs altogether. The highest contribution is at Wimbledon. I propose to take the intermediate instances in the course of my argument.

Everybody knows that the matter of the repairs fund—I am speaking of the administrative effects of the Bill—has bedevilled housing finance for a large number of years, and it is as well that we spend a little time on this subject. The Minister has allowed an estimated figure of £12, taking the country as a whole. Housing repairs are terribly difficult to estimate. I want to quote from a document issued by the Leeds City Council to show what their experience is. The figures for the average cost of repairs per tenancy went up from £4 12s. 5d. in 1946–47 to £15 18s. 1d. in 1949–50. The estimated figure which, I believe, they had in the normal estimates, on which their budget was based, was a figure of £5.

Take, for instance, the constituency of the Minister. The Bromley Council allow a figure of £17 per tenancy for repairs. I know Bromley very well. I live in North-West Kent, and Bromley is a very good authority indeed. They allow £17. Next door, in Beckenham—the constituency of the Patronage Secretary—the figure is £10. If it was sought to score a debating point, one could reasonably ask whether Bromley were paying too much—the Minister, I think, will agree that the two places are comparable—or whether Beckenham were paying too little for repairs. I do not know. One would need to be on the spot to find out.

It is rather curious that the figure for Beckenham this year has fallen to £8—I managed to get some rather more up-to-date figures before I came to the House today. The figure which is allowed in Wallasey—the constituency of the Parliamentary Secretary—is £6. Actually, in the year for which they estimated £6, they expended £8. In Wimbledon, as I have said, the figure is £24, and with regard to Cardiff, in spite of their resolution to spend only £1 18s. a year on housing repairs, they spent in the past year £7 14s.

Why does this sort of thing happen? I come back again to the figure for Leeds, because I am trying to prove that an average figure of £12 a year is no good for the basis of the argument, and that was the figure which was used in the negotiations. In the current year, the City of Leeds spent £264,877 on repairs to 26,647 tenancies, which represents an expenditure of about £10 a tenancy. The normal contribution, on their estimates of £5, should have been about £132,000. This average figure of £12 simply plays off one authority against another.

We have heard today from the Minister of the wide dissimilarity in local government, and I believe that I should carry the Minister with me, and certainly the hon. Member for Edinburgh, South (Sir W. Darling), when I refer to the Minister's statement that the glory of local government is that they please themselves.

Sir W. Darling

Why differentiate?

Mr. Pannell

Yes—why is there this wide differentiation?

Sir W. Darling

Competence and income.

Mr. Pannell

It is not quite that. Would the hon. Member say that a Conservative council which decided to do no repairs whatever was a competent council and should let their buildings rot?

Sir W. Darling

They were well built.

Mr. Pannell

Take the practice of many authorities in the matter of repairs. Some authorities do no repairs at all. Some do all the repairs, inside and out and of every kind. Some provide materials, leaving the tenants to provide the labour, and some provide the labour if the tenant provides the materials. Some, of course, repair and redecorate at regular intervals, and some, like those represented in the main by hon. Members opposite, repair at very irregular intervals indeed.

That is the story about housing repairs, and yet we know—it is reasonable to bring it into the argument—that with regard to the pre-war houses, the reason for the increased rents up and down the country has not been based on capital costs, because the money was raised many years ago. The increased rents have arisen for most council properties from the mounting costs of repairs. Consequently, when people speak rather glibly about pooling all the housing accounts and giving a flat rent to the lot, they should bear in mind that if they consider that against the high rate of interest or the high cost which they now have to find, they have to consider it against the mounting repair costs of the older houses.

I have looked very closely into the question of housing pools, and I should take most local authority representatives with me when I say that one could establish quite a good case for treating them as two separate types of problem.

Sir W. Darling

And sell some of them.

Mr. Pannell

I shall come to the question of selling, because I do not think the hon. Member has thought about that problem any more than he has done about the repairs.

I know the hon. Member for Edinburgh, South. I listened to him in a remarkable debate in 1938 at the Institute of Municipal Treasurers, when he debated the rising curve of public expenditure. But, of course, he likes those emotionally toned question-begging phrases. Consequently, he referred to the burden of the rate as if rates were something he should not have to bear, but that—

Sir W. Darling

I would point out to the hon. Member that I did not suggest the title of that interesting debate, in which I was such a distinguished protagonist. It was suggested by the Institute of Municipal Treasurers. If the hon. Member would remember, I carried the honours of the debate against my protagonist.

Mr. Pannell

Most people referred to the wit with which the hon. Member carried it, but generally speaking it was felt that the wit rather outshone the material. I believe that the word "masked" is the word which my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) always uses.

I want now to come to the sale of council houses. It does not seem to me that we have yet faced up to the basic difficulty of dispensing with property which has for a long period been subsidised by the rates. One can see the muddleheadedness that creeps in. I do not want to refer disparagingly to a maiden speech, although it was a very controversial one, but the hon. Member for Dulwich (Mr. Robert Jenkins), who made his maiden speech earlier today, seemed to assume that local authorities should sell those houses at the outstanding balance on the books.

Mr. E. Partridge (Battersea, South)

Oh, no.

Mr. Pannell

I do not know whether the hon. Member was present—

Mr. Partridge

Yes, the whole time.

Mr. Pannell

It is quite possible that the hon. Member did not hear, any more than the hon. Member for Dulwich knew what he was talking about. Quite apart from the fact that I listened—one need hardly say this—I have no prejudice against owning a home of one's own. It so happens that I live in a ward of a local authority which has just had a resounding victory in the Kent County Council elections. Some 95 per cent. of the people are home owners, and they now know where their true interests lie.

I started to buy a house of my own. There is a greater tradition of home ownership in the south than there is, perhaps, in the north. We ought to ask ourselves one or two of the questions that will spring from the matter of the sale of council houses. We have to make up our minds whether it is merely the outstanding amount on the books or what other figure for which we are going to sell them. I am assuming for instance that the Government will go through with this, and I know full well that the Minister must endorse any schemes that are put up to him.

We must ask ourselves whether these houses are to be sold freehold or leasehold. That is a fair question, and I suggest that, if sold at all, estate property that is acquired from public funds, and particularly property which has been subsidised, should revert eventually to public ownership. If any sales are contemplated, the properties should be disposed of by leasehold for a period of years. Miscellaneous properties, however—I refer to requisitioned properties which their owners have subsequently been willing to sell—that have been acquired by local authorities, might for administrative convenience and tidiness be sold—I say that straightaway.

I am trying to argue about municipal estates. Some pre-war houses built under the 1919 scheme will be debt free, apart from site costs, in less than 30 years, the 1933 houses in 35 years and the 1934 houses in 37 years. At the end of those periods these houses should be good for another 30 or 40 years.

The post-war houses will be saddled with loan charges for a period of about 60 years. It seems to me that the Minister, when considering any scheme, should make it a period not exceeding 50 years leasehold, possibly with a ground rent. I am using the figure of £1,525, with a ground rent not exceeding £7 10s. per annum. I shall not go through all the statistics with regard to that, but it seems appropriate.

Another question we might ask is at what value should these houses be sold. Many hon. Members opposite have served on local authorities and, as such, are public trustees, and in this sense we are public trustees tonight. We should think of the administrative effects of the Bill, as well as its main principles. Should we sell at sitting tenant valuation? I take it that the Bill says "no," because it removes the obligation for getting the highest price in a limited area. Should we sell at vacant possession value, or refer to the relation of cost, or a figure which bears some relationship to all three?

In inducing people to buy council houses, the offer to sell must be made attractive for reasons which are not made here, and the applicant, if he is a council tenant, will expect something more than he is enjoying at the moment. All council rents are subsidised. What does the council tenant expect to get out of this? From the viewpoint of security no one is in a more fortunate position. Nothing could be more secure than being in a council house.

Mr. Partridge

Subject to a week's notice.

Mr. Pannell

Again we have that ridiculous assertion made. It is necessary to take tenants through the county courts, but do councils get rid of them at a week's notice? Of course they never do, because of the effect of public opinion and of political parties. It is a lot of nonsense to suggest that the tenants are in the same position as the tenants of rack renting landlords. A form of public responsibility goes with the local authority landlordship and, when all is said and done, members of the council are trustees for the ratepayers. Why should we have this foolish remark made about a week's notice?

