England and Wales (Hansard, 27 October 1955)

§ The Minister of Housing and Local Government (Mr. Duncan Sandys)
As promised, I should like to make a statement about housing policy.
The Government have been reviewing the level of housing subsidies in England and Wales. At present, the basic annual Exchequer subsidy is about £22 per house. That figure was fixed a year ago. Since then rates of interest on loans have risen appreciably, and if we were to follow the previous practice of adjusting subsidies to take account of such changes the basic subsidy would now have to be raised to well over £30. But, the Government do not consider that such an increase is either necessary or desirable.
Local authorities own about 1¼ million houses built before the war, and a further 1½ million built since the war. The Exchequer subsidies which they are receiving on these existing houses amount in all to nearly £47 million a year. There is no doubt that, in general, council house rents are today being subsidised to a greater extent than the financial circumstances of the individual tenants require. This shows that the amount of subsidy which the Exchequer is now paying out in respect of existing houses is unnecessarily large and provides a margin which could properly be used for financing some part of the future house-building programme.
For a number of years there will continue to be a large demand for more houses and in many areas the shortage is still serious. But most, if not all, the authorities which have long waiting lists possess a big pool of existing houses upon which they are receiving large amounts of subsidy. These usually include many pre-war houses, built at much lower cost. Provided, therefore, that they subsidise only those tenants who require subsidising, and only to the extent of their need, local authorities should be well able to continue building the new houses they require with appreciably less Exchequer assistance than hitherto.
We are not proposing that the rates of subsidy on houses already built or building should be altered; but we have come to the conclusion that the subsidy on 378 future houses, built for general needs, should be abolished altogether