HOUSING (SCOTLAND) BILL

HC Deb 03 July 1952 vol 503 cc624-79

Order for Second Reading read.

3.38 p.m.

The Secretary of State for Scotland (Mr. James Stuart)

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

As the House will be aware, the necessity for this Bill arose out of the decision to increase the rate of interest charged on the longer dated loans of the Public Works Loans Board. The Chancellor of the Exchequer announced the first increase on 8th November, 1951, when the rate was raised from 3 per cent. to 3¾ per cent., and then on 9th February of this year it was raised from 3¾ per cent. to 4¼ per cent. The Chancellor at that time, realising that this would be very disturbing to local authorities' finances and their housing accounts, agreed that a review of the subsidy arrangements for housing would be undertaken by the Government. That has been done.

Before dealing with the Clauses of the Bill, this might be a suitable opportunity for me to say a few words about the housing situation in Scotland at the present time. I know that our proceedings are to be interrupted this evening for a period, and I do not want to take up too much time, because I know that many hon. Members wish to speak, but I should like to refer to the position as it is today.

The completions of houses in Scotland in 1949 and 1950 approximated 26,000. In 1951, there was a fall in the number of completions to just under 23,000, but it was only a matter of 72 below the 23,000 figure. The right hon. Gentleman the Member for Greenock (Mr. McNeil) warned the House that there might be some reductions in that year, giving his reasons for that view. I shall not go into that now, because our concern is with the present and the future in this important matter of housing in Scotland. We are doing, and shall continue to do, our utmost to increase the house-building programme and to step up the number of completions in so far as the limits placed upon us by the availability of labour and materials will permit.

For the first five months of 1952, the figures are encouraging. The completions for that period amounted to 10,704, as compared with 8,724 in the previous year. This represents an increase of 23 per cent. The number of houses built for letting increased almost similarly—from 8,209 to 9,804. The number of houses under construction at 31st May, 1951, was 33,239, and at 31st May, 1952, 38,447.

I am not going to suggest that these figures indicate that we have achieved all that we desire, but at any rate I do suggest that they are encouraging, and I only hope and trust that we shall be able 'to maintain this improvement. I am glad to say that local authorities at the present time have a substantial amount of work in hand—35,000 houses under construction by local authorities and the Scottish Special Housing Association. There are 10,000 houses for which tenders have been approved but which have not yet been begun, and a further 21,000 houses which have been authorised but not yet put out to tender. Therefore, in Scotland, we have a total of 66,000 houses at different stages either of construction or preparation.

Progress is not, of course, uniform throughout the country, and those authorities which are able to make the fastest progress with programmes already under way will be the ones to be authorised to build more, in order to maintain continuity and steady employment in the industry. It will be agreed on all sides of the House that, in order to maintain this continuity, it is essential to look ahead and see where difficulties and scarcities of one kind or another may arise. In this connection, the Department of Health for Scotland can do most valuable work in a survey of the field of housing as a whole.

On 13th June, I issued a circular to local authorities on this very subject, asking them to consider how they stood in three respects; namely, on the servicing of sites, the choice of non-traditional houses and the starting of new houses. I hope that all convenors of housing committees, and the housing committees themselves, of all local authorities throughout Scotland will satisfy themselves that they are planning and working ahead to see that the necessary sites, the servicing and roads are being got ready, in order that there should be no interruption of the steady maintenance of the house-building programme. If this is not done, housing will be held up, and it is absolutely vital that it should be done.

I have reason to suspect that in certain areas at the present time the builders in their work are beginning to creep up too close upon the heels of the road-makers. Since the war, of course, many of the sites which were then available, and on which building was held up during the war, have now been built up, and it is of vital importance that new sites should be planned ahead.

The main purpose of this Bill is to increase the subsidies for new houses in Scotland, and perhaps I should say a word about the basis upon which this calculation is arrived at. On the one side, we take the total annual charges which are made up of the annual loan charges—that is to say, the interest on the borrowed money—the allowance for management and repairs, and the allowance for owner's rates, and against that we have to put the figure for rent. The figure for rent, of course, is what is called today a notional figure, and is not necessarily the exact rent which anyone pays, but it is an endeavour to reach a fair figure looking at the country as a whole.

Mr. Hector McNeil (Greenock)

This is an important matter on which the Minister's right hon. Friend has already given us, if not some information, some directions on the subject. Will the Secretary of State tell the House the basis upon which he arrives at this notional rent? Is it an average calculation of the rent paid for a fair range of houses of comparable type in Scotland? Has it some statistical basis?

Mr. Stuart

Yes, Sir; it is based upon a picture of the general situation throughout the country. The rents do vary, of course, from area to area very considerably. I will come to the exact figure in a moment, as soon as I have dealt with the manner in which this calculation is arrived at and upon which the figure for the subsidy is based.

On the one side, we have the outgoings, such as loan charges, management and repairs, and owner's rates, and the figure for the rent has to be deducted from that, the difference being the average deficit which has to be met by the Exchequer and by the rates. I will give the exact figures in a moment, but, as this is a rather complicated matter, I must follow my notes rather closely at this stage.

In 1946, when the subsidies were last fixed, the Government of the day took the average cost of a four-apartment house to be £1,130, which at 3⅛ per cent. gave £42 as the annual loan charge. The figure taken for management and maintenance was £6 10s. per house, and that for owner's rates £7 10s. If we add these together, they produce total outgoings amounting to £56. It was estimated that the average rent would be £26, which left an annual deficit of £30 per house. This was borne by the Exchequer to the extent of £23 and by the rates to the extent of £7.

The proposed new rates of contribution for a four-apartment house under the Bill now before the House are based on an average cost of £1,635. The rate of interest taken is the present ruling rate of 4¼ per cent., which gives an annual loan charge of £75 15s. To this £11 is added for management and repairs, and £11 15s. for owner's rates, making the total outgoings £98 10s. Against this we have assumed an average rent of £42, leaving a deficit of £56 10s. per house. The proposal is that £42 5s. of this deficit should be borne by the Exchequer and £14 5s. by the rates in respect of houses completed after 28th February.

Hon. Members have before them in the Explanatory Memorandum a comparison between the rates of contribution as they exist at the present moment and as it is proposed to increase them for the various sizes of houses. I may say that in dealing with this matter I have taken—and I think it is the general custom to do so—the four-apartment house as being the simpler type with which to deal, instead of trying to deal with all the different sizes of houses. In the Explanatory Memorandum hon. Members will find details given for smaller and larger houses.

This means that the Exchequer grant increase on a four-apartment house over the next 60 years will rise from £23 per house to £42 5s. Meetings have taken place with the three local authority associations, but I regret to say that we have been unable to reach agreement. I think all hon. Members have received a circular from these associations explaining their differences and their views, and I think I should touch on certain important points which they have raised in this circular.

We have taken the average cost per house as £1,635, and the associations argued that the figure should be £1,900. I would mention, in passing, that the figure agreed for England is £1,525, which is £110 less than the figure for Scotland. It is not easy, I admit, to arrive at an average which is satisfactory or fair to all, and, as we know, circumstances and conditions vary from area to area. Therefore, there is bound to be some variation in the estimates, but I am afraid that in this case, although we made certain concessions with a view to trying to meet the representatives of the local authorities, the gap proved too wide to bridge. I am prepared to agree that in a few districts the cost of a house may be as high as £1,900.

Mr. A. C. Manuel (Central Ayrshire)

In certain Highland districts it could even be much more than the figure quoted by the right hon. Gentleman.

Mr. Stuart

There is a rather different arrangement in the Highland districts to which I shall be coming in a minute. There are additional grants in those areas.

I was about to say that I would not admit that this average figure of £1,900 would be fair for the country as a whole unless a large proportion of the houses built cost more than £2,000. From the statistics and figures available to us, I do not agree that that is the case. It is quite clear that an average as high as £1,900 would necessitate a cost of well over £2,000 in a considerable part of the country.

Mr. William Ross (Kilmarnock)

Will the right hon. Gentleman say how his Department arrived at the average of £1,635?

Mr. Stuart

We endeavoured to work out what could be regarded as a fair figure for the country as a whole. I admit, of course, that in certain areas it is not so satisfactory as in others, but that must be true of any average or notional figure, whether it be the cost of the house or the rent charged for it, because costs vary from county to county and area to area. The rent, again, is a notional figure and in calculating it we took £42 per annum as being a fair general average or notional figure.

All I can say to the right hon. Gentleman who asked me how this figure was arrived at is that this, as he knows, is not the first occasion on which there has been a review of these matters. The last adjustment was made in 1946. This has been worked out in a similar manner to that adopted on other occasions, by looking at the country as a whole and trying to arrive at a reasonable figure. The associations suggest a figure of £33 as being a fair one. While our figure for Scotland is £42, it is perhaps worth noting that in England the figure of £46 17s. has been agreed to, which is £4 17s. higher than ours. At any rate, considerable increases have taken place in rents of local authority houses, and at the present time some are as high as £40 or more in certain counties, in two or three large burghs and even in some small burghs.

Of course, local authorities will continue to charge the rent which they think proper, but we believe that, taking into account previous increases, coupled with increased costs generally and improved wages, a notional rent of £42 for subsidy calculations is not an unreasonable figure. Further, the associations say that the increase of £19 5s. per annum by way of Exchequer grant barely meets the increase in the interest charges on a house costing £1,900. They also say that it gives no relief in regard to the increased building costs since 1946.

I agree that this would be a perfectly fair criticism if the average figure for building costs were agreed at £1,900, But my reply is that on £1,635, which is our figure, the increase of £19 5s. is not only wiped out, but that there is, in addition, £3 over and above to be set against the rise in costs, because on a £1,635 house the increase in the interest rate is £16 5s., which leaves £3 to be set against the rise in costs.

Another important point which was raised by the associations, and to which I should like to refer, was that while Exchequer contributions under this Bill may be continued or reduced, they cannot be increased without the approval of Parliament. I need only say that I could not agree to its being otherwise, and I do not think any Government would or could or should do so, for the very simple reason that I do not think Parliament would approve. It would take away from Parliament control over increases in public expenditure, which would be a very dangerous constitutional innovation.

Those, briefly, are my replies to the main points of criticism made by the associations, and, to be quite frank, I cannot hold out hope of being able to increase the figures which the Government are proposing at the present time. We have to base our calculations on the various figures which we can obtain. We want to be fair, but it is impossible to secure an average figure which would be agreeable to all and which would cover all the costs. In addition, costs have risen steadily since 1946 and the recent Government, or at any rate their predecessors, resisted pressure by the local authorities for revision of these subsidies on account of the economic state of the country. That argument is no less forceful at present than it was in previous years.

I should like to deal with Clauses 2, 3 and 6 which affect, in particular, housing in agricultural areas. Here we have had to make certain modifications due to changes in conditions and circumstances, and also certain improvements. Firstly, when these subsidies for agricultural housing were started in 1938, the subsidies for houses built by the local authorities for the agricultural population varied from one place to another according to the cost of the house, the rent and the housing expenditure and financial resources of the local authority. Those were all taken into account.

But under the changed conditions, that is to say, with the present system of equalisation grants and with the improved position of the agricultural industry, we have decided to leave it in the hands of the Secretary of State for Scotland, under Clause 2, to decide whether the increased contribution should be paid in any particular case.

I propose to discuss with the local authorities how this discretion should be exercised to the best advantage. I may say, by way of explanation, that exceptional costs will be the main guide or criterion; that is to say we have in mind isolated neighbourhoods where labour and material have to be transported from considerable distances to the site, which naturally adds greatly to the cost of building.