In the main, council tenants are in subsidised houses at present and, whatever the right hon. Gentleman says about the position of rent control and the fact that many people are in a private tenancy, are these living at too cheap a rate in his view? [Interruption.] I will take interruption from hon. Members who have listened a long time to the debate. As I understood the Minister, when dealing with the matter of subsidies, he said that people should remember that in addition to council tenants receiving subsidies, there is a great mass of people who are tenants of private owners who are not giving an adequate remuneration to the private landlord. I think I have fairly interpreted what he said.

Mr. H. Macmillan

That is not what the hon. Member said before.

Mr. Pannell

My memory is more recent of what I just said than that of the right hon. Gentleman. Unless the council tenant is offered a house cheaper than he is getting it now, what attraction is there to buy it at all?

Sir Jocelyn Lucas (Portsmouth, South)

He can keep a pet dog or a canary in a private house, but not in a council house.

Mr. Pannell

The hon. Member speaks as a professional dog breeder; I read the article in "Picture Post" about the hon. Member keeping hundreds of Sealyhams running round his residence. The public authority should insist if it has to sell, upon leasehold. We have to ask ourselves which houses should be offered for sale, if any, whether whole estates have to be offered, part estates, on a piecemeal basis, terrace houses, or flats. When we talk about mixed estates, I would inform hon. Members that I can remember the Law Land Estate at Walthamstow. It was a private estate all owned by one person who had the greatest difficulty in stopping enthusiastic tenants painting the outside of their residences either black and white or like a Scotsman's kilt. It should be borne in mind that if one or two here and there are offered for sale administrative costs go up.

To whom should they be sold? To tenants only, to sitting tenants, as houses become empty and available? Who should decide it—

Mr. Turner-Samuels

A Labour councillor.

Mr. Pannell

My hon. and learned Friend says, "A Labour councillor," all councils are being won by Labour now. Any scheme should satisfy other conditions, such as whether the owner should dispose of the property and the council buy it back again at about 5 per cent. per annum, plus improvements at valuation, and that the purchaser should keep it in a state of repair comparable to that at which it has been kept. I do not know what would be done in Cardiff, where they spend nothing on repairs at all.

Sir W. Darling

£1 18s.

Mr. Pannell

Even the hon. Member would not find that would go very far. It has to be borne in mind that, whatever the obligations of the best private landlord, local authorities have special obligations and a statutory duty to let at reasonable rents. It is often said that the local authority has certain advantages compared with the private landlord, but they have to take on obligations of hardship, sometimes of anti-social tenants and the rehousing of people because of children. This is a health service as well as a social service. No such duty lies on the private landlord—[HON. MEMBERS: "Oh."] I think that is true; the private landlord takes in whom he wishes, but the local authority has to consider all sorts of social obligations which do not lie on the private landlord.

Mr. H. Macmillan

There are duties in life other than legal duties.

Mr. Pannell

I was speaking, for the purposes of argument, of a legal duty. The moral duty also lies on a local authority. Hon. Members on both sides of this House, the type of people who go into public life giving their time voluntarily, are of course people moved by moral impulses.

We should also bear in mind when we consider this matter of selling houses to people at the top of the list that there are hundreds and thousands of dwellings in places like Leeds, back-to-back dwellings built in the old days by the predecessors of hon. Gentlemen opposite—[HON. MEMBERS: "And the Liberals."]—certainly not our predecessors. The people occupying those houses are being taxed and rated today to provide accommodation very much superior to that which they can hope to enjoy themselves for many years.

I would remind the House of what my hon. Friend the Member for East Ham, North (Mr. Daines), said not so long ago. I hope that sooner or later we will consider housing not only in the concept of municipal housing, but in the general concept of all the housing of all the people. I know of the arguments about houses going into ruin because they are not properly repaired, and all that sort of thing. But I am not in favour of rent increases to owners of slum property. Whatever case there may have been for the idea of compensation at a certain rate for the nationalised industries, there is not the same argument for the same rate of compensation to be paid in such cases as that.

I am in favour of the extension of municipal control of all letted properties to provide housing repairs even to the extent of taking them over. We should not forget that we are dealing not only with a great human service and a great health service, but also with something that is second only to the unity of the family itself, the largest and most important single element, with all that is best in the life of the country, the unit older than the State and which stands apart from the State—the preservation of the decent dignity of British family life.

Mr. Partridge

Before the hon. Gentleman sits down, he accused me of saying something foolish because I was taking up what my hon. Friend said in his maiden speech. He was talking about rising rents and a week's notice in the same context. Would the hon. Gentleman be good enough to tell me what happens to a council tenant if he gets his rent arbitrarily raised by as much as 10s., as my hon. Friend mentions, and cannot or will not pay it—

Mr. Deputy-Speaker (Mr. Hopkin Morris)

Order. Squadron Leader Cooper.

8.12 p.m.

Squadron Leader A. E. Cooper (Ilford, South)

We always enjoy the speeches of the hon. Member for Leeds, West (Mr. Pannell). I do not know whether he reached the same standard he set for himself in his speech on the Second Reading of the Finance Bill but, nevertheless, we did enjoy his fireside chat, punctuated as it was by innumerable interruptions. I mean him no discourtesy and I shall try to deal with a number of points which he made later.

It is rather curious, but this Bill has not been subject to any intensive lobbying on the part of local authority organisations and, in consequence, I think the fears with regard to deficits which hon. Members opposite think will arise are somewhat ill-founded. I hope to deal with some of those points later, but on the question of pooled rents which the hon. Member for Leeds, West, raised, if I took his meaning correctly, he is not in favour of local authorities pooling the rents over the whole of their council estates.

Mr. Pannell

I would look at it on its merits for each local authority.

Squadron Leader Cooper

I would incline to that view myself, but I think it wrong to pool rents over a wide number of houses built at differing times. We must, however, criticise the hon. Member for Leeds, West, on his attempt to prove that the figure of the Minister for repairs is wrong. It is difficult to fix a proper figure, because estimates vary all over the country, and even substantially within a particular borough. But I would say from my experience that as a sound and practical figure the one put into the present Bill will stand up to quite close analysis.

This debate has shown that the Labour Party are in considerable difficulty on the question of housing. During six years they failed to solve the problem, particularly during the first five years when they had an overwhelming Parliamentary majority and could have done anything they chose. Now they are jealous that my right hon. Friend is showing considerable zeal in tackling this very serious social problem. Hon. Members opposite continually jibed at us about our target of 300,000 houses, and because we did not achieve it in the first three or four months we were pilloried all round the countryside as having broken our Election promise. It is flattering that the Labour Party should imagine that we could fulfil that objective in the first three or four months of office.

My right hon. Friend has shown, however, that we mean business. Already the figures he has quoted this week in the country show that completions are increasing at a very satisfactory rate—and that during the worst building period of the year, namely, the winter months. In any event, why should hon. Gentleman opposite suppose we would find it difficult to reach a target of 300,000 simply because they themselves were not able to go above 200,000. Sir Richard Coppock, the General Secretary of the National Federation of Building Trade Operatives, writing in the "Socialist Outlook" in June, 1950, said: I am sure the industry can build at least 350,000 houses a year in addition to all other building required. So I think the task we have set ourselves is well within the capacity of the building industry at the present time.

Now the charge is that in consequence of the increase of money rates rents will go up. But they have not. The subsidies now proposed by my right hon. Friend have taken care of that and hon. Gentlemen opposite, including the former Parliamentary Secretary, should bear in mind that in 1948 interest rates were increased from 2½ per cent. to 3 per cent. and no extra subsidy was given—

Mr. Lindgren

The hon. and gallant Gentleman will surely agree that the subsidy was agreed assuming a rate of 3⅛ per cent.

Squadron Leader Cooper

The hon. Member is quite wrong, as he often is on these points. The subsidies were fixed some time before. They were fixed, I believe, in 1945 and building costs had already gone up and the point of my statement is—and the hon. Gentleman can wriggle how he pleases—that council rents, in consequence of the increase of the Public Works Loan Board rate from 2½ per cent. to 3 per cent., went up all over the country.

Mr. Lindgren

I will deal with that in my reply.

Squadron Leader Cooper

The hon Member should not worry about that, and neither should the Labour Party. I will quote the right hon. Member for Ebbw Vale (Mr. Bevan), who said this in the House when he was Minister of Health: Of course, people quarrel about rents. Whenever rents go up 1s. or 2s. there is a row. That is human nature. Everyone wants the product he is selling to go up in price, and the product he is buying to fall in price. No hardship is suffered at all by virtue of the fact that the local authorities have decided to raise rents. As these people are living in subsidised houses, it is reasonable that they should pay a slight increase in rent rather than the other people should pay an increase in rates in order to keep those rents down."—[OFFICIAL REPORT, 4th July, 1949; Vol. 466, c. 1822.] That is a very different story from that told to us today by the right hon. Gentleman the Member for Ebbw Vale, and it is a very different story to that now being sent out from this House today as part of the propaganda of the Labour Party. Maybe, it is because we are getting close to the local government elections.

Mr. Lindgren

You are getting worried.

Squadron Leader Cooper

On the contrary, we are not getting worried at all.

Mr. Lindgren

You are being beaten.

Squadron Leader Cooper

The increase in the ego of hon. Gentlemen opposite may not be so great in a few weeks' time.

Mr. Lindgren

It may be higher.

Squadron Leader Cooper

I come now to the important part of the Bill and this question of house ownership. I am quite unrepentant on this subject. I believe that house ownership is one of the pillars of our social structure in this country. I believe that it creates a proper situation of strength and stability, which can only be for the enduring peace and prosperity of our nation as a whole.

Mr. Lindgren

And the unemployed?

Squadron Leader Cooper

The hon. Gentleman is not given to very intelligent remarks on the subject of housing. I would point out to him that, whether people are unemployed or not—and there were three million unemployed when his party was in power in 1929–31—people still had to pay their rents.

The real trouble which we have got into at present is due to the rigid figure imposed upon local authorities in the past six years for house building in relation to private licences. I am sure that the hon. Member for Clapham (Mr. Gibson) will agree. Perhaps it is not quite so easy in the London County Council areas as it is in other areas, and I do not profess to know what are the housing conditions of the L.C.C. area.

In many areas, however, it is the fact that a considerable number of people who are housed in subsidised council houses today enjoy quite substantial incomes, and could properly—and, indeed, would like to—own their own homes. What we have to do is to encourage these people by all the means in our power to buy their houses if they can. Apart from the real value of that process to themselves as individuals, there is also the very considerable value to the national economy, and we must also bear in mind that the more houses we build that are subsidised, either by national taxation or by local rates, the more the general burden on the nation is increased, and that a situation can arise in which it may be quite impossible for the nation to support these very large subsidies.

It is within the knowledge of this House that one village or township in Scotland, Whitburn, I think it is called, had to refuse its allocations last year because the subsidy burden was too much for it to bear. It is a fact that, if we could sell some of our Council houses to existing tenants—their housing needs would be already established, because if they were in occupation of a house, obviously, they must have established a housing need in order to be there—we should be able to build more houses without increasing the subsidy level and performing a very considerable social good.

Mr. Pannell

The hon. and gallant Gentleman is making out the case that there are any amount of people whose income is such that they do not need to live in subsidised houses. Why sell them a house which is under the subsidy, then?

Squadron Leader Cooper

I cannot believe that it is the intention of the Minister that, in selling these houses, any moneys paid over to public funds will be, shall we say, lost in that way. I think that a fair market price is the price which will have to be fixed in selling these houses, and that would be my understanding of the proper way to do it.

There is only one point in the Bill to which I want to refer, and on which I hope the Minister will give an answer at a later stage. It concerns the period of four years for disqualification before sale. The period of four years is mentioned in Section 43 of the Housing Act, 1949, but the Building Materials and Housing Act, 1945, first contained this provision, which was originally fixed for a period of four years, and was subsequently extended by the Housing Act, 1949, to a period of eight years.

Under that Section of the Act, it was possible to take a house under private licence and have a period of only one year in which one was disqualified from selling, but here we have a positive disqualification for four years. I am advised that, administratively, the difference between these two provisions would be untidy, and that there is a case for bringing the period of disqualification into line with that in the earlier Act.

I commend this Bill to the House. I think it is a further step forward in the housing policy of the Government, who have shown enterprise, zeal and initiative in faithfully fulfilling this vital Conservative pledge. Socialists may not like it, but we shall succeed in our task, and posterity will revere the present Minister as the man who cut out "red" tape and got on with the job of building houses for the people.

8.27 p.m.

Mr. M. Turner-Samuels (Gloucester)

I have listened to practically the whole of this debate, and certainly with interest to the speech of the Minister in introducing this Bill. I would like to say to him that I think he has been extremely lucky. Whether it is because of the adroit way in which he introduced the Bill, and, in that process, glossed over what, in my opinion, is one of its most important provisions—Clause 3, relating to the sale of houses—I do not know, but one thing has been made very evident, and that is that the Minister himself was very careful not to say too much about Clause 3, while the little that he did say was not in all respects correct. All his followers on the opposite benches have also taken great care not to make any real reference to that particular Clause.

I am desirous of dealing only with that part of the Bill, and, so far as that provision is concerned, my submission is that this is a very bad piece of legislation indeed. I believe that it has been forced upon the Government by reason of their extravagant promises at the General Election. It is very much like transport and iron and steel, in regard to which the Government are now being obliged to redeem their pledges, which are of ill-service to the country, and which the Tory political paymasters and their supporters are now demanding should be carried out.

Clause 3 of the Bill clearly stems from the silly and false slogan of "setting the builders free." Last November the Minister announced the 50–50 rule in which private licences for the building of private enterprise houses were to be in the same ratio as for the number of council houses built, the option being left entirely to the local authorities as to what extent they carried out that rule.

That rule, in itself, was a most unjust and regressive provision, yet—and I would like the Minister to observe this—it is perfectly clear that it did not satisfy private enterprise builders. Since then local authorities have found out that public opinion is absolutely against the 50–50 rule. It is perfectly clear—and I am sure that the Minister, who is a very astute Parliamentarian and a very acute observer of what goes on around him, is aware of it—that the aim of the Government is to get rid of all building controls and to hand the community over completely and without protection to vested interests.

It is my view, and I think it is a view which the public will register more and more as they appreciate what this Bill means, that this Bill is the halfway house to that goal. The method is perfectly simple although it is calculated. It is: get the houses out of council ownership first and then it becomes a simple step to setting the builders free completely as the Tories promised the builders they would do. The Tory Party will pay very dearly for this policy and for disregarding the nation's housing interests. Indeed, they have already received the country's verdict in the recent county council elections and when the local elections come along they will find to their loss that that view will be emphatically re-affirmed.

This Bill is absolutely irrelevant to the most urgent need in housing. People today are chiefly preoccupied with the provision of houses for the waiting list. Yet this Bill defeats that very object. In fact, the Bill is an aggravation of the 50–50 rule announced by the Minister in November. It is, and it will so work out in Tory-dominated councils, a device to get as far as possible a 100 per cent. sale of council houses. Where there is a Labour majority, of course, the situation will be safe in the future, as it has been in the past. But where there is a Tory majority not only will the 50–50 rule be enforced but Clause 3, which is concerned with the disposal of council houses, will also be fully applied.

I have had experience of the 50–50 rule in my own constituency in Gloucester. For the time being I have been able to rouse public opinion and in that way I have prevented the application of that rule, but I am perfectly satisfied that if, after the coming municipal elections, there is still a Tory majority on the Gloucester City Council this 50–50 rule will be enforced. I say that for this reason. As soon as the provision of the new rule of 50–50 was announced the Gloucester Tory housing chairman at once declared publicly that the rule would be fully in operation this year.

With reference to that part of the Minister's letter issued in November last year which dealt with the sale by councils of their houses, the leading Tory alderman on the Gloucester City Council said publicly that he was in favour of the sale of all council houses. So it is perfectly clear what the result is going to be under Clause 3 of this Bill where there is a Tory majority council.

It is said that sitting tenants will get these houses. No doubt a few sitting tenants will be able to buy some of these houses, but most sitting tenants cannot afford to do so. It is nonsense to say that this is a provision which will enable occupying tenants to acquire their houses. We have to go further and give them the means of doing so. The result will be that Tory-dominated councils who insist on selling their properties will sell to the highest bidder.

I want to take the Minister up on this, because he really was not fair about it. When he was talking about the sale of these houses I suggested to him that it was not only tenants who would be able to buy these houses, but that these houses could be sold by councils if they so desired to anyone apart from tenants. The Minister denied that, but when I attempted to draw him later he was not forthcoming about it. The fact is that the sale of these houses would not be limited to sitting tenants at all. The power is conferred on and vested in the councils to sell to whomsoever they desire. But even if, in the first stages of these sales by Tory councils, some degree of conscience were to apply, it would not be long before the normal process of getting the highest price reasserted itself.