An additional contribution to this type of housing will be a fixed additional sum of £12 to the basic rate of £42 5s., which will bring it up to £54 5s., in the scattered or remote areas. I believe that this change to a fixed additional sum will be agreeable to local authorities who are handling this important work, because it will simplify procedure and will help to avoid the unnecessary complications of forms, correspondence and so on.

There are two other important provisions affecting agricultural houses to which I wish specially to refer because it is important that, in the agricultural areas we should get that type of housing which is desired or is necessary under modern conditions to attract and maintain labour in the agricultural industry. We want to help the farmer who is ready and prepared to help himself to improve housing. Under Clause 3, instead of limiting the grant to new houses to replace unsatisfactory houses, we are making a grant available for new houses whether they are replacements of existing houses or not. That will be a definite improvement and assistance.

Clause 4 provides Exchequer assistance towards grants made by local authorities at present. I think this is the point to which the hon. Member for Central Ayrshire (Mr. Manuel) was referring just now. The Exchequer grants will be three-quarters of the local authority expenditure normally, but seven-eighths in the Highlands and Islands.

I attach very great importance to Clause 6, which contains the other main improvements. I have always been very keen to see the restoration of the grant for improving houses occupied in accordance with what is known as a contract of service. I have always held, and have often stated, that this should have been kept in being. A great deal of good work was being done under this provision in the late 1920s and even more so in the 1930s. It is through no fault of the occupier that he has been denied this assistance. His work is vital to the conduct of efficient farming, especially in Scotland, where our livestock is of much greater importance comparatively than in the southern part of the kingdom.

I am very pleased to take some part in restoring this grant, which I think can do a great deal towards improving existing housing, bringing it up to the standards required in modern conditions and encouraging people to remain in agriculture, which is of such vital importance if we are to maintain the maximum agricultural production in this country.

Mr. Thomas Steele (Dunbartonshire, West)

In view of the fact that the right hon. Gentleman has made a very clear and definite statement that he wants to help those people who are living in houses under a contract of service, will he indicate why he has limited this provision to agricultural workers and has not included workers in other industries?

Mr. Stuart

The Housing (Rural Workers) Act, 1926, provided for agriculture and we are aiming to restore that provision here.

Mr. Steele

My understanding of that Act was that it applied to houses in rural areas and that, not only agricultural workers, but many railwaymen, had their houses re-conditioned under that Act.

Mr. Stuart

The hon. Member is aware that it is not everybody who is in agreement about the restoration of this grant for the improvement of what are known as tied houses. I, personally, feel that assistance should be given to improve all the houses that we can improve, because, with the existing shortages of materials, I maintain that a great deal can be done to bring existing houses up to modern standards where the walls and masonry of the houses are in good order and indeed, as is often the case, in better condition than in many recently built houses. But for the purposes of this Bill I am dealing at the moment purely and simply with those defined as agricultural workers under Section 154 of the Housing (Scotland) Act, 1950. I am afraid that I cannot go beyond that at the present time, although I should be perfectly prepared to consider and discuss improvements or extensions in other directions.

Clause 9 (2) deals with a minor change to benefit agricultural housing. This remedies what was a mere oversight in the 1949 Act and enables grants for improvements to be paid in respect of houses occupied by certain crofters and landholders.

Clause 7 raises from £4 to £8 the payment to be made by local authorities to repair funds in respect of each house. This has also been objected to by the local authority associations. Some local authorities regard £8 as being too high a figure; but I must point out that, as a considerable part of their case rests upon the fact that costs have increased so much, it is reasonable to suggest that costs of repairs have similarly increased and, therefore, a higher amount should be paid into the repairs fund owing to the rise in costs generally.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

Would the right hon. Gentleman agree with the local authorities that if the proportion of increase in the repairs fund is 100 per cent., that increase should also apply to the subsidy?

Mr. Stuart

I cannot agree to that. What I would say in reply to the right hon. Gentleman is that I have power under this Bill—indeed, I have power under the 1950 Act—to modify that sum of £8. Where the repairs fund is in good financial order and has reserves which are sufficient to enable the carrying out of the likely repairs ahead, that sum may be reduced; and I am perfectly prepared to consider suggestions to that effect which are put forward by any local authority.

Mr. James McInnes (Glasgow, Central)

Is the right hon. Gentleman aware that the local authorities have asserted quite categorically that an agreement was reached between them and him that this increase would apply only in respect of houses which earned the new subsidy—in other words, it would be applicable to the older types of houses—but that faith has not been kept in that agreement? Will the right hon. Gentleman indicate quite clearly whether or not this increase applies to all houses?

Mr. Stuart

It does apply to all houses. I do not think it is the case that that agreement was come to with the local authorities. I do not wish to argue, but I think they agree that we do not agree to what is suggested by the hon. Member. This increase does apply to all houses.

Mr. David J. Pryde (Midlothian and Peebles)

Am I correct in understanding the right hon. Gentleman to say that he would be prepared to discuss this question of the £4 increase?

Mr. Stuart

What I said was that under the 1950 Act it is not necessary to insist on £8 being paid into the repairs fund in every case. Where the repairs fund is in a sound financial position, I can modify that amount, and if any local authority wishes to bring forward a case on those grounds to have the amount paid into the repairs fund reduced to something below £8, I shall be prepared to consider it.

Mr. Pryde

Will the right hon. Gentleman accordingly insert an Amendment in the Bill?

Mr. Stuart

I do not think it is necessary to have such an Amendment. I have power under the previous Act to do this.

Clause 8 merely puts right an oversight in earlier legislation and secures that certain Orders made under the Housing Act shall be published as Statutory Instruments.

I do not think there are any other points of particular importance to which I should refer. This is not a big Bill or a very long one. As I said at the start, its genesis and the reason for it being necessary arise from the change announced by the Chancellor of the Exchequer in relation to the rates of money borrowed from the Public Works Loans Board. At the same time, we have taken the opportunity of including in the Bill certain points, particularly in connection with housing in agricultural areas, which we believe will be of great assistance and value in helping housing and agriculture. I commend the Bill to the House.

4.16 p.m.

Mr. Hector McNeil (Greenock)

This Bill, in the words of the right hon. Gentleman, may not be a big Bill, but the House is very aware of its importance, which derives from the survey which the right hon. Gentleman made in opening. The number of houses which are to be built and the proportion of those houses which are to be let at rents which can be met by the people who most need houses will turn upon whether this is an effective and a just Bill.

I am sure that the House is very honoured to have not only such a representation from the Scottish Office but also the presence of the Minister of Housing and Local Government. This is not an accident, because the Minister is plainly becoming the white hope—indeed, the only white hope—of the Government.

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

Being a Member for an English constituency does not prevent my sitting in the House when we are dealing with Scottish affairs.

Mr. McNeil

On the contrary, I hope that the right hon. Gentleman will persuade some of his colleagues to attend. We are delighted to see the Minister here, sustaining, cherishing and supporting his right hon. Friend.

The figures which the right hon. Gentleman gave at the beginning of his speech are of great interest to the House, He showed us how impressive were the completions for the first five months of this year. They are very impressive indeed. They are an inheritance, and they were predicted. The right hon. Gentleman was fair enough to admit that a year ago I felt it necessary to warn the House that there would be a drop in completions last year and that I also said that, for the same reasons, there would be an increase in completions this year. Every one is very glad that that prediction has been fulfilled and we are very happy to think that these additional houses will be available, whoever claims the credit—whether we claim it for having made the provisions, or the right hon. Gentleman claims it, as he is quite entitled to do, for his administration. Local authorities, such as Glasgow Corporation, also deserve a great deal of credit for their long-term planning.

But it is very important that the Government, having impaired the Health Service, crippled the education service, badly bungled the economic condition of the country—[Interruption.]—yes, badly bungled it; no one looking at the drop in the productivity index for last month can be otherwise than alarmed at the economic conditions which Her Majesty's Government are forcing upon the country. And, added to this long list of failures, there is this new departure, that even the safety of our troops is to be threatened by the indiscretions of a Minister.

Mr. Steele

Is my right hon. Friend not aware that there is a split in the party opposite—that only the Ministers are above the Gangway, and all the other Members have gone below the Gangway?

Mr. Ross

I hope that my right hon. Friend will be fair to the Secretary of State for Scotland and will never accuse him of saying too much.

Mr. McNeil

At any rate, it is plain that the right hon. Gentleman not only had an obligation but, no doubt, had an instruction to make the best that he could of these figures from a political point of view.

Mr. Stuart

I am obliged to say that in presenting them I gave a purely factual statement.

Mr. McNeil

I took great care to point out that it was a factual statement. The motivation of the presentation of the facts is fairly plain to anyone who is politically alert.

Like anybody else on this side of the House, I wish the right hon. Gentleman well in his housing programme—do not let anyone doubt that. But what we must be concerned about—to be fair to the right hon. Gentleman, he shared the same caution himself—is not only the rate of completion, nor even the number of houses under construction, under approval, and for which preliminaries have been overtaken. The right hon. Gentleman quoted a figure of 66,000 houses either under construction or for which preliminary steps had been taken. That is a very impressive figure, provided it is physically matched by balanced preparation. The right hon. Gentleman admitted that, because he used a very good phrase about the house builder being too close on the heels of the road-makers.

Even though we wish the right hon. Gentleman well in this respect, we must all be careful to suspend our judgment. It is a little too early for the Minister of Housing and Local Government to start crowing or for his party to count the seats that they will win in terms of his programme. If they manage to build 300,000 houses, we all know that it will be the only promise from their Election programme that the Government have managed to keep, but it is not very plain yet that they will do that. Of course, the Bill has an acute relevance to whether or not that kind of promise can be kept.

I do not find it a very pleasant task to criticise the Bill, but it must be criticised. I propose mainly to deal with Clauses 1 and 7, although there is one over-riding point which I want to make. It is quite plain that the local authorities, like all of us, are concerned to try to understand how long this over-high rate of 41¼ per cent. can be maintained. I am not an authority upon this subject and I should be unfair if I expected the right hon. Gentleman to reply offhand, but it would be very much to the interest of the House and to the benefit of the local authorities if, before the end of the debate, the right hon. Gentleman or his hon. and gallant Friend the Joint Under-Secretary of State could obtain an authoritative reply on this aspect.

Everyone is worrying about the Bank rate. There are already rumours current that it may go up. There is already advice being offered to the Chancellor of the Exchequer that he should take another turn of the screw of this monetary instrument or weapon. That, in turn, would be bound to have an effect upon gilt-edged values, and therefore, in turn, as they went down, the gilt-edged return must rise. It seems to me—I repeat, however, that I am not an authority —that if the gilt-edged return again rose, the Public Works Loan Board interest rate could not be held out of relation to these charges. It is, therefore, relevant and fair that we should ask the Govern- ment to tell us whether they anticipate maintaining this figure at 4¼ per cent. and, if that is their intention, how they propose to do it.

The right hon. Gentleman, dealing with the anxieties of the local authorities to have annual revision of the rate of subsidy in relation to the rate of interest, ran away by saying that that would be unfair to the House and discourteous. It is quite understandable that, with no assurance that the interest rate will be stable, they should want an annual balance. May I suggest that it is a rather offhand judgment to decide that this could not be done by Regulation?

Mr. Stuart

I did not say "unfair" or "discourteous." I said that I did not think that Parliament would agree to such a thing. It would be taking away from Parliament the control of finance.

Mr. McNeil

The Patronage Secretary is the person who determines what this Parliament will agree to, whether or not it is fair to them, and we have had enough legislation, goodness knows, by Regulation already in this short Parliament.