In any case, the Minister has placed himself in a very difficult position, because he has made the term during which any conditions of price and rent can apply merely one of four years. Four years is nothing in the lifetime of the housing situation of this country. It means that at the end of that period those houses will be left completely free to be dealt with in any way that the owners desire, whether it be in rent, or price or any condition whatsoever. The only exception is in relation to maintenance and use, and that does not go to the gravamen of the matter, namely, the practical acquisition by tenants of their houses.

Another matter which the Minister mentioned and about which he was wrong, if he will forgive me saying so, related to the repeal of Section 79 (3) of the 1936 Act. He said, "Why should I leave that provision about best price and best rent?" I quite agree with him there; I agree with its removal. But what he failed to tell the House was that its removal makes no difference whatever, except that it takes away the statutory obligation now resting upon the council. The council, notwithstanding that repeal, can still insist upon the best price or the best rent.

Therefore, the removal of the prohibition as to price or rent really achieves nothing. What protection is that against a Tory-dominated council? It leaves councils virtually dictators of price and rent, just as they are left to act on their own sweet will over the 50–50 allocation of houses. With all respect to the Minister, that is simply legislating confusion and caprice.

The Bill clearly removes the safeguards of the 1936 Act. It is no use the Minister saying that this position has always been the same, because that is not correct. I venture the view that the Minister will now give his general consent and councils will be left free to deal with the houses as if they were ordinary investors in property.

We have heard something about the Small Dwellings Acquisition Acts. In these Acts there is a very important provision, which is that anyone who buys a house must reside or intend to reside in the house; but there is no such protective provision in this Bill. The startling and indefensible fact is that under the Bill, after four years in any case and at once if the council does not impose the conditions of price or rent, the house is freed of all obligations except, maybe, use or maintenance—and even then there is a question whether or not it is imposed by the Minister or the local authority.

I should like to ask the Minister whom the sale of council houses is to benefit. It will certainly not solve the housing problem. One of the things it will do in relation to the housing problem is seriously to reduce the number of houses for letting. If that is the fact—and I think it undeniably is so—it is perfectly clear that the sale of council houses will not act to the benefit of the housing problem. I do not know whether the Minister realises it, but the present yearly pool of council houses exceeds the number that local authorities can build, and the sale by the local authorities is at once going to diminish and will ultimately end that particular pool.

That means that the poor people who are applicants upon long and stretching waiting lists will then have to wait until Domesday before they have any prospect of getting a house. What is the bright idea behind the Government's policy? Is it to enable the local authorities to make money? Is it to make it easier to get a house? Or is it to get rid of the housing subsidy? I should like the Minister, or whoever is to reply to this debate, to tell us something about that.

Is it not really the Minister's desire to get rid of the housing subsidy? Is this the Tory end of the wedge, which we have seen already in the case of food subsidies? Is it to relieve the local authorities of the cost of maintenance and repairs? I do ask the Minister, just for a slight interlude, to repent and be frank about what are the Government's real intentions.

One of the last speakers from the benches opposite spoke about tenants buying their own houses and about house ownership. The average applicant on the housing waiting lists is unable to shoulder the heavy burden of buying a house. First of all, he has to accept these disabilities. He gets no subsidy at all. As soon as he touches the house all question of subsidy ends and, indeed, if any instalments of subsidy have been paid the probability is that he will be made to pay for them in the purchase price. He has a high interest to pay on his mortgage because of the operations of the Government in increasing the rate of interest, and he has to deal with a building society to whom he will probably be making payments for 20 years or more.

If it is argued that the council can lend him the money, then where is the need or the sense of the sale at all? If the council are to advance the money there can be no sense in this idea of a sale. In addition, the tenant has to find a deposit for the purchase.

Mr. Raymond Gower (Barry)

rose—

Mr. Turner-Samuels

I will give way in a moment.

The purchaser has legal costs to pay, he has to face heavy rates and heavy taxes—and it has been estimated publicly, and not denied by the Government, that it would cost the tenant, who is usually a working man or salary earner, between 65s. and 75s. a week for years and years in order to enable him to purchase the house. House ownership is in itself all right. I do not complain about it for a moment. Nor is private building objectionable. I do not complain about that, either. But I do complain about them both, on the basis that the primary need for houses is first provided. That is the very principle which the Bill negates.

I do not want to detain the House, as I know there are others who want to speak. In conclusion, in my submission the Bill is a grave and anti-social step to take at this time. It is hopelessly and heedlessly premature and it should be rejected, as I hope it will.

Mr. Gower

The hon. and learned Gentleman said that there is no difference if the council lend the money. Would he not agree that the mere acquisition of a house, the ownership of a house, gives the occupier a greater interest in it and, other things being equal, is calculated to produce a superior type of citizen?

Mr. Turner-Samuels

I do not agree at all. That is begging the whole question. What I was saying is that the vast majority of tenants cannot afford to buy their house. In any case, the transaction of the loan is merely a matter of bookkeeping. If the council are to advance the money I cannot see the sense of the sale or why it should take place at all, because it will throw upon the purchasing tenant a burden which I do not think he can possibly sustain—something like 75s. a week.

8.49 p.m.

Mr. Robert Allan (Paddington, South)

I wish to intervene very briefly on the question of subsidies being weighted in favour of building flats—a fact which has been deplored by one or two hon. Members, particularly my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell).

I regard the building of flats as essential to the solution of our housing problem, particularly in London and more particularly in my constituency. The difficulty which we face in Paddington is that of rehousing perhaps only temporarily, but certainly for a period, large numbers of people so that the houses in which they are now living can be re-built or the area re-developed in any way decided.

We in Paddington have whole streets of houses which were condemned before the war but in which people are still living because there is no alternative accommodation for them; and, of course, during all this time the property is deteriorating more and more. There is no Member for any London division who has not had experience of the pathetic and appalling conditions which obtain in such areas.

I realise that it was hoped that the new towns might accommodate those unfortunate people and give the local authorities an opportunity of re-planning and re-building the areas needing it, but it seems to me that two things are working to prevent that. The first is that the estimated annual influx of population into greater London is about 50,000 people, which is about the number envisaged in the new towns themselves. This means that, even if the new towns were to be completed quickly, there would be no easing of the pressure on Central London. Over and above that there is the reluctance of people to leave London to go into the new towns. That has been remarked upon by a number of Members. So this influx into London, which is not being syphoned off into the new towns, is going on at the same time as the property in Central London is deteriorating quite rapidly.

The answer must be to have flats in the centre of London—flats, a block of which may, perhaps, house a whole street of people; and then that street area could be redeveloped. The answer certainly cannot be the type of development which ruins towns and squanders land, because, as my right hon. Friend mentioned, the shortage of land is now becoming acute, and if the conflicting demands made on it by industry, by agriculture, and by housing continue at the present rate, we shall be faced with what has been described as "land bankruptcy" in five years. So the answer must be to build in Central London on a large scale. By that I mean, tall buildings; and that, of course, involves the use of expensive sites and means high rents.

My right hon. Friend, in opening this debate, said that nowadays the notional rent was 18s. I know quite well that the notional rent is merely used for purposes of calculation, but again I give an instance from my own constituency, of how in Paddington there are people who are being offered new accommodation and having to pay anything between 40s. and 50s. Without that subsidy those rents would be very much higher. Already people in great housing need cannot afford these rents. So it seems, if we are going to solve our problem—and I am talking locally—our problem in Paddington, we have to have that subsidy to enable us to rehouse our people there, so that the condemned areas can be replanned and rebuilt. So far from deploring the fact that this puts a premium on the building of flats, I would welcome this Measure for that reason; and also I should be very glad to see the Minister doing anything else which would encourage the building of flats in areas such as Paddington.

One of the ways I would suggest is by encouraging building over land already used for some other purpose. Goods-yards, of course, immediately come to mind. In Paddington we have a goods-yard of 16½ acres which could very easily be built over without spoiling its existing use. There are many difficulties, I know; but they can be overcome. In fact, one of the most obvious is already being overcome by the use of diesel shunting engines. That process, with high buildings, seems to be the essential answer, because modern engineering techniques and modern repetitive methods in the building industry make it possible to construct quite high buildings in London at relatively low cost. Again, there are many difficulties, some of which are of no importance, but others of which can be overcome if there is a sense of urgency and imagination, but I think that at last we have a Minister who has a sense of urgency and imagination commensurate with the problem he has to tackle.

8.56 p.m.

Mr. J. A. Sparks (Acton)

The hon. Member for Paddington, South (Mr. R. Allan), has made a very interesting and important point on the housing problem of London and the Greater London area, but the solution he proposes would accentuate rather than relieve that problem, because all those who are experienced in this respect would view with grave concern his suggested development of massive blocks of flats in Central London. In fact, the reverse is the policy we must pursue if we are ever to reduce the housing problem of London, together with its traffic congestion, and many other problems besides.

Up till now the hon. Member has been the only one to mention the new towns, about which I want to say a word or two, because this Bill has a very important connection with their housing development. The hon. Gentleman complained that, although the new towns were supposed to provide a great outlet for the decentralisation of people from London, they were not proving as successful as was originally anticipated. The point is that the new towns on the circumference of Greater London are in the very earliest stages of their development. They are now beginning to develop an equilibrium and a momentum in the construction of, particularly, houses and factories to draw from the central region of London those living in congested conditions. The Minister ought to be quite sure that this Bill will help the new towns to develop their housing construction in order to relieve the problem of congestion in London.

There again, I do not think the Minister is going far enough. The development corporations of the new towns are faced with a much more difficult problem than the local authorities in housing development, because they do not get the benefit of the local rate subsidy for housing. The Minister merely contributes to them the Exchequer contribution, on the same basis as he contributed to an ordinary local authority. As a consequence, the rise in the rate of interest charged by the Public Works Loan Board to development corporations for loans for housing purposes, is, to some extent, causing a very serious rise in the rents which the development corporations are having to charge.

I wish to mention one or two figures to illustrate this very serious trend, because if it continues unabated, if something is not done to ease the problem, the new towns will not provide that great measure of relief which we expected from them in the decentralisation of the population of London. The Minister said that the subsidies under this Bill were based upon a notional cost of an average three-bedroom type house, and he gave the notional figure of £1,525. That may be the average notional cost of the standard house, but in the new towns and, in particular, in the greatest geographical area of southern England, the average capital cost of a three-bedroom house is not £1,525 but £2,050.

As a consequence, the subsidies which are now advanced under this Bill to local authorities and also extended to development corporations to make good the increased cost of housing loans, fall far short of doing that, because the rise in the interest charges on a house costing an average of £2,050 is far greater than the rise in the interest charges on a loan for the national type house of £1,525; so it follows that so far as the new town development corporations are concerned, after allowance is made for the subsidies contained in the Bill, the rent of an average type house in the new towns will rise from 33s. 7d. per week to 37s. 8d. per week, an increase of 4s. 1d. a week.

If we compare that increased rent with the rent of the same type of house, three years earlier, when building costs were lower and when the average cost of this type of house was £1,650 and the average rent paid was 22s. 3d. a week, we have this position. In the new towns where the rent of an average three-bedroom type house in 1949, after due allowance for the subsidy received from the Exchequer and taking into consideration the rate of interest on loans advanced three years ago, the rent was then 22s. 3d. a week net, it is now on the basis of the subsidies plus the increased loan charges, 37s. 8d. a week, a rise of 15s. 5d. a week in three years. Therefore, I feel that the Minister should go further than he has done in this Bill to give to the development corporations a greater measure of financial support than he has done.

I cannot understand why this Bill should have been brought forward at all. There was a much simpler way of dealing with this problem. The Minister says that the object of the Bill is to make good to local authorities the increased cost of housing loans. Instead of evolving a Bill and putting Government Departments and local authorities to endless trouble in working out the new subsidy scales and readjusting costs, a simple directive could have been sent out by the Government to the Public Works Loan Board that, in future, they should advance housing loans to local authorities and development corporations on the previous rate of interest. This would have solved many problems, and there would have been no need for a Bill of this description. But the Government have seen fit to go the longest way round, and, in addition, they have fallen far short of the real solution of this problem.

I should like to make one or two points in connection with the proposed permission to local authorities to sell existing houses. If the Minister is not very careful he will make the housing problem in London and built-up areas far more difficult of solution than it is. I tried by way of an interjection to put my point to the Minister on this matter, but he failed to appreciate the substance of the point I was putting. Let me put it in this way. I will take my own constituency, which is typical of most of the London and Greater London constituencies. We are a built-up area without any land for the erection of more houses or flats. We have a mixture of flats and housing development, and when a man and his wife and three or four children are put into a house there comes a time when the family grows up and leaves the home. We frequently find then that a three-bedroomed dwelling is occupied by two adults.

It is quite wrong, in a congested area, whether they be council or privately owned dwellings, that there should be a lot of unused accommodation. The local authority, when it owns houses, has the power to transfer that adult or those two adults from a three-bedroom house to a one-bedroom or a two-bedroom flat, thereby leaving the three-bedroom house vacant for a family on the housing list. Thus there is a certain amount of flexibility in transferring families from overcrowded conditions to larger accommodation.

If local authorities are to be permitted to alienate their houses and offer them for sale, they lose control and are restricted in transferring families on their housing list to larger accommodation when that which they occupy is too small. I believe that the principle of the sale of council houses in a built-up area is a bad principle and will accentuate the housing problem.

Again, why should the Government seek to prevent local authorities, if they accept the idea of local authorities selling council houses, selling them at the market value and permit the person who buys them in four years' time to sell them at the market value and to profiteer as a result? Anyone who understands the housing problem in London will not deny that if a council house is sold today the tenant, in four years' time, will be able to sell that house free and unfettered from any control by the local authority at a substantial sum above the figure that it was sold to him by the local authority.

Mr. Powell

No.

Mr. Sparks

If the hon. Gentleman thinks that property values in London and Greater London will depreciate to that extent then he is making a very great mistake.

Mr. Powell

They are.

Mr. Sparks

The tendency will be for housing of this type to appreciate very considerably in value. When the Minister talked about the raising of the Bank rate creating conditions which will permit houses to be built at a lower cost he was far from the truth. The rapid rise in the cost of living, in turn leading to a rise in wage costs throughout the industry, will send up the cost of house building very greatly in the next few years.

I ask the right hon. Gentleman to consider, in the Committee stage, very seriously, Amendments designed to improve the Bill and make it of greater value to the town development corporations and to local authorities in developing their housing schemes to the benefit of people still on their waiting lists.

9.11 p.m.

Mr. G. Lindgren (Wellingborough)

Everyone will agree that the debate has been extraordinarily useful. The Minister, to whom I shall refer on a number of occasions in my speech, has apologised for his absence. Everyone will agree that he has been on the Front Bench most of the afternoon, and he has now gone for some food. He knows briefly what I shall say, and it is no disrespect either to the House or to myself that he is not here.

The three points which we have been discussing have been the subsidy, agricultural houses—tied houses—and the sale of existing council houses. Why are local authorities in housing at all? No hon. Member opposite has admitted that local authorities came into housing because private enterprise failed. At the end of the 1914–18 war it was impossible for private enterprise—the financier and the speculative builder—to provide houses at rents which ordinary workers could afford to pay. When there is no longer a profit in a service or activity Tory Governments hand them over to local authorities to undertake. In fact, the two functions of local government are to provide services in which private enterprise cannot make a profit and to guard the consumer of the service against fraud where private enterprise does provide a service.

There was a spate of legislation after the 1914–18 war. The Act of 1919 was followed by Acts in 1923, 1924, 1925, 1926, the Greenwood Act of 1930, the 1933 Act, the 1935 Slum Clearance Act and the 1936 Act which consolidated the general housing Acts and gave power to pool housing accounts. In all those Acts there were varying subsidies and varying rates of interest, and from the local authority point of view housing became a nightmare to the administrator and the elected representative.

We are genuinely afraid that the present Tory Government is returning to the ideas of Tory Governments of the past. They do not like local authority housing, and they do not like good standard local authority housing. We had high building costs following the 1914–18 war. We also had high rates of interest. The rate of interest on the first houses built by my own local authority after the 1914–18 war was 6 per cent., and the cost of each house was £1,500. How did successive Tory Governments bring down the cost of housing and the cost of subsidies? They cut housing standards.

Mr. Archer Baldwin (Leominster)

indicated dissent.

Mr. Lindgren

I see the hon. Member shaking his head, but the standards of the houses under the 1922 and 1923 Acts were much lower than those under the 1919 Act. The Government cut the standard of construction and the standard of fittings. Under the 1923 Act the Tory Government made my local authority cut 12 inches off the top of the wall between the second and third bedrooms in order to bring down costs. If, therefore, there was a lodger, one could look over the top to see how he was getting on. That was the type of cutting down of standards which Tory Governments insisted upon, and we are afraid that that sort of thing is coming back.

Although hon. Members opposite deny it, and although the Minister tried to palm off the fact that he was looking for that £50 on the basis of the general relaxation that my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) made in regard to the variations within the Dudley standards under the Ministry's general plans, the fact is that the Minister—I do not blame the Ministry—is tending to encourage local authorities to cut out valuable fittings—cupboards and that sort of thing—and the standards will go down unless there is some resistance from local authorities.

Do not forget that under a Tory Government council housing became a music hall joke. One thing of which my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) can be proud is that he took housing away from the music hall joke of the Tory Party and raised it to the very fine standards of creditable housing for the workers that we have had since the war. No longer do we hear jokes from the music hall about council houses. [Interruption.] I dare not repeat some of the jokes, or I should be called to order by Mr. Speaker.

Mr. H. Nicholls

Shortage of housing is not funny.

Mr. Lindgren

I am glad that the hon. Member has butted in. Prior to 1939, there was not a single local authority that was not under-housed. I know what I am talking about, because I have led deputations of local authorities to the Ministry pleading to be able to build houses prior to 1939. The Ministry, then under Tory Ministers of Health, refused to allow us to build council houses unless we had double the number of waiting applicants on the lists for the number of houses we wanted to build. And so, of course, we got the waiting lists and the under-housing which existed in 1939. One in five of the country's houses were destroyed or damaged during the war, and we have had the whole of the losses of building in the war period to make up. The hon. Member for Peterborough ought to be sure of himself before he butts in.

Now, we have the general question of the Public Works Loan Board and the increase in the rates of interest to 4 ¼ per cent. It was very encouraging to hear the Minister say, but he was very guarded in what he did say, that the latest increase in the Bank rate did not necessarily mean that there would also be a further rise in the Public Works Loan Board rate.

But local authorities are worried. The Public Works Loan Board rates have always followed the Bank rate. Will the Minister guarantee that Public Works Loan Board rates will not rise as a consequence of the recent increase? Will the Parliamentary Secretary give a guarantee also when he replies that, if the Board's rates do increase, we shall have another Housing Bill to give the general subsidy increase again to relieve local authorities of the increase in costs?

Why the Minister would not give the figures of how the assessments—the old assessment of subsidy and the new—are arrived at, I do not know. So far as I know, there is nothing secret about it, and I have the figures. The hon. and gallant Member for Ilford, South (Squadron Leader Cooper), who would not give way when he was speaking, did not know the facts. Prior to the reassessment, the subsidy was based on the fact that the notional house was accepted as £1,100 and the rate of interest as 3⅛ per cent. The loan charges, therefore, on that basis were £40 12s. plus a repairs allowance of £7 8s. That gave an annual charge of £48 a year. Against that was set the hypothetical rent of 10s. a week—£26 a year—which left a balance of £22 chargeable to the rates. That £22 which was chargeable to the rates on the notional house was made up by £16 10s. from the Exchequer and £5 10s. by the local authority from rate fund charge.

The new assessment is, as the right hon. Gentleman said, £1,525, and at 4¼ per cent. the annual loan charges become £70 8s. Look at what hon. Members have done through their monetary policy. The notional council house means £30 a year in the bankers' pockets. [Interruption.] An hon. Member opposite sneers, but it is a fact; £40 under the 3⅛ per cent. interest and £70 8s. under the Tory Government at 4¼ per cent. interest. It is true that the £12 repair allowance has been agreed, and so we get £82 8s. as the outgoings of the notional house. There is assumed rent at £46 16s., leaving a rate balance which would be a charge on the rates of £35 12s., and that £35 12s. on the hypothetical house is made up of £26 14s. from the Treasury and £8 18s. from the local rates. That is on the notional house, and I agree that we could not deal with this matter otherwise than by a notional house.

For 20 years prior to entering this House I was a member of the Welwyn Garden City authority and for many years chairman of its housing committee. I am indebted to them for these figures of houses under actual construction. The Minister said that this would not mean an increase in the rents for the average council house. I give two figures of houses being built under contract by his Ministry, terrace houses and semidetached houses. The annual charges if the rate of interest had been at 3⅛, would be £52 3s. 8d., and the site and development charges £10 16s. 8d., making a general total of £63 4s. Deducting the subsidy of £22, the charge would be £41 0s. 4d. per annum, making a rent of 15s. 9d. per week.

Under the 4¼ per cent. rate of interest, the annual loan charges become £66 18s. 1d., the site and development charges go up to £12 8s. 6d., because the 4¼ per cent. is not only on house building but on every local government activity, making a total annual outgoing charge of £79 6s. 7d. The increased value of the subsidy is £35 12s., bringing the net annual charge down to £43 14s. 7d., making the weekly rent 16s. 10d. Even taking into account the increased national and local subsidy, these rent charges mean that houses under construction have had their rents increased by 1s. 1d. per week over and above what the tenant has to bear as his share of the £3 18s. rate subsidy.

In addition, every activity of the local authority will be covered in this increased interest charge; street lighting, parks, open spaces—in every activity the interest rate will be going up. This rate of 4¼ per cent. means higher rates, which in turn means higher rents. In fact, the rents of normal council houses, including rates, are going up into the range of 35s. and 40s. a week, which is above the ability of the ordinary worker to pay, even in a period of full employment.

Under a Tory Government we cannot be sure of full employment. People are really worried now about taking on a council house. So long as there was security under a Labour Government and full employment with good wages they were prepared to pay—[Laughter.] Hon. Members opposite may smile, but if they go to Welwyn Garden City, where in fact before the advent of a Tory Government every worker was assured of a full week's pay every week, they will find that now people are fearful of getting the sack, which means that these council houses are not so attractive to them.

My hon. Friend the Member for Acton (Mr. Sparks) referred to the question of new towns, about which I also wished to speak, but I shall not have the time because I want to give the Parliamentary Secretary an opportunity to make a full reply. I will, however, deal with the question of the tied cottage. We shall oppose this Bill on Clause 2, because we are against perpetuating the vicious system of the agricultural tied cottage.

The tied cottage, as such, is associated with a large number of industries. Policemen, firemen, railway workers, workers in the old colliery companies and now under the National Coal Board live in tied cottages. Mr. Speaker lives in a "tied cottage," and the Prime Minister lives in a "tied cottage." It is a question of the general treatment which one receives when living in a tied cottage and the ability to find alternative accommodation if one has to get out. I know of no industry which has been more vicious in its application of the tied cottage system than the agricultural industry. [Interruption.]

Brigadier Medlicott

Would the hon. Member explain why the Labour Government perpetuated this very system for six years when, with a stroke of the pen, they could have ended it?

Mr. Lindgren

They could not have ended it with a stroke of the pen. Hon Members said the system does not work viciously, but in my own constituency and in cases within my own knowledge I have known of a dozen cases of agricultural workers who were put on the streets. [Interruption.] I could give actual cases, and will quote names if hon. Members wish. For instance a man with a sick wife and six children put on to the street—

Brigadier Clarke

Give us names.

Mr. Lindgren

I will give hon. Members a case—[HON. MEMBERS: "No, dozens of cases."] Hon. Members can have them, but equally I have been associated with other industries. I was a staff clerk on the railway—

Mr. Baldwin

Will the hon. Member quote a dozen cases to one hon. Member on this side of the House before the Third Reading of this Bill so that we can deal with them?

Mr. Lindgren

With pleasure, and also the problems of the local authorities who had to handle them. I will go further, and give the hon. Gentleman cases of houses bought by farmers who applied for a certificate and turned out people who had been living in the cottages for 40 years—

Several Hon. Members

rose—

Mr. Lindgren

I cannot give way, in fairness to the Parliamentary Secretary. I was associated with the railway industry as a staff clerk, but I never knew the old railway company turn out people like it—

Brigadier Clarke

The hon. Member never knew anything.

Mr. Lindgren

The hon. and gallant Member may know something about the Army, but what he knows about housing and local government—

Mr. Beverley Baxter (Southgate)

The hon. Member used the expression, "There is no more vicious industry," and then there was a noise. Would he repeat what it was he said afterwards? It would be interesting to have it on the record.

Mr. Lindgren

No industry has more viciously used the tied cottage system than the agricultural industry. It is the only industry I know, and I can quote cases where, in fact, men, women and children have been put into the street within recent times.

It is true that we did not deal with it altogether, but what, in fact, hon. Gentlemen opposite are now doing is applying public money to it. There may be something to be said for a farmer who has built a house with his own money for somebody whom he employs to do something for him, but there is no justification whatever to use the taxpayers' money in order to perpetuate a system so that private individuals may use it ruthlessly in regard to persons employed in their industry.

If I may now pass from the tied cottage—[Interruption.] I know that hon. Gentlemen opposite do not like it. We now come to the sale of council houses, and I want to say that we are not opposed at all to the individual ownership of houses, provided that the person concerned is in a good job, has a good wage and has security. He should have every encouragement to own his own house, but, for a person who is in an insecure job, living on a low standard and low wage, house ownership is not for him.

Unfortunately, the general majority of workers are not in that fortunate position. [An HON. MEMBER: "Under Socialism."] We are not under Socialism now. We are under a Tory Government, and, under the Tory Government, there is a general lessening of security. The hon. Lady the Member for Tynemouth (Miss Ward) laughs, but will she go to Lancashire and Yorkshire and ask the people there if they think they are more secure today than they were before the General Election? Or will she go among the workers in her own constituency around Tyneside and ask them whether they feel more secure now than they did when a Labour Government was in power?

No, so far as the individual is concerned, if he is in a good position, with a satisfactory income and security, house ownership is a virtue, but, if he is in an insecure position with a low wage and living standard, then house ownership, with the repayments of the mortgage and all the rest, can be a millstone round his neck to make his home life almost unbearable.

Why this sudden enthusiasm of hon. Gentlemen opposite for the selling of council houses? The power has always been there. Under the 1923 Act, local authorities could build houses and sell them, and some of them did so. Under the 1936 Act, they could do it. Let me tell the Parliamentary Secretary and the Minister that I was a member of local authority deputations asking permission to build council houses to sell under the 1936 Act, and successive Tory Governments and Ministers of Health refused. [HON. MEMBERS: "When?"] In 1937, in 1938 and in 1939, when the last application was made. The powers are there under the 1936 Act, and they were there under the 1923 Act.

I know that hon. Gentlemen opposite do not like this, but the fact is that the power was there, and that successive Tory Ministers would not allow that power to be used. [HON. MEMBERS: "Why?"] I will tell hon. Gentlemen why. It was because it interfered with general estate developers and speculative builders, and they did not like local authorities coming into competition with speculative builders and estate developers. That is the reason. Hon. Gentlemen may smile, but I can tell the House that the real trouble is that hon. Gentlemen opposite, or most of them, have never been in local government. [HON. MEMBERS: "Oh."] I know there are some exceptions.

Sir Geoffrey Hutchinson (Ilford, North)

Many local authorities were allowed to sell their houses under the Act of 1936.

Mr. Lindgren

Many local authorities were, it is true, and there were many more under the 1923 Act than there were under the 1936 Act. But where one had a developing area, such as the Welwyn Garden City, for example, the Tory Government of those days would not allow the local authority to compete with the speculative estate developer or the speculative builder. Our complaint is that this Bill interferes with general estate management of local authorities.

My hon. Friend the Member for Leeds, West (Mr. Pannell), put a large number of questions which I should have liked to repeat to the Parliamentary Secretary. He was not in his place to hear them, but perhaps they have been passed on to him and we shall have a reply to them. Council houses built in normal estates for letting are not suitable for disposal. Let us take, for example, council houses in a terrace row of six. One tenant wants to buy. What is the position of the council in the matter of the repair and maintenance of the rest? Under what conditions are they to sell—leasehold of freehold—to protect the other tenants in these blocks or terrace houses?

Have we not some responsibility with regard to the future of the people who are likely to buy? Some Government—either this Government or the next Labour Government—will reach a position in which the housing supply more nearly meets the need. When that occurs housing prices will fall, and the quickest to fall will be the council house in a terrace row which some person has been foolish enough to buy. Normally a person who wants to buy a house does not want to buy one under those conditions. He might buy a terrace house today, owing to the general scarcity, but when there are more houses available he will not do so.

Our complaint against even the existing houses which are being sold under private ownership is that where an existing privately owned house becomes vacant it is put up for sale; and that means one house less in the general rent pool. I will close in fairness to the Parliamentary Secretary who, because I have been led astray by hon. Members opposite, has already been deprived of some of his time. We shall allow a Second Reading of the Bill. Hon. Members opposite need not smile. If they want a Division we can give it to them.

Hon. Members

Divide.

Mr. Speaker

Time is getting very short.

Mr. Lindgren

But we intend to endeavour in Committee to amend Clauses 2 and 3, which we consider to be the unfair parts of this Bill.

9.39 p.m.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Ernest Marples)

The closing remarks of the hon. Member for Wellingborough (Mr. Lindgren) assumed that Clause 1 of the Bill is fair. He said that the Opposition would try to amend Clauses 2 and 3 upstairs. Clause 1, which deals with subsidies, apparently is fair. If that is so, there is no point in my replying to the various arguments on subsidies put forward by hon. Members opposite.

The hon. Member for Wellingborough became rather heated in his historical reminiscences of the Tory Party in the 1920's and about the tenant peeping over the wall to see what the lodger was doing—something that might be desirable in some circumstances and not in others. I do not propose to follow the hon. Member in those reminiscences.

Before I reply to some of the points raised by hon. Members opposite in the short time at my disposal—and I presume they will not think me discourteous if I cannot reply to them all, because I have less than 20 minutes to do it in—I should like to add my congratulations to the tribute paid by the right hon. Member for Ebbw Vale (Mr. Bevan) to my hon. Friend the Member for Dulwich (Mr. Robert Jenkins) on his maiden speech. It was a lucid speech, displaying great knowledge of local government, and the reason is that my hon. Friend has spent the best part of a quarter of a century in local government.

My hon. Friend is well informed, and he tackled a very difficult proposition in speaking on a controversial Bill of this nature. As he himself said, he realised that he had to be non-controversial, and he succeeded in doing reasonably well, especially considering the speech of the hon. Member for Wellingborough (Mr. Lindgren). We all hope to hear him again on his favourite topic, which is obviously local government.

There are three important Clauses in this Bill, one relating to subsidies, another to, the sale of council houses, and the third of tied cottages. But there is one serious omission which hon. Members opposite made. I cannot remember a contribution from any hon. Member opposite, and certainly not from the right hon. Member for Ebbw Vale or the hon. Members for Lincoln (Mr. de Freitas) and Wellingborough, about the costs of house building The high costs of house building, more than anything else, are responsible for the subsidies which the State is now paying out. In 1945 and 1946, when I first came to this House, I well remember the right hon. Member for Ebbw Vale and the right hon. Member for Poplar (Mr. Key) dilating at considerable length on the costs of house building and how they would reduce them.

In fact, the cost of a notional three-bedroom house has increased from £1,100 in 1946 to £1,575 now. That is an increase of £475 during the period when the right hon. Gentleman and his party were in office, and the failure to mention that fact is a serious omission in a debate of this character.

Mr. Bevan

I asked the Minister, when he was speaking, whether it was possible to give a comparison of the costs of house building. Perhaps the hon. Gentleman has now armed himself with that information?

Mr. Marples

I only have time to shoot off a few of the facts with which I have armed myself. The right hon. Gentleman has already intervened a great deal, as well as making a long speech.

I should now like to deal with the question of the sale of council houses. The hon. Member for Lincoln who opened for the Opposition referred to this part of the Bill as "rank Toryism."

Mr. de Freitas

I was referring to Clause 2.

Mr. Marples

The hon. Gentleman was talking on both Clauses 2 and 3. My hon. Friend the Member for Hampstead (Mr. Brooke) effectively disposed of this point by pointing out that this showed that the Opposition do not trust the local authorities. They seek to make this Government say to local authorities, "You shall not sell your houses whether you like to or not, whether it is convenient or not, or whether it is right or not." We on these benches take an altogether different view. Secondly, the Opposition want us to say to the local authorities, "You shall not let private enterprise build more than one-fifth of all the houses in your area whether it is convenient or not and whether it is right or not."

We say that we would rather trust the local authorities, and that they can sell houses if they want to in suitable cases, subject to certain safeguards. We also say that local authorities may sell half the number of houses by private enterprise if they consider local conditions justify this. This is permissive; it is not mandatory. We are not forcing local authorities to sell.

If they do not want to sell their houses, there is no compulsion on them to do so. The law has not been altered. It has been legal to sell council houses for many years, but the terms on which they can be sold under the law have been made ridiculous, unsuitable and obsolete by events, because if a council were to sell a house today under existing legislation they would have to exploit the sitting tenant by charging him a scarcity value on the house. We do not think that is desirable. That is why this Clause is brought in—to make sure that a fair price is paid.

In principle, we believe in house ownership. We believe that council houses should be sold to sitting tenants if the sitting tenants wish to buy and the council wishes to sell. We believe that these councils, if they so desire, should erect and sell houses to the people who are in need of them. We think that there should be freedom of choice. If a man wants to own a house, let him own it; if he wants to rent a house, let him rent it. We do not think that politicians should dictate to a citizen which course he should adopt.

Assuming that we agree to differ with the Opposition on the policy, let us try, at any rate, to implement that policy by rules which are not only fair but which are seen to be fair. My right hon. Friend has introduced certain rules. The first is that the local authority must ask the Minister. The second is that the price shall be fixed so that the local authority does not exploit the tenant and the tenant, in turn, does not get a cheap house and make a quick speculative profit out of it. The Opposition assume that the selling of council houses means, in a lot of cases, that the wrong people will be put into them. I refer here to the hon. Member for Lincoln who quoted from an article which I wrote in the "People" during the General Election. He quoted an extract out of its context, as I shall leave the House to judge when I read the passage in full.

There are two points to decide on the question of tenants. The first is, who shall occupy the house and the second, who shall own it or rent it? We say that it should be occupied by those who are in greatest need. We then go on to say that if a person needs a house he shall be free to choose whether he owns it or whether he rents it. The hon. Member for Lincoln said that he was rather frightened, because I wrote in "The People," when talking about a soldier who had been wounded in Korea, that he should have the chance to buy a house. The hon. Member quoted about half a sentence. I will read from the beginning. In a free country a man should be free to choose whether he rents or owns. No politician should dictate to him either way. Surely a more important question is 'Who occupies the house?' Suppose a single man wishes to rent and an older soldier wounded in Korea wishes to buy. Justice demands that the soldier gets the house first. Freedom demands that he pleases himself whether he buys or rents.

Mr. de Freitas

The sole point I was making—and the very strong point—is that the hon. Gentleman's town council was giving the man a chance to buy, but the price was such—over £3 a week—that the poor man who had returned from Korea would not be able to buy it.

Mr. Marples

The hon. Gentleman has still got it wrong. I said "if the soldier returning from Korea wishes to buy." The occupancy is given to the person who deserves it physically, and then he is left free to buy or to rent it. If he wants to buy it he can buy it; if not, he can rent it.

Mr. de Freitas

He cannot buy it.

Mr. Marples

If he cannot buy it, then he can rent it. The Opposition assume that the sale of a council house automatically reduces the pool for letting. A lot of council houses will be sold to the existing tenants and it is to be assumed that the existing tenants have established proper claims and have prior rights because they need the houses. What happens afterwards? In the first four years in which he can dispose of it, he has to give the local authority the right of pre-emption, in which case the local authority can buy it back again. At the end of four years he can dispose of it elsewhere.

Do hon. Members opposite really mean to say—because four years' time is 10 years after the end of the second World War—that after six years of their own Government and, I hope, four years of ours—[HON. MEMBERS: "What a hope."] we shall be in such a poor position that a man should not be free to sell his house if he so wishes?

Mr. Sparks

rose—

Mr. Marples

I hope the hon. Gentleman will not think me discourteous if I do not give way, but there are a number of points with which I have to deal. The next point is that the only houses which will be taken from the pool of letting are those in which the man dies after the four years—and that is in a very small minority of cases, very small indeed; and so the concern of hon. Members opposite is entirely unfounded.

Mr. Sparks

The hon. Gentleman has got it quite wrong.

Mr. Marples

One of the reasons why I and my right hon. Friend think that these council houses should be sold is some people are occupying council houses when they can well afford to buy them. The hon. Member for Leeds, West (Mr. Pannell) referred to a speech I made in 1948.

Mr. Pannell

In 1946.

Mr. Marples

Well, in 1946. I still maintain the view that a large number of people are living in council houses and are receiving the subsidy when, in fact, they could well afford to pay the full rent, and I can give the hon. Gentleman a case which I quoted in this House, I think, in 1947. It was of an official of one of the gas boards in the north-west of England who was receiving a salary of. I think, between £2,500 and £3,000 a year—and I am quoting from memory—and who was occupying a council house and receiving a subsidy from the Exchequer and a subsidy from the local ratepayers.

That man got occupation of the house when he was in different circumstances. I therefore said that if his needs were such that he required the house, then he should still have occupation of it. What I cannot stomach is a man earning £3,000 a year and receiving a subsidy from the taxpayers and ratepayers. I must say that the publicity which was given in that case was rather salutary—and I say this in fairness to the member of the gas board—because when he bought his own house he voluntarily gave to the council the subsidy which he had received in the past.

I should like to pay tribute to him and to say something to any other public man earning that salary and receiving a subsidy—and there is one in Scotland as will be seen from this quotation from the "News of the World" of 24th February, 1952. In a leading article they pointed out that the Glasgow City Treasurer declared that many of the tenants had personal or family incomes running well into four figures; one is a Government official with an annual income of £3,000 and a further £500 for expenses; and six are M.P.s. All I can say is that any man in public service who is getting over four figures a year should search his heart and his conscience to see whether he should follow the example set by the official of the North-West Gas Board and return to the local authority the subsidy which he has received.

Mr. William Ross (Kilmarnock)

rose—

Mr. Speaker

If the Minister does not give way the hon. Gentleman cannot remain on his feet.

Mr. Ross

On a point of order. [HON. MEMBERS: "You do not like to listen to it."] The Parliamentary Secretary has made some suggestion about Scottish Members of Parliament. [HON. MEMBERS: "No."] Well, the inference was there, in what he read. Should he not give way so that we may get some enlightenment of the position?

Mr. Speaker

That is not a point of order.

Mr. Marples

I will now come quickly to the question of costs, and I do so because it is fundamental to our discussion of housing. What is to happen to future costs of house building? In 1946, the then right hon. Member for Bow and Bromley, now the right hon. Member for Poplar, said this: Our third problem—if we are wise and sufficiently determined—will, though a big one now, be but temporary. It is that of the high cost of building these new and better homes. High cost must not prevent us from building now, but costs must not be allowed to remain so high as to frustrate the fulfilment of our task: the building of better homes at reasonable rents for the poorest of our people. Costs must come down; high subsidies must not be an incentive to maintaining high costs, and, since we are determined that high costs shall be temporary, high subsidies must be temporary, too."—[OFFICIAL REPORT, 6th March, 1946: Vol. 420, c. 342.] Then we had the right hon. Gentleman the Member for Ebbw Vale, who made a great display of what he did when he was at the Ministry of Health. He said: If I had surrendered, three months ago, to the importunities of the other side of the House, and had mentioned programmes and targets, I would have been caught now … The result of the building contractors not knowing is that at the moment effective control is being achieved over building costs, and by the same scientific organisation of material supplies we shall progressively reduce the costs of building."—[OFFICIAL REPORT, 26th November. 1945; Vol. 416, c. 1000.] How did the right hon. Gentleman reduce costs of building? Because that is why we are here discussing subsidies today—the right hon. Gentleman's failure to reduce the cost of house building. He reduced it this way. His notional cost of a house was £1,100, for a three-bedroom house based on 950 ft.—the average house councils were building on Dudley standards; and now it is £1,575, an increase of £475, or 43 per cent., in building costs. And the right hon. Gentleman was to bring them down by scientific organisation.

I was going to give the House a few thoughts of my right hon. Friend on building costs, but I have only about three minutes left, and I want to say this, that to bring down costs—which is crucial—we have to do two things; first, give private enterprise more chance of building houses; because it has always been the pacemaker in reducing the cost of houses. If hon. Gentlemen opposite disagree with that, let me tell them that, since my right hon. Friend took certain steps to free the industry, private enterprise builders are now selling houses at from £50 to £150 below the figure inserted in the licence by the local authority. The other way to bring costs down is to create effective conditions so that private enterprise can really get down to the job.

My right hon. Friend, who has been given great help by the Minister of Works, has created, with him, in the building industry a very favourable psychological climate for the building of houses. They have full order books and are maintaining a steadily expanding programme—not the erratic, violent programme given by the right hon. Gentleman the Member for Ebbw Vale. One of the most erratic things we in this House of Commons ever saw was the housing campaign in 1947, when everybody stopped building houses to put roofs on houses only half completed.

My right hon. Friend has taken many steps. We do not on this side of the House want to be judged by slick debating points. We are quite satisfied—and my right hon. Friend is satisfied—to be judged by events as they unfold themselves, and by the number of houses built. My right hon. Friend wants this Measure to enable him to press forward and see that the number of houses we build is greatly increased. I am glad indeed that the Opposition are not going to divide on a Bill which has such worthy motives and intentions.

Question put, and agreed to.

Bill accordingly read a Second time.

Committed to a Standing Committee.