Mr. Stuart

May I, then, repeat that what I said was, "a dangerous constitutional innovation."

Mr. McNeil

I am delighted to see this sudden breach in the Government and this emergence of sanity. Perhaps the right hon. Gentleman will convey that view to his right hon. Friend in relation to other legislation. If we cannot be assured that this rate is to remain stable, we might on the Committee stage very well consider whether we should not so amend the Bill as to permit a review by Regulation. It would be disastrous if local authorities were left behind in this unwise competition which the economic policy of the Government is forcing upon the country. That is a general point of great importance, and I turn next to Clause 1.

Sir William Darling (Edinburgh, South)

Is it the right hon. Gentleman's serious proposition that local authorities should borrow money irrespective of the money market generally?

Mr. McNeil

That is a very inviting question and one upon which the hon. Gentleman knows that he and I have rather controversial views. A promise has been made, with which I propose to deal, that subsidy would be related to rate of interest. If the Government cannot tell us that the rate of interest will remain stable, then surely it is an obligation on the House to consider how that promise can be implemented and how the local authorities can be safeguarded.

Sir W. Darling

The right hon. Gentleman attempts to stabilise the rate of interest, but that is only one of the many elements of the cost. Does the right hon. Member also favour stabilising wages, the prices of materials and land, and all the other elements in the price?

Mr. McNeil

I must in fairness say to the hon. Gentleman that the local authorities and, of course, the people whom we must constantly seek to rehouse—that is, all of us except the hon. Gentleman, because he does not believe in subsidies for houses; he once treated us to a rather ill-natured, bad-tempered, incautious and historically inaccurate discourse—I remember the mistakes of my opponent as well as his occasional correctnesses—

Mr. Stuart

I should like to remind the right hon. Gentleman that at the beginning of 1948 Sir Stafford Cripps increased the Public Works Loan Board rate from 2½ per cent. to 3 per cent. and that on 20th January, 1948, he explained that the rates of interest charged to local authorities were fixed from time to time to correspond broadly with Government borrowing rates for comparable periods."—[OFFICIAL REPORT, 20th January, 1948; Vol. 446; c. 33.]

Mr. McNeil

That is exactly what I am arguing. I know this is a dull and involved subject, but it is an important one, and if the right hon. Gentleman will do me the courtesy of listening to me he will appreciate that I am arguing that, at a time when every day we hear rumours about the Bank rate, with its consequential effect upon the gilt-edged rate and its further effect upon the interest rate of the Public Works Loan Board, if we are to make a job of this Bill we are entitled to know the Government's intentions and their expectations and how they are going to meet any variations in the situation to which the late Sir Stafford Cripps referred. I do not expect an offhand answer, but I hope that we shall have one before the end of the debate.

If I might turn to Clause 1, I think there are two points of dissatisfaction in relation to this Clause with which hon. Members on both sides of the House must be familiar. I refer not only to the circulation of the memorandum to which the right hon. Gentleman referred, but the conversations with the local authority representatives. I understand that an undertaking was given that there would be effective consultation with the local authorities.

As I understand it, the local authorities do not think that that promise was implemented and they therefore feel aggrieved. We all know that disagreements between the Central Government and local authorities will frequently emerge, but I do not think that we on this side of the House have ever had a subject of this dimension involving disagreement between us and local authorities where we would not at any rate have made an effort which extended to the Secretary of State meeting these authorities.

Let the right hon. Gentleman understand that I make no criticism of him, and I should like publicly to pay tribute to his experience and ability in this housing subject; but when we have a difference in figures amounting to 12½ per cent. in a Bill of this importance, it is a little unusual for the consultations not to have been carried further. Certainly in the time of the Labour Government that did not happen; and, of course, we did not have the assistance of a fresh wind blowing through St. Andrew's House in the person of the Minister of State.

We were told in most extraordinary and vivid terms how the Minister of State would be able to meet these local people, would be able to satisfy them and would be at their beck and call; but on this first big question the Under-Secretary of State and the most excellent officials in the right hon. Gentleman's Department were the only people made available for consultation. I have talked with local authority representatives who feel decidedly aggrieved on this subject, and I must in honesty, however unpleasant it may be to me personally, tell the right hon. Gentleman that I appreciate their feeling of resentment upon this subject.

As the right hon. Gentleman told us, the local authorities are dissatisfied about the basis of the calculation. The Department of Health have submitted figures. They calculate the average cost of a four-apartment house to be £1,635 —the figure which the right hon. Gentleman gave. They go on to make their calculations upon that basis—loan charges at 41 per cent. for 60 years, £75 15s. roughly; management and maintenance, as the right hon. Gentleman quoted, proportionately at £11; owner's rates at 5s. 7d. in the £ giving £11 15s.; rent £42, giving a net annual deficit of £56 9s. and some odd coppers. They are, therefore, confronted with the proposition offered by the Government that, on the basis of the deficit shared in the normal proportion of three to one, they carry £14 5s. and the Government £42 5s.

The local authorities have argued throughout, and have submitted figures which are available to all of us, that the average cost was not £1,635 but £1,911. They have argued that the average levy for owner's rates is 6s. 4d. in the £ and not 5s. 7d. in the £, and further that the average rent charged for a four-apartment house is £33 and not £42. The right hon. Gentleman finds himself unable to accept these figures.

On 19th February the Minister of Housing and Local Government gave a flat undertaking that the increase in the housing subsidy was guaranteed to cover the whole increased cost to local housing authorities at the new rate of interest. I must admit that the phrase can have varying interpretations, and it would have been better if I and my hon. Friends had been more precise in our questions at the time. But when the right hon. Gentleman gave me that undertaking, I cannot believe otherwise than that he anticipated that the rise in interest rates in direct consequence of the Government's policy was going to affect not only the Government and the local authority but also the builder, the timber merchant and the brickyard. They have all got to borrow in the same market, and they have all got to borrow at rates affected by the Government's decision.

Sir W. Darling

The right hon. Gentleman must not be so innocent. There are plenty of businesses which run on their own capital. They do not all borrow.

Mr. McNeil

I have had some considerable local authority experience, and I cannot remember ever meeting any building contractor or supplier of material in substantial quantities who operated otherwise than by borrowing.

Sir W. Darling

The suggestion that big industries in this country subsist entirely on borrowed money is an indication of the innocence and lack of experience of the right hon. Gentleman. It is not the case.

Mr. McNeil

I might perhaps plead guilty to innocence but not to inexperience. The point I am trying to make—and I do not think the hon. Gentleman can deny it—is that when any local authority enters into a contract of a substantial kind with the building industry, such undertakings are financed in large part by borrowing. That is the position, and, of course, that 3¼ per cent. is bound to be reflected in increased building costs, and, in turn, they are bound to have a reflection on the figure upon which the right hon. Gentleman and the local authorities have got to agree.

The difference is a very substantial one. We are not talking about £1 or 30s. We are talking of a difference of £276 in the average figure for a four-apartment house whose standards are pretty uniform throughout the country—£276; more than 12½ per cent. It is really trying the patience of the House a little much for the right hon. Gentleman to come here and not offer any detailed information as to where this difference really arises.

Moreover, as I have already said, most of these figures are ascertainable. It is not a guess. We know exactly, for example, what the average rents payable in Scotland are for each and every type of house for any reasonable period, as the hon. and gallant Gentleman knows. We know, for example, that the average figure since the war is not £42 but £33—and yet that is cheerfully set aside without any further discussion.

I should not think it inconsistent with my duty as I see it to proceed further with this argument, but I have a simple proposition to make. The honour of the Government and the credit of the right hon. Gentleman are here at stake. They have to meet an undertaking which the right hon. Gentleman and the Government gave to these local authorities. It is quite true that there will be differences as to the figures upon which such an undertaking should be based. It is equally true that these figures for the most part can be ascertained; the tenders are there; the final figures are there.

The Joint Under-Secretary of State for Scotland (Commander T. D. Galbraith)

I wonder if the right hon. Gentleman would help me? To what undertaking is he referring? I want to follow him.

Mr. McNeil

The undertaking is the undertaking given on 19th February that the complete interest rates would be met by increased subsidy. The hon. and gallant Gentleman, I know, is not going to be clever at my expense. That relates to the cost of a house, and the cost of that house has got to be ascertained by available figures. The local authorities believed that the increased interest charges were going to be met on a house the cost of which was determined by the Government without reference to them, and, much more important, without reference to the actual money which they have to pay. It must, therefore, be, related to a figure which is ascertainable.

I repeat, that since there is no doubt about the figure and since quite clearly the credit and reputation of the right hon. Gentleman and his Government are at stake, there should be a simple way of tackling this, and that is to appoint someone to whom the figures are made available, perhaps a judge—I do not know—perhaps an accountant; perhaps even a schoolboy from a secondary school, because he would have no difficulty in discovering that the average rent paid in these post-war years was £33.

The other figures, I agree, are a little more difficult to ascertain, to assess and to weigh; it is a little more difficult to determine an average figure; but they, can be reached, and since there now seems no likelihood of the Government and the local authorities coming together on this subject, surely the honest way and the quickest way would be to invite the decision of some outside authority upon the area of agreed figures. It is not an academic matter. I should not press it if it were only an academic and political matter. It is a matter of great importance to the whole population of Scotland who are waiting for houses.

Perhaps because of my excessive good nature, I have given way too frequently to curious and belligerent hon. Gentlemen opposite, and I am aware that I am rather going beyond my time, but I want to make one other reference, which I can dismiss in almost a sentence or two, to Clause 7. My hon. Friend has already raised the subject of the repairs, and made a good point about this conclusion of the right hon. Gentleman that it is necessary to raise the annual contribution for repairs from £4 to £8 on all houses.

It is reasonable to think that the local authorities are more likely to be right in their calculation as to the cost of the house than he is in his calculation of £1,635. Moreover, it surely is a very wide argument that this increase should be available to all houses. We can plainly see that one would have to raise the figure on the houses coming under this Bill. One would have to raise it—I do not know whether necessarily to £8; but one would have to raise it.

I have had some information from my local authority, with the details of which I shall not bore the House, but I find from an examination of its calculations that the figure, which I have no reason to believe to be otherwise—and the repairs are effective, and are maintained at a reasonable level—is much lower than this and is slightly under £6 a house per annum. I have the details available if the hon. and gallant Gentleman would like to see them. If the Secretary of State is not able to move in this, I had better say frankly that hon. Members will feel bound to seek to amend it to a lower figure than £8 on Committee stage.

I suggest to the right hon. Gentleman that it is not enough for him to say that he retains power to vary this figure in relation to local conditions. What we are here discussing is a desperate situation for local authorities in relation to their rating position, and their housing revenue accounts. We are not making party capital. Hon. Gentlemen opposite who have been in touch with local authorities know that it is literally the position under this Bill.

There will be local authorities whose rating level in consequence of this Bill, if they are to carry out an adequate programme, will go above 20s. in the £ in one year, and hon. Gentlemen opposite know that. I say that even this little crumb of a reduction of 20s. or 30s. in the annual repairs contribution would make quite a difference to their budgeting position. I hope that we shall have an assurance that the Government will look at an Amendment relating to that.

But it is not the decisive point. The decisive point must be the size of the subsidy; the decisive point is the carrying out of the Government's undertaking to these local authorities that interest increases brought about by the deliberate action of the Government shall not be passed on to the local authorities and shall not be passed on to the houseless people in Scotland.

My hon. and right hon. Friends will not divide against the Bill for the obvious reason that, so desperate is the housing situation that even with these inadequate subsidies we should not feel it responsible behaviour to impede in any way the possibility of building houses. We know that this will reduce the rate at which house building can take place in Scotland, and in Committee we shall have Amendments to offer to many of the Clauses.

4.51 p.m.

Major W. J. Anstruther-Gray (Berwick and East Lothian)

The right hon. Member for Greenock (Mr. McNeil) stressed the anxiety he felt about the financial situation very much from the point of view of local authorities versus the Government. While I agree about the seriousness of the financial aspect, I should like to approach the question from the point of view of the individual and the effect it has upon him or her. Who has to pay this additional cost entailed in house building nowadays? It can be paid in three ways: by the tenant by way of rent; by the ratepayers in a general rise in the rates affecting both occupiers and owners; and, thirdly, it can be paid by the taxpayers through an Exchequer grant from the Treasury which the taxpayers feel in the Budget by increased taxation.

Many cogent arguments can be brought against increasing the charge on any one of those three sources. I have no doubt in my mind that our taxation, both direct and indirect, is already such a burden that it is hampering our economic recovery, and I should much regret to see it increased unduly, even in the worthy cause of helping housing.

As to the ratepayers, I need go no further than quoting, if the House will allow me, some remarks made on 6th March this year by the Agent for the Convention of Royal Boroughs, who said: Housing finances of local authorities are in a serious state. Scottish local authorities have sustained deficits in the last five years of over E5 million, in addition to the statutory contributions. To turn to another person whom I regard as an expert in local affairs, Sir John Ure Primrose, the Lord Provost of Perth, who speaking on 4th December last year said: There will be a housing crisis in Perth and other cities unless something is done quickly to bring down housing costs. I am afraid that the time is coming when the town council will decide to stop building. My last quotation in this respect is from the Clydesdale Bank Survey of Economic Conditions in Scotland in 1951, which says: As a result of rising costs some small boroughs have been unable to take up their housing allocations in full, and other authorities have postponed or abandoned part of their housing plans. That is a measure of the serious situation from the local authority point of view.

We must consider not only the local authority point of view but also that of the individual ratepayer. After all, these increased rates will not be paid only by the fortunate people who obtain new and up-to-date council houses. They are also paid by people living either in old council houses or in privately-owned houses. What do they think of having their rates raised in order to subsidise much better houses, many of which go to people who-are richer than themselves? It must be wrong for poor ratepayers to be called upon to subsidise people richer than themselves. It is not only occupiers' rates which are the worry. Owners' rates come into it too.

Mr. Woodburn

It does not necessarily follow that a person lives in a house of earlier vintage is poorer than a person who goes into a new house, but the person in the old house at a very low rental is paying a much smaller contribution for the services he receives from the local authority than the person going into a new house. The services in the house are different from the services outside the house, yet the person in the old house receives the same outside services, and because of his low rental pays, according to our rating system, a much lower contribution. Therefore, his lot is not quite as bad as the hon. and gallant Gentleman makes out.

Major Anstruther-Gray

I appreciate the force of the right hon. Gentleman's argument, but the fact remains that people living in rather indifferent houses, not very well maintained—and this brings me to the point of the Rent Restriction Acts which make it extremely difficult, if not impossible, for poorer property owners to maintain their houses properly—the people living in houses which are in bad repair are entitled to feel aggrieved when their rates are raised in order to provide better houses for people who are sometimes in very well-to-do positions.

I do not often quote from the "Daily Express," but they had this to say on 22nd February of this year. A Government official earning £3,000 a year with £500 expenses is living in a Glasgow council house. So, too, are six Socialist Members of Parliament and 25 Socialist Councillors —almost half the Socialist membership of the Corporation.

Mr. Ross

So is the Duke of Edinburgh.

Major Anstruther-Gray

The quotation goes on: These cases were cited at the City Council by Treasurer J. B. Kelly, and he went on to say that there are many with personal family incomes running into four figures who live in Corporation houses at the expense of the poorer folk of the City. In general, it is legitimate for people in indifferent houses which are highly rated to feel indignant when their rates subsidise people much better off than themselves. Under the Rent Restrictions Acts, which this Bill does nothing to remedy, it is impossible for many property owners to charge sufficiently high rents to pay for even their necessary upkeep. The result is that the tenants suffer and property owners who are dependent on that source of income become destitute.

The last consideration on the question "Who pays the piper?" is the rent paid by the tenants of these houses. Here we not only come up against the unpopularity of raising rents, which no party, Government or local authority wants to face, but we come up against real consumer resistance. It would be a thousand pities if the most deserving families were prevented from getting houses because the rents were above a level they could reasonably afford to pay. This is not a new question. Back in 1950 the Scottish Housing Advisory Committee was reporting: We received evidence that a considerable number of families in some areas are prevented by their financial position from accepting the offer of a local authority house. That came from Edinburgh in 1950.

As hon. Members know, it is perfectly possible to argue the other way round. I do not know if anyone here read "The Times" of the 3rd March of this year, which put a different point of view. How entirely artificial the situation is can be seen from the financial estimates of consumers' outlay, and here came the astonishing fact that the British people spend more in a year on cigarettes alone than they do on rent, rates and water charges put together.

Before the war they spent more on tobacco and drink combined, but now they spend more on cigarettes alone than on rent, rates and water charges. That is a United Kingdom figure and not a Scots figure. We must not go too far in pressing our arguments on consumers' resistance, and there is the further fact that whereas before the war the average industrial wage earner paid rather over 10 per cent. of his earnings on rent, at present the average industrial wage earner is paying rather less than 10 per cent. of his earnings on rent.

I, personally, am convinced that there are a lot of people in Scotland who cannot afford to pay an increased rent without having seriously to curtail expenditure which they are entitled to look forward to making in other directions. I say "look forward to making," but it is often expenditure which they pretty well have to make in other directions if they are not to see their standard of living seriously fall. I should like to hope that they may look forward to some relief from costs. I believe that I am entitled to say today that it is no longer necessary to take for granted that all costs are rising. While I say that, I think that I would be just as well to touch wood before I can claim that they may not start rising again in the future.

Let us look at the position and take what is good. The fact is that timber is down in price, lead is down in price, cement is down in price 3s. a ton, and there is a prospect of a fall in the price of paint. These are all things that affect directly the cost of building houses. I was reading the report of the Royal Show the other day and saw that the price of hen houses and fencing wire is down, too. That is an indication in the right direction. I do not suggest that people live in hen houses, but I do suggest that the price of timber for making hen houses is by no means irrelevant in considering the price of house building. There are other things that affect house building costs, perhaps not quite so directly, such as road transport. Tyres are down 7½ per cent. in price, and in yesterday's newspapers an announcement was made that Ford vehicles were down from 5 per cent. to 10 per cent. in price, and also diesel engines.

Against these encouraging figures, I admit that there are others which must give great concern. It is a fact that the increase in building wage rates of l½d. per hour, granted on 4th February this year, is reckoned to have increased the price of the average house by £20, and so we see how easily the benefits of the reduced prices of material can be swallowed up if we give reign to a desire to allow wages to rise without taking careful note of the ultimate benefit to the public. Other factors can increase the price of house building.

In answer to a Question which I asked today as to how much agricultural land had been taken for house building, the answer was that since January, 1945, 21,666 acres had been taken for local housing, 2,885 acres for industry and 4,000 acres had been earmarked for urban development in the new towns of East Kilbride and Glenrothes. To the latter part of my Question, in which I asked how much of this was good land for farming and how much was land of relatively small importance, the answer war: The greater part of the land taken for urban development is of good or fairly good quality. The point is that some 28,000 acres of good food-producing land is being taken away. We cannot afford to do that with impunity. That is since 1945. I would say that an increase in the cost of building, if it enabled rough sites to be used rather than the best agricultural land, might be public money very well spent.

That brings me again to look round for ways in which we can make economies. I hope that we will not look for it in quality, although there is an old saying, "Cut your coat according to your cloth." I am not sure that that is not a sound principle in public affairs as well as in private affairs, but housing not the particular coat that we want to, cut. Can we save money in house construction, or can we save it in standardisation? I wonder whether there is not still scope for freeing the regulations and seeing that the standard measurements are not too cut and dried.

As a last quotation, I should like to quote from the British Architects' Conference, held in Edinburgh last week. I read this in the "Scotsman," and I took great note of it. The heading was: Housebuilding within the country's means. The architects were discussing low costs and methods. I am sure that other hon. Members will have read the article, and I was specially struck by what the Borough Architect of Northampton said. He stated: An architect designing a building for a private person would not usually desire to bring about his client's bankruptcy. Where funds were limited, he would design a building of simple character with sound but not expensive material. Faced with rising costs, the client, on his side, would usually agree to forego some of his originally idealistic requirements in the interest of economy. This architect went on: Many architects felt that they were being prevented from the full use of their ingenuity in design by insistence on specified room sizes. In small house design the fundamental factor was room shape. It was all too easy to produce a bedroom well in excess of the required minimum size which could not be satisfactorily furnished, just as it was undoubtedly possible to plan a well-shaped bedroom below the minimum size which would serve its purpose admirably. I felt myself in sympathy with that architect, although I do not feel qualified to go all the way with him.

He went on to say, Provided room shapes are planned to take normal bedroom furniture in normal positions. the minima for first and third bedrooms could well be reduced to 120 square feet and 60 square feet respectively in place of the present 135 square feet and 70 square feet. I hear hon. Members laughing, and it was with that feeling in my mind that I said that I did not think I knew enough to go all the way with this architect in his proposal; but let us have regard to the other side of the matter before deprecating this man's opinion too readily. After all, if we do not economise in this way, either the rents will have to go up or the rates will have to go up, or taxation will have to go up. I do not want to have to go to my constituents as one who has helped to raise taxation, rent or rates. I think that it is worth while to consider any further possibilities that may be to hand.

The architect goes on— Thus with the saving seen against the present social and economic background and realising the possibility of making some at least of the first floor bedroom space available for daytime and evening use, it is difficult to believe that a house of 800 square feet gross is inadequate for a family of five. The saving of 100 square feet of floor space in this way would effect a saving of £100.

Mr. Woodburn

The argument the architect has introduced is very interesting, but does not the hon. and gallant Member think that he has disqualified his argument from having any real consideration when he starts by assuming that architects are such fools that if they get a big area they design a house so that it cannot take furniture and if they get a small area they design the room so that it can take furniture? Is there any reason why they should not use common sense with the greater area as with the smaller area?

Major Anstruther-Gray

I do not think that the right hon. Gentleman is quite right in that argument; I think there is always scope for ingenuity and invention. If we look back to the invention of the motor car, we see how ridiculously out-of-date old motor cars appear. I am sure that, as time goes on, in architecture modern designers will improve on what was done by their forbears. I think there must be great importance in shape. In the "Scotsman," an admirable paper which picks and chooses what it reports, there is no record of derisory cheers, so I take it that what the architect said was greeted with the respect which in my opinion it deserves.

I leave that subject, which might easily become controversial, in order to turn to another point. I wonder if the House feels contented that we have gone as far as we could in the standardisation of house construction. This same architect said: Staircases could be manufactured on a large scale if architects would agree on desirable floor heights and the need to use simple straight flights on all possible occasions. He also said: More important, two or three standard combinations of spacing between bath, lavatory basin and water closet would allow waste connection to be standardised and mass produced, leaving only assembly to be carried on on the site. These may seem small contributions to a debate of this sort, but I feel that it is well worth while urging that my right hon. and hon. Friends at the Scottish Office should be in no way hidebound in their efforts to find some means, other than the highly undesirable means of increasing taxation, of increasing rents and of increasing rates. If a little more freedom and encouragement of ingenuity among architects, authorities, or private individuals will give us cheaper houses, quicker and good enough to live in, surely it is well worth our support.

5.14 p.m.

Mr. William Hannan (Glasgow, Maryhill)

Since entering this House in 1945 it has been my privilege on occasions, when sitting on the benches opposite, to make several short speeches. They were indeed no more than interjections, and sometimes a dialogue was carried on between the occupant of the Chair and myself, as one of the then Government Whips, in conducting the business. The longest speech was one of 12 words, when I moved, "That the Bill be committed to a Committee of the whole House." On other occasions, it gave great pleasure when my speech was to adjourn the House. This is the first occasion on which I venture to address the House at length, and although this is not technically a maiden speech, I hope that the House will extend its understanding and sympathy to me in making some remarks concerning the Bill now before the House.

This Bill, as the Minister agreed, and as my right hon. Friend the Member for Greenock (Mr. McNeil) insisted, is a reflection of the financial policy of the Government. Although I am sure the hon. and gallant Member for Berwick and East Lothian (Major Anstruther-Gray) will, under present circumstances, understand if I do not follow his remarks, it is my opinion that the economies of which he spoke will follow as a direct consequence of this Bill. The Minister of Housing and Local Govern-ment, in introducing the English Bill, said that the need for this review at this time arose primarily from two increases in the rate of interest on loans to local authorities, and there is no difference on that point.

I wish to ask the Joint Under-Secretary of State for Scotland if he would not agree that, apart from the increase on interest rates, there is a case for an increase in subsidies. On the information supplied to me, and from the memorandum of the local authorities, there would appear to be a very strong case that, apart from the increase in interest rates, a further increase could have been justified because of the increased capital costs.

There is this difference between the local authorities and the Department of Health for Scotland on what I consider to be the fundamental approach on which all the considerations should be based. It is the premise from which we start. I am sorry that the Minister of Housing and Local Government is not present. He said in his speech on 22nd April: 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."—[OFFICIAL REPORT, April 22, 1952; Vol. 499, c. 230.] Figures have already been given of what the local authorities insist upon as the present day cost of building houses. They are at the end of the construction of building houses, and experience in these things goes a long way. They insist that £1,900 is much nearer the figure for a four apartment house than £1,635. In England the Minister of Housing and Local Government indicated that he had got agreement with the local authorities after an investigation committee had been appointed or an inquiry had been held. Has such a committee or cost-finding inquiry been held in Scotland in order to make an adjudication? All of us can see that, even on the difference of £250, the accumulated cost over 60 years will come to a startling figure.

I have obtained some figures on the interest charges on the £1,600 which the Department of Health suggests. Assuming that that figure is right for a four apartment house, over 60 years the annuity required to repay capital and interest would be £57 16s. 3d. The total over the 60 years for a house originally costing £1,600 comes to £3,460. At 4¼ per cent., the new rate, the total over the same period, is actually £1,000 more —that is, £4,446. We are getting into a fantastic situation when we allow that to continue. My plea to the Government is to have another meeting and see if they cannot agree to split the difference between the figures. Some gesture like that would encourage the local authorities to do the great job which confronts them.

I intended to speak on the question of rents. My right hon. Friend the Member for Greenock has mentioned the fact that £33 is nearer the figure. The sum of £42 is the figure that the Government have suggested should be charged for a four-apartment house, but that is in danger of being increased because of the new Bank Rate, which in turn means increasing the cost of living in as much as rent is a big factor in the calculations of the ordinary people. In 1950 the present Prime Minister, when Leader of the Opposition, criticised the Labour Government for charging 25s. to 27s. a week for rent which he said was a hollow mockery of the housing plans, for it did not provide people with houses which they so sadly required at rents which they could pay. The Government are in danger of upsetting the present housing plans by reason of these much increased rents.

The general economic policy of the Government is going to restrict and reduce the demand for houses. Indeed, it could be said that it will act in the way which some members of the Government want. Such works as water schemes, sewerage schemes and so on will feel the effect of these increased charges. Recently the Minister of Housing and Local Government issued a circular to local authorities in England asking them to try to effect economies in the construction of water works and sewerage undertakings. These things are, of course, fundamental to any housing scheme, for they must be built before houses can be put up at all. Has the Scottish Office issued a similar instruction, because if it has it will increase the concern of those of us who are apprehensive about die overall economic and financial policy of the Government? What, in fact, is going to happen is that finance will determine the needs of the people instead of physical controls deciding social priorities.

A point in the Government's policy which I want to criticise for a few moments is their suggestion that local authorities should be empowered to sell houses. I would ask them to alter their attitude towards that scheme. They propose an increase in the number of houses for sale from one in ten under the previous Administration to one in five under this. Surely it is appreciated now that the evidence is overwhelming that there is no great demand to buy houses, but rather that the supreme need is for houses to let.

The Joint Under-Secretary of State comes from Glasgow and knows perfectly well what happened in Merrylee. I do not want to be controversial or appear to be overbearing on this subject, but he knows that the local elections gave a clear indication of the signs of anger at the proposals which were then made. Despite the help of the Secretary of State to restrict these houses to certain classes of people, like existing tenants, those who were ill, and those who would ordinarily be allocated houses within the next year from the large waiting list of 100,000, what was the result? Of a total of 131 applicants, only 24 came from existing tenants, only seven from the 100,000 on the waiting list for accommodation, and 100 from those who applied on health grounds.

What were they asked to pay? For a three-apartment house the deposit was £228 and £2 11s. 1d. weekly as repayment of capital and interest. For a four-apartment house they were asked to pay £323 deposit and £3 9s. weekly. On a five-apartment house the deposit was £354 and the weekly repayment £3 12s. 9d. I know the hon. and gallant Member is sincere in these matters, but does he not honestly think that these figures are an affront to the people in his constituency? They certainly are to the people in the constituency of Maryhill in Glasgow which I have the honour to represent. They are asked to pay weekly amounts like that out of wages of £7, 8 and £9 a week.

It is interesting to look at the total incomes of the Scottish people. I refer hon. Members to the Annul Report of the Inland Revenue Commission for these figures. The total incomes of Scotland number 1,771,000, and of that total 1,164,000 earned £350 a year or under. Those earning £500 a year and under total 1,500,000. It is a well-known fact that the people in the north do not earn the high salaries and wages which can be earned in the south, particularly in the London area. In view of all these telling facts, I ask the Government to review at once the policy of houses for sale. They should stop it, and our primary aim should be to construct houses to let.

I want to conclude with this point. A large number of decent people for whom I am speaking now, but who are supporters of the party opposite, though they want to assume the responsibility of buying houses and entering upon a mortgage for them, find that the position will go hard with them. The hon. Gentleman the Member for Altrincham and Sale (Mr. Erroll), speaking recently on a new Clause in the Finance Bill giving relief from tax in respect of payments to local authorities and building societies, said this: The person who wishes to own his own house has to carry personally the full extra burden of the increased money rates now in force. In fact, it is clearly becoming very difficult indeed for younger married couples to be able to afford to own a home of their own because the charges involved are so considerable. They alone will receive no relief at all from the Treasury or the Exchequer. I feel that this new Clause, which is designed to give them a measure of relief, should he welcomed by my hon. Friends on this side of the House since we are such fanatical believers in a property-owning democracy. We should live up to our aims and help where possible those who are trying and are anxious to own homes of their own." —[OFFICIAL REPORT, 17th June, 1952; Vol. 502, c. 1072.] The cost of living has gone up, but these people are being asked to pay these excessive sums for owning their own homes. That is an added reason why their tastes should be catered for by proper attention to the admirable Report, issued by the Scottish Office. I want to congratulate the officials on the production of the Report—dealing with the Housing of Special Groups.

A policy of greater assistance to the local authorities in the acquisition of the properties which are being abandoned in Glasgow would make a useful contribution. I am not suggesting that it will be a solution to the housing problem. There are properties in Glasgow which the local authority cannot acquire because the ground burdens are excessive. The properties would be offered by the owners free of cost, but the local authority are hesitant, because they are not provided with assistance. We should encourage social ownership in housing. It is in that direction that a solution of the housing problem lies.

Private investment of capital will never again be able to provide for the needs of our people in houses to let. It will need to fall to public authorities and to public enterprise to do the job. Just as the great industries of coal and railways had to be salvaged from wreck and ruin because the nation needed them, so housing will require to be saved. I am hopeful that at no distant date the community will think fit to acquire all rented houses as a form of social ownership, pooling the rents and equalising them, and charging individuals in the higher income groups with the full economic rent. We can do that, and in doing so we shall in the end create still better citizens and make Britain a brighter and freer country than she has ever been before.

5.34 p.m.

Mr. H. R. Spence (Aberdeenshire, West)

It is a great pleasure to follow the hon. Member for Maryhill (Mr. Hannan), who has just made his maiden speech in the House, and I offer him unreservedly my congratulations upon the way in which he did it. I add the usual words, that we shall look forward to hearing his future contributions to our debates, but I make one reservation. It is that those contributions shall be long and not, for any reason, be the short contributions that we have had before.

I hope that the hon. Gentleman will forgive me if I do not follow him on the particular point of the Bill which he has been discussing. From my point of view, the important thing in the Bill is the introduction of Clauses 3 and 6, which, I think, will do very much for housing in rural areas. They affect my constituency vitally. Clause 3 introduces grants for the building of new houses and of houses to replace those that are scrapped. Clause 6 brings in reconditioning grants.

Not very much has been said about the part that reconditioning can play. It may be interesting to run back over the history of reconditioning in the rural areas in the past 25 years. From 1926 until 1945, various editions of the Housing (Rural Workers) Act have operated, and some 36,000 houses have been reconditioned to make good homes for a very modest price. In 1945, the Housing (Rural Workers) Act was discontinued, one of the first acts of the Labour Government on taking office. Within a week that Government announced their intention of discontinuing the Act. The announcement was received with dismay.

Questions were asked to find out why it was being done. We were told by the then Lord Privy Seal that Scotland had not to continue to expect special advantages, and by the then Secretary of State, the late Mr. Westwood, that the Act would be replaced by something more fruitful. When re-enacting the legislation, reconditioning was hamstrung from 1945 until the Housing Act that we considered in 1949 and which became law in 1950. Reconditioning grants were then to be made on condition that where a grant was accepted the cottage would be no longer tied to the farm.

In the year after the Act was passed until June. 1951, only 410 applications were made for a reconditioning grant, whereas in 1938. the annual rate of application had risen to 3,800. The bringing in again of the reconditioning Clause will have a great effect on housing in the rural areas and, in turn, upon agricultural production, by keeping up manpower in agriculture, which is most important.

I have one or two questions to put which I hope the Minister will answer when he winds up the debate. We must read Clause 6 in the context of the principal Act, and when they are read together the impression is created that the reconditioning grant of £300 will be available where a house is reconditioned at a total cost of £600, but that if the reconditioning costs in excess of £600 no grant will be payable. I believe that this impression is not correct. In the parent Act are powers permitting the Secretary of State for Scotland to alter the sum. If that is so, I would ask my right hon. Friend to have the same broad outlook on the problem of the rural areas as he has shown in the rate of subsidy, which takes account of the higher cost in rural areas.

If £600 is the rate for an area easily served with materials it cannot be right for very remote areas. It would be a pity if a genuine case of reconditioning a cottage should fail to rank for grant simply because the cost over-ran some statutory figure, notionally put into the Act in advance. I hope the Secretary of State for Scotland will see that all genuine cases of reconditioning for the purpose prescribed in the Bill will receive the grant.

I should also be grateful if the Minister will tell us whether this grant will apply to cottages for forestry workers. We might well incorporate the wording used in the Housing (Rural Workers) Act, 1926, which, dealing with housing for the agricultural population, reads as follows: … housing accommodation for agricultural workers and for persons whose economic condition is substantially the same… If that could be incorporated in this Bill, it would be for the good of all.

I pass next to Clause 3, which deals with the grants for new houses. Will this grant be payable in respect of nontraditional as well as of traditional houses? I am thinking of timber and other prefabricated houses. The grant should be available for any kind of approved house and it would be helpful to have confirmation of this point.

Subsection (6) of Clause 3 gives me some foreboding. It reads: A local authority may in any case refuse to give assistance under this section on any grounds which seem to them sufficient. It may well be that a Socialist county authority may not believe in tied houses, as many hon. Gentlemen opposite do not. It seems to me that a complete power is granted to a local authority to veto a grant where any cottage being built is to be tied to a farm. I may have misinterpreted this subsection and I shall be glad if the Minister will deal with this point also.

There is no doubt in my mind that this Bill will bring to the farming community and to those who work on farms a sense that their housing problem will be handled with nearly half as much speed again in the coming years. The building of new houses will go on, but reconditioning has been hamstrung. The figure at the end of 1938 was running at 3,800 a year for reconditioning and I believe we shall come near that figure again within a year of this Bill becoming as Act.

I welcome the Bill and I hope that the House will give it a speedy Second Reading. I hope, however, that the Minister will tell us tonight about the position of those who may be going on with their plans for reconditioning or building during the passage of the Bill. Will those rank for grant when the Bill finally goes on to the Statute Book?

5.45 p.m.

Mr. J. Grimond (Orkney and Shetland)

I am glad to follow the hon. Member for Aberdeenshire, West (Mr. Spence), because I want to speak about the same points he raised. However, that does not imply that I do not realise that the most important part of this Bill, taking Scotland as a whole, is that containing the financial provisions. As many have spoken and no doubt will speak about that matter, I shall confine myself largely to Clauses 3 and 4 and to those parts of the Bill which affect primarily the rural areas.

As the Secretary of State knows, a great deal has been done for housing in my own constituency by the people themselves, by building, reconditioning and repairing houses, with the aid sometimes of Government grants and sometimes entirely on the initiative of the householder. I welcome any Bill which will encourage people to improve their own housing conditions. Certainly it is a great economy both to the State and to local authorities, and, generally speaking, the type of house put up is satisfactory.

There is provision in Clause 3 for grants towards the building or rebuilding of houses. In the conditions of today those grants should be greatly increased. I hope the Secretary of State will confirm that even though the work costs more than £600, a grant up to £300 will still be payable. But today £300 goes only a very short way. It is implied in this Clause that we may give a grant up to half the cost of a house. It would be in the interests of economy if we allowed grants up to half the cost of the cheapest house that can be built. Today that will cost between £1,200 and £1,500. There is a strong case, therefore, for increasing the grant up to £600 or £700.

The hon. Gentleman also asked whether this grant would be available for the non-traditional type of house. Those which have been erected in my constituency are costing £2,000 and more now and, as he will appreciate, if the grant is limited to £300 that will only be of small assistance, although no doubt it will be welcome. I want also to stress the importance of making the best use of local materials, particularly of local stone where it is suitable.

I should like to know the total amount which will be available. I see from the Explanatory Memorandum that the annual additional charge to the Exchequer is estimated at £19,900. I am not clear what is in the mind of the Secretary of State about this. Under subsection (6) the local authorities have absolute power to refuse a grant without giving a reason. Is that primarily intended to safeguard them from the financial point of view because they have to bear a proportion of the total cost, though in the north their proportion is small? If this is the case, I want to plead that they are given the utmost encouragement and the largest total amount of money to enable them to give grants in every suitable case. I hope that building will not be restricted by this subsection taken in conjunction with Clause 4.

I want to know the types of people who will be eligible. As far as I can see, a crofter fisherman primarily engaged in fishing with a cottage or croft will be eligible for a grant under this Measure, but that might be confirmed, as also the case of the forestry worker. I want to make a plea for the plight of the true crofter today.

Under the old Crofters and Landholders Acts, it was intended that they should be given special protection and assistance owing to the difficulty of their life and the peculiar conditions in which they have to run their crofts and earn their living. Recently, however, as the help and protection given to other forms of agricultural holding have been increased, the crofter has fallen behind. I am very glad to hear that there is a small provision made in the Measure which will permit it to be applied to crofters. I know that at present they are entitled to grants under the Agriculture Act, 1948, but the grants are small, and I think it would be generally agreed that there is no area in the country in which rural housing is at a lower level than these areas.

If we want to retain the population in the country, then there is a great deal to be done to repair and improve existing crofter houses and to build new houses. This is a very difficult matter. All expenses are high, the crofters have little money of their own and the local authorities, in general, are also poor. The best and easiest thing the Government can do to solve the problem is to increase the rate of grant.

Without entering into the subject in detail, I suggest that there is also a case to be made for applying different standards in different parts of Scotland. I realise the dangers of lowering standards, and I realise, too, that there is already a certain amount of discretion, but if hon. Members were to go round Shetland in the winter they would find that the cry was not for more space to heat and more windows to stop up, but for means of keeping the wind and, indeed, the rain out and for getting up as big a peat fire as possible to try to keep the blood circulating. I do not want to go into the question in detail, it is difficult, and the last thin. I would wish to do would be to reduce building standards throughout Scotland. Nevertheless, there is a case for research, at least, into the best type of building for different parts of the country.

In conclusion, may I touch briefly on the wider subject? A very serious problem indeed is developing in Scotland because, in spite of these enormous subsidies, many people in my constituency find it extremely difficult to pay the rent, even where the State provide most of the cost. I do not know whether the answer is to spend less money on cigarettes, as has been suggested, or what it is, but that is the situation. We also have the difficult situation of one family in poor circumstances paying three or four times as much rent as another family, and for a very inferior old house. There is, too, the difficulty of keeping old property in repair.

The hon. and gallant Member for Berwick and East Lothian (Major Anstruther-Gray) spoke of the unfairness of richer people living in Government houses, and I sympathise with that point of view, because the State-provided houses are intended primarily for the poor.

Mr. Manuel

For need.

Mr. Grimond

I quite agree; for need. On the other hand, in places like my constituency we have a lot of people who come on temporary Government work which will last possibly three or four years. For example, we have officials of the Post Office, and local authority officials. They must have somewhere to live. We shall never get them to go to those areas unless we provide somewhere for them to live.

I cannot say what is the solution, but the Minister of Housing was kind enough, at Question time not long ago, to suggest that I should wait and see what he was going to do about certain matters, and I hope that if I wait and watch carefully, this whole question of grants, subsidies, of rents and of rent restriction, both in the towns and the rural areas, will eventually receive attention and that we shall then have not only a rise in the standard of housing throughout Scotland—because there is nowhere which needs it more, both in the rural and urban areas—but that we shall also get justice between the different classes of people who occupy these houses.

5.56 p.m.

Mr. James McInnes (Glasgow, Central)

I hope the hon. Member for Orkney and Shetland (Mr. Grimond) will forgive me if I do not follow him too closely, because he has dealt largely with the financial contribution towards the provision of new houses for the agricultural population. Nevertheless, I wholeheartedly agree with him in the views which he expressed on these financial arrangements.

One would naturally assume that this Housing Bill, dealing with subsidies, would make provision, as indeed all other similar subsidy Bills have done, not only for the increase in interest charges but also for the overall increase in building costs generally. Instead, we have a Bill designed merely to meet interest charges. Although the Secretary of State, in presenting the Bill, indicated that provision had been made for the increase in building costs, I submit that the Bill is designed merely to provide for the increased interest charges and that to that extent it is a fundamental departure from the original principle upon which all subsidies have been paid in the past. It makes absolutely no provision for the increase which has taken place in building costs, and there has been no recognition of present day building prices.

Mr. Niall Macpherson (Dumfries)

Is not the hon. Gentleman aware, from a simple piece of mathematics, that the increase in interest rates amounts to 41 per cent. whereas the proposed increase in the grants, in the subsidy, amounts to about 83 to 84 per cent.?

Mr. McInnes

I am not aware of that, and, indeed, I hope to prove as I develop my argument that the increase in the interest charges is precisely, and by no mere coincidence, the same amount of money as that provided in the Bill. Failure to make any provision for the increase in building costs has inevitably meant that local authorities today are faced with the burden of having to meet the whole of these increased charges. The fact that the subsidies proposed in the Bill cover only increased interest rates was clearly indicated by the hon. Member for Maryhill (Mr. Hannan) when he quoted the statement made by the Minister of Housing and Local Government in introducing the English Bill, when the Minister indicated quite specifically that his promise was to make provision only in respect of the increased interest charges. There was no ambiguity about his statement.

Let us take the example of a four-apartment house, which is the generally accepted house when one is trying to arrive at an overall figure. Under the old subsidies, local authorities made a contribution of £7 and the Exchequer made a contribution of £23. Under the new proposal, the contribution of the Exchequer is £42 5s., which is an increase of £19 5s. Even if I were to accept the figure which the right hon. Gentleman gave as the capital cost of a house—namely £1,635—the then increased interest charges on that figure amount to something like £16 13s. But if I accept the figures submitted by local authorites —and this covers the point made by the hon. Member for Dumfries (Mr. N. Macpherson)—which shows the capital cost of a house today as £1,900, then the increased interest charges on that sum amount to £19 6s. 9d., and the provision in the Bill for the subsidy amounts to £19 5s.

One is prompted, in these enlightened days, to ask why there should be such a substantial difference between the Department's estimates of the capital cost of a house and the estimate of the local authorities. My right hon. Friend indicated that the difference is about £276. I should like to know precisely what formula or structure was adopted by the Department in arriving at its figures. I submit—I think I do so justifiably—that the Department based its figures not on present-day building costs but on the costs which existed several years ago, and then proceeded to find out the amount involved per house in interest charges, and on that basis determined the capital cost and the extent of the subsidies.

The right hon. Gentleman had, of course, to consult local authorities. Presumably he was under an obligation to do so, but he might have saved himself the trouble of fruitless negotiations had he simply indicated to the local authorities that the subsidies merely made provision for the increase in interest charges and nothing else. Perhaps that was rather too honest a course to adopt. He wanted to impress on the local authorities that his subsidies were based on present-day building costs. When he extended the invitation to the local authorities to meet him he did so in the knowledge that his mind was made up, his figures were all phoney and that his calculations were unrealistic. In other words, he was guilty of gross deception.

The methods employed by the right hon. Gentleman were far too clumsy and crude to deceive the local authorities. I will analyse some of the figures which the Department submitted to the local authorities. The right hon. Gentleman said that his figures were based on tenders received between June and December, 1951. The Department indicated to the local authorities that on that basis it had arrived at a capital cost of not £1,635 but £1,507. The local authorities challenged the right hon. Gentleman's figures, and they were then provided with lists to confirm that his figures were correct. However, when the local authorities analysed the figures they discovered that the cost of the nontraditional house was based on tenders submitted not between June and December, 1951, but in March, 1950. That revealed a difference of £150 in the cost of a house.

It can be said for the right hon. Gentleman that he conceded the point when the error was shown to him, and the estimate was increased from £1,507 to £1,635. But the right hon. Gentleman immediately took steps to regain what he had conceded. The local authorities assert that £150 should have been included in the estimates of capital cost in respect of under-building. I believe I am correct in saying to the right hon. Gentleman that the figure of £150 per house was deleted completely. I had submitted to me this morning a statement by the Convention of Royal Burghs citing 1,590 houses completed in the last 12 months by Glasgow Corporation where the extent of under-building worked out at £154 per house. I submit that there is absolutely no justification for the right hon. Gentleman's deleting or having no regard to the figure for under-building.

Let us also take the question of low cost design which also entered into these calculations. I am reliably informed by the local authorities representatives that at the original meeting with the Department the figure of saving in respect of low cost design was £130 per house, but when the local authorities pointed out to the right hon. Gentleman that it was utterly impossible to achieve a saving of that kind it was mutually agreed that the figure should be reduced to £100. But what has happened? The final statement reverts to the original £130. I consider that to be a piece of manceuvring unworthy of the right hon. Gentleman. It serves to demonstrate that, having conceded £150 in respect of the non-traditional house, he was determined at all costs to regain what he had lost.

Will the right hon. Gentleman indicate whether or not it is true that no provision has been made at all for architects' and surveyors' fees? I am satisfied that the right hon. Gentleman is aware that in all housing contracts and tenders provision is made for architects' and surveyors' fees, for that is a legitimate charge, always has been and presumably always will be. But the right hon. Gentleman makes absolutely no provision for that.

Let us take another item included in the calculations. Provision is made for the increases that are likely to arise either in the cost of materials or in wages during 1952–53, and the sum of £40 is allowed. The right hon. Gentleman allowed that sum because, as the hon. and gallant Member for Berwick and East Lothian (Major Anstruther-Gray) indicated, an increase had already taken place of 1½d. per hour for building trade workers, which cost £20 per house. Another £20 was allowed in respect of unremunerative capital expenditure, but nothing else.

I wish to ask these questions of the right hon. Gentleman. Am I right in asserting that since these arrangements were made between the local authorities and the right hon. Gentleman further increases have taken place in wages? Am I right in asserting that the cost of bricks has increased by 7s. 6d. per 1,000, which means an additional £7 10s. on every house? Am I correct in asserting that the price of cement has increased by 4s. 6d. per ton?

Lieut.-Colonel Sir Thomas Moore (Ayr)

No.

Mr. McInnes

I am.

Sir T. Moore

The hon. Member was asking a question.

Mr. McInnes

That increase in the price of cement adds £2 5s. to the cost of a house.

There are also other increases. Only last month those engaged in the cement industry were awarded a wages increase, and that will reflect itself in the cost of cement. Those engaged in the brick-making industry were awarded a 2½d. per hour increase on 18th May this year. That again will be reflected in the cost of building materials. I am certain that the right hon. Gentleman is aware that only a fortnight ago the building trade workers, at their annual conference, decided to go forward with a claim for substantial increases in wages.

Despite that trend of events, no provision to take account of it has been made by the right hon. Gentleman in his calculation of the capital cost of a house. I say quite categorically that the figure submitted by the local authorities showing that the capital cost of a house is nearer £1,900 than £1,635 is far more realistic than the right hon. Gentleman's figures.

I now wish to deal with the calculation of subsidy, and I wish to take only two items in that calculation-those of rates and rents. The right hon. Gentleman has calculated that the average rate throughout the whole of Scotland is 5s. 7d. in the £. I understand that that was the figure for 1950–51. I wish to ask him why he did not take the 1951–52 figures because these were readily available. Indeed they were available as far back as last September, and the right hon. Gentlemans' negotiations with the local authorities took place in January and February this year.

I venture to suggest that the right hon. Gentleman did not take the figures for 1951–52 because he knows perfectly well that almost every local authority in Scotland had increased its rates. If one takes the counties and compares their 1950–51 rates with those which they are imposing in 1951–52 one finds an increase of 5s. 3d. in the £ in Aberdeen, 3s. in Angus, 3s. 3d. in Moray and Nairn, 3s. 4d. in Banff, 5s. 3d. in Ross and Cromarty, 2s. in Stirling, 2s. 4d. in Glasgow, 2s. in Aberdeen and 2s. in Dundee.

Surely in the light of those figures the right hon. Gentleman would have been justified in conceding the claim made by the local authorities' association that the average rates throughout the whole of Scotland were not 5s. 7d. but 6s. 4d. in the £. So far as I have been able to ascertain, only four local authorities out of 84 in Scotland did not increase their rates in their 1951–52 estimates.

My right hon. Friend the Member for Greenock (Mr. McNeil) indicated that he could not understand how the Department's figures in respect of rents were arrived at. The figure quoted by the Department is £42. My right hon. Friend challenged the right hon. Gentleman to give concrete evidence as to how that figure was arrived at. I too would like to know because I have here a document produced by the Department, and issued in November, 1950, dealing with the rents of municipal houses in Scotland. It says: In the past 12 years the average rent of council houses in Scotland has increased by £3 11s.—from £18 7s. 7d. in 1938 to £22 8s. 7d. in … November, 1949. Permanent houses built"— in the post-war period— are larger than their pre-war counterparts and have an average rent of £28 6s. 3d. In the light of these figures, which cover every local authority in Scotland, I wish to challenge the figure of £42 upon which the capital cost calculations of the right hon. Gentleman are based. I wish frankly to state that I think that even the local authorities' estimate of £33 is far too generous.

But what underlies all this? I submit that the capital cost figures in the structure which was prepared, and the subsidy figures which the right hon. Gentleman also prepared, were deliberately and designedly prepared to coerce local authorities into increasing rents and rates of municipal houses in Scotland.

Let us look at the financial implications of this Bill. It means that a local authority will have to make a local rate contribution, not of £14 5s. as is implied in the Bill, but of £34 15s., a difference of £20 10s. If we calculate that on a housing programme of 25,000 houses we are adding an additional burden of £512,000 every year to local authorities; an addition to the already deplorable burden which these local authorities have to bear.

I have analysed the position and I find that in the past five years Scottish local authorities have contributed by way of their statutory local rate contributions the sum of £1½ million. But since the statutory local rate contribution was totally inadequate, they have had to make a further contribution of £5½ million. In these past five years the housing revenue accounts reveal a deficit of £5½ million, so that what Scottish local authorities have contributed to housing in the past five years is, in the aggregate, a sum of over £7 million. What has the State contributed? Less than £5 million. And we are told that subsidies are calculated on the basis of three portions by the State and one portion by the local authorities. Indeed, it is almost working out in inverse ratio.

I analysed the position in respect of the English local authorities, and I have a statement here which reveals to me that cities like Birmingham, Liverpool, Leeds, Manchester, Bristol, Newcastle and Sheffield, cities whose population are precisely equal in the aggregate to that of Scotland, did not contribute, apart from the statutory local rate contributions, one single penny to their housing problem; not one single penny. I say to the right hon. Gentleman that this appears to be an injustice to poor old Scotland, and I hope he will look at the matter again.

I want to refer to Clause 7. Like my right hon. Friend, I cannot for the life of me appreciate the necessity for increasing the statutory minimum contribution from £4 to £8. Again I have analysed the accounts of Scottish local authorities and I find that only nine out of 84 exceeded the sum of £8 so far as building repairs are concerned. It was rather illuminating to me to find that Scottish local authorities finished the year with a surplus of £1,411,000 in their repair fund account. Here we have the astonishing position of local authorities having a surplus of almost £1½ million in their repair fund and yet the right hon. Gentleman takes the opportunity, for some unknown reason, of increasing the contribution to the repair fund from £4 to £8. That is a rather peculiar situation.

There are four cities with a surplus of £860,000; 20 large burghs with a surplus of £210,000; 29 small burghs with a surplus of £158,000, and the counties have a surplus of £170,000. Surely, in the light of these figures, there is absolutely no justification for increasing the statutory minimum contribution. There can be no charge of neglect or of failure on the part of local authorities to carry out repairs. I only wish that private factors and landlords would carry out repairs with the same expedition as do the local authorities.

I wish to ask the right hon. Gentleman why he cannot leave this matter entirely to the discretion of the local authorities? After all, surely they are the best judges of what is required. I see no justification for interference by the Department in this matter. As the right hon. Gentleman indicated today, the Secretary of State has power not to impose the £8 if local authorities can prove it is unwarranted. But surely it will not be argued that he will concede this to 72 authorities and enforce it in respect of the other nine or 10? Surely if it was left to the discretion of the local authorities there is nothing to prevent them putting the statutory minimum up to £5 or £6 as they found it necessary. But to impose £8 by compulsion simply means that they would have to increase their rates in order to achieve this, because there is no other way of getting this £8.

In view of the criticisms made by my right hon. Friend, and by other hon. Members on this side of the House, I appeal to the right hon. Gentleman that there is every justification and every reason for withdrawing this Bill in order that further negotiations may take place between him and the local authorities. I make that appeal in the interests of his own housing programme and in the interests of obtaining the co-operation and confidence of the Scottish local authorities. If the right hon. Gentleman is not disposed to withdraw the Bill, then I ask him to consider, in view of the chaotic condition of the financial resources and position of Scottish housing, the question of setting up some form of commission or independent inquiry to make a complete investigation into the whole situation.

In my submission no effort to relieve local authorities has been made in this Bill. Indeed, it aggravates a problem which sooner or later must be tackled if we are to improve the situation so far as local authorities in Scotland are concerned.

6.30 p.m.

Mr. Niall Macpherson (Dumfries)

The hon. Member for Glasgow, Central (Mr. McInnes) has treated us to an absolute galaxy of figures. I must congratulate him on his command of them. However, I thought that he was a little unfair to my right hon. Friend when he suggested that the Secretary of State for Scotland was inferior in powers of persuasion to my right hon. Friend the Minister of Housing and Local Government, because the Minister of Housing was able to convince the local authorities in England that what is being done in a similar but may be perhaps not so generous Bill is satisfactory for England, whereas the Secretary of State has been unable to persuade the local authorities in Scotland.

I do not think that that is the fault of my right hon. Friend the Secretary of State. The speech to which we have just listened has shown why. The hon. Gentleman started by saying that the Minister of Housing and Local Government had pointed out that the need for the present review arose from the change in the Bank rate. The Opposition are in a difficulty. In 1946 they brought into effect the present subsidies. Since then costs have risen continuously and also we have had a rise in the Bank rate. But the subsidies were not changed.

What did the Opposition intend to do in this matter? Why was it that they let the position run on for five years? Having done so, what right have they to say now that we should relate the subsidy to the present cost of houses? Why did not they do that a long time ago? What right have they to say now that we should do that?

Mr. McInnes

The 1946 provisions were considered to be adequate. Indeed, the Minister, in answer to a Question in this House recently, indicated that subsidies which were £3,500,000 in 1945 had increased to £10,600,000 by 1950–51.

Mr. Macpherson

The reason for that is clear. Houses were being built all the time.

Mr. Woodburn

That is the first time that the hon. Gentleman has admitted it.

Lieut.-Colonel Walter Elliot (Glasgow, Kelvingrove)

Not as many as we would have built.

Mr. Macpherson

We know that they rose to a figure of about 25,000 a year in Scotland, and they fell back last year.

Mr. McNeil

No doubt the hon. Gentleman will offer the explanation why they fell back.

Mr. Macpherson

I was dealing with the point made by the hon. Member for Glasgow, Central. The reason for the increase in subsidies was that more houses were being built. The more houses we build during the next 60 years, the higher the annual bill for the country will become. We all accept that. But that is different from suggesting that, in spite of the policy of the last six years and of the fact that agreement has been obtained in England on the subsidy policy, we should now ask for a subsidy related entirely to the current cost of house building in Scotland.

Figures have been presented showing that with the proposed increase of £7 5s. in the contribution to be made by local authorities, and the proposed increase in the Exchequer subsidy, the accounts will balance on the basis of a rent of £42 a year. The estimate of the notional cost taken by my right hon. Friend, before the reduction of £130 for the economies to be made in construction, amounted to £1,765. That has been reduced to £1,635. That is disputed by the local authorities, who say the cost is £1,900.

As the Minister of Housing said in a previous debate, a notional cost is not related to any particular house which is built. It is the notional cost related to the general policy of the Government. After that, having taken that cost, one sticks to it, just as the Labour Government stuck to the limit of £410 million on food subsidies.

My hon. and gallant Friend the Member for Berwick and East Lothian (Major Anstruther-Gray) has pointed out the various ways in which an extra cost could be met. We could either pass it to the Exchequer, put it on the rates, or on the tenant, or we could make economies in the house building. He concentrated mainly on the latter. The hon. Member for Glasgow, Central pointed out that some big cities in England had shown no deficiency in their housing accounts. What happened in Scotland? There was a natural tendency for local authorities, especially in the years immediately after the war, to say that the State would pay in the long run.

But that was not the policy of the Labour Government at that time. Costs were rising all the time. No increase in Exchequer subsidy was provided for in the 1946 Act. Therefore, the increase had to be met either by the tenant or from the rates. Different local authorities met the cost in different ways. Some increased rents, some ran a housing deficit. In 1951 the total housing deficit in Scotland was estimated at £1,500,000. That is a staggering figure.

We have to consider whether that policy is right. The local authorities say that the average rent is £33. My right hon. Friend takes as his notional rent £42. He says that £42 is the figure necessary to balance the account. What are we to do? If we accept the additional Exchequer subsidy for which the local authorities ask, that would cost the nation some £350,000 a year for 60 years for Scotland alone. That is not a small sum of money.

We have to ask whether that is really the right policy. Let us consider it in this light. Let us take the case of a house on which at present rates the annual interest amounts, roughly, to £100. Under the present Bill, for a four-apartment house, that means £42 5s. is to be borne by the Exchequer and £14 5s. by the local authority. That is a total of £56 10s. in the way of subsidy to the tenant of the house. What do the other citizens, who are not occupying council houses, pay towards that?

The hon. Member for Maryhill (Mr. Hannan) has a complete and logical solution. He said, "Let the State take over all the rented houses and share the burden equally." Incidentally, some local authorities have already shared out the burden between pre-war and postwar houses. The hon. Member thinks that that is going to add to the freedom of Britain. Is it really? When people have no option at all, but, when they want to rent houses, have to be at the mercy of a body, however high-minded it may be, that does not sound like freedom to me.

Mr. McNeil

What freedom have people got to rent a house?

Mr. Macpherson

There is a tremendous shortage of houses, but it is still possible to rent houses. [HON. MEMBERS: "Where?"] Houses do fall vacant from time to time; some are sold, but not all. [HON. MEMBERS: "Where are they?"] Hon. Gentlemen opposite ought to be more careful what they say. Surely, it is absolutely clear that, so long as there are houses to be let, other than council houses, there is at least a choice for people whether they wish to become council tenants or not. [Laughter.] The right hon. Gentleman laughs, but let him apply for a house now to a town council. What will he be told? "Find one for yourself; to start with, do all that you can, and meantime you go to the bottom of the list for a council house." But, all the time, people are finding houses for themselves, and they do not have to stay for ever on the housing waiting lists.

Mr. McNeil

Will the hon. Gentleman tell the House what houses under the Rent Restrictions Acts are becoming available for renting at present in an area like Glasgow Has he any figures? If he has figures and evidence, then, of course, I will apologise. I think the truth is that, not only is there a tremendous figure—I am sorry I cannot quote it—of the queue for council houses, but there are no official figures of working-class houses being offered for renting in Glasgow, and that is why we have this Bill.

Mr. Macpherson

The right hon. Gentleman is perfectly entitled to talk about Glasgow. What I am talking about is my own contacts with my constituents, which may be just as close, and perhaps even closer, than the right hon. Gentleman's contacts with his constituents. How could I collect statistics? I do not suppose that such statistics exist, for the very reason that these are privately-rented houses. That is the real difficulty which the Opposition are in today. It is really extraordinary that they should attack this Bill for not doing what they themselves failed to do for five years.

I should like to turn from that to the consideration of Clause 6. I welcome this Clause very much indeed, but I have some misgivings about it on the score of the maximum cost of improvements for the re-conditioning of houses occupied by agricultural workers. I hope the Joint Under-Secretary of State will tell us whether, if the cost of the improvements exceeds £600, it will still be possible for the owner to recover £300 of the cost. That, of course, would be only fair, and any other suggestion would be quite preposterous.

It is a fact that nowadays, if one wants to re-condition a rural house completely, it will cost a good deal more than £600. Many of the rural houses have been reconditioned in part under the earlier Act but need to be re-conditioned still further and modernised. Where a rural house is re-conditioned and modernised, the cost would be more than £600.

With regard to Clause 3, I welcome the provision for the building of new houses for the agricultural population, whether or not they are in replacement of old houses. That provision is very much overdue, but there is one question which I should like to ask with regard to it. A number of houses have already been started in the present year, and those houses are building just now. Will the owners be entitled to the grant if the houses are completed after this Bill becomes law? It would seem to be logical that that should be so, because, after all, the grants for local authority houses are back-dated, and if they are back-dated there seems to be no reason why in the same way local authorities should not only be entitled, but encouraged, to pay that grant if the houses are not completed by the time the Bill becomes law.

In conclusion, I should like to say that this is a Bill which we on this side of the House welcome very much. I should be extremely surprised if the Opposition were to vote against the increases in the grants, but, from the heat of the speech which we heard from the right hon. Gentleman the Member for Greenock (Mr. McNeil), one would have thought that that was going to happen. I do not believe they want it to happen. I do believe, however, that they have sought in this debate to raise the maximum prejudice against an increasing rise in rents that is bound to take place, and has been taking place for a considerable period, for local authority houses. I consider it deplorable that this Bill should not have had the united support of the whole House.

6.49 p.m.

Mr. David J. Pryde (Midlothian and Peebles)

This Bill has certain recommendations. This was made very plain when the Secretary of State for Scotland tried to impart to us the Government's attempt to tackle the housing problem. The principal recommendation which the Bill possesses is that it effects a reversal of Tory policy. The Tories have preached to us for the abolition of subsidies; they have preached to us about a property-owning democracy, and it may be that this Bill only gives a new interpretation to that nice, smooth but well-worn phrase "a property-owning democracy."

Probably the Government intend to make the local authorities the property owners, and, as the members of local authorities are elected by secret ballot, in just the same way as Members of Parliament are, one might say that it will be a democracy. But that is charging the local authorities with the responsibility for housing. The Bill is a confession of the fact that private enterprise in this country cannot be expected to provide housing accommodation for the people and that the responsibility must be transferred to the local authorities.

Today we hear that the local authorities are jibbing and we ought to make some analysis of the cause of that. I want to focus the attention of the House on the Bill, not from the point of view of the large local authorities but from the point of view of the small burghs, because they are in a doubly disadvantageous position.

The large burghs are simply the direct connecting links with the Department of Health for Scotland. The small burghs are the sub-tenants of the counties. As a result we are in a very dangerous position from the point of view of housing finance. If we read the Report of this debate in the cool light of reflection tomorrow. I think it will be generally agreed that the contribution of my hon. Friend the Member for Glasgow, Central (Mr. McInnes) emphasised the real problem.

I want to draw attention to the real reason why the local authorities in Scotland are not in accord with the Secretary of State. That is a dangerous state of affairs which we on this side of the House do not at all encourage. We want the local authorities to be in complete accord with the Secretary of State for Scotland; but only this morning I heard from my own local authority the real reason why members of the local authority cannot agree with the Secretary of State for Scotland. They believe that they are not getting a square deal as between the financial contribution of the Central Government and the financial contribution of the local authority.

I want to give an illustration. The hon. and gallant Gentleman the Member for Berwick and East Lothian (Major Anstruther-Gray) dwelt on the subject of rates. I should like to remind the House that since 1945 I have continuously mentioned the dangerous position towards which Scottish local authorities were heading. In a local authority area not eight miles from the Scottish Whitehall, 30 traditional houses were built. In that burgh in the East of Scotland, which has had a very fine record since 1945 in the building of houses, those 30 houses were costing approximately £55,652, to which has to be added £3,242 for the cost of architects fees and measurement fees. That is one of the items which, as my hon. Friend the Member for Glasgow, Central impressed upon the Secretary of State, the Government fail to take into consideration.

That total of £58,894 shows that the average cost per house is £1,963. The contract price was £40,576, or an average unit cost of £1,352. But the Department, in its generosity—and I have no doubt that the Department was quite sincere in its feeling of generosity—gave a subsidy based on £1,560, which means that £400 is being ignored. The Department may be able to ignore the £400, but the burgh chamberlain in a small burgh cannot afford to ignore £400, because if he does the Secretary of State will send round the auditors and those gentlemen will impose a surcharge. So we cannot afford to ignore that £400.

I want to draw attention to the £8 which the Secretary of State told us will be the cost of repairs. It is generally agreed that there must be some increase in the cost of repairing houses, but where are we to get the increased amount? At present the £4 is taken from the housing revenue account. The local authorities are faced with the problem of getting another £4. That is not going to be such an easy matter. It is a very complicated affair from the point of view of the burgh chamberlain of a small burgh.

If we add £4 to the tenant's rent in this burgh, it brings in £2 13s. 4d., because there has to be deducted owner's rates of 6s. 8d. in the £. The tenant then has to pay rates at 8s. 6d. in the £, and that adds £1 14s. to the £4. That means the tenant will be required to pay an additional £5 14s. a year, but that will not get the £4 necessary. We then find that in order to get the necessary £4 into the housing revenue account the tenant in this burgh will have to pay an additional £6 or £6 10s. in annual rent and rates, making a total sum of something like £8 11s.

That is not the whole story. The county assessor comes into the matter. In Midlothian the county council employs a very able and competent gentleman to ensure that everyone contributes his share to the county rating. Mr. Smith comes along, rubs his hands and says to the small burgh, "Yes, this is a gift from the gods. You have raised the value of that burgh," and the county requisition goes up. When the county requisition goes up the Exchequer equalisation grant goes down. The small burgh is being hit twice. Therefore, I ask the Secretary of State to consider very seriously the advice of my hon. Friend the Member for Glasgow, Central and endeavour to put before the House a more workable proposition.

There may be difficulty in providing houses for the people, but there is one part of this Bill that we on this side of the House will fight tooth and nail. Even if not one other Member on this side challenges a Division, I certainly will not sit here quietly and allow this House to turn back the wheel of evolution so far as the tied cottage is concerned.

I am shocked when people who are in well-endowed positions come to this House and argue for the minimum standard of accommodation for the real wealth producers of this country, the people who till the soil and produce our wealth. Surely the people who produce the wealth of the country are entitled to as high a standard of living as we can afford. Surely we should see to it that these people on the land are given some status in society which will encourage them to look forward to the future. In the past they have had a most chequered career—

It being Seven o'Clock, and there being Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS, under Standing Order No. 7 (Time for taking Private Business), further Proceeding stood postponed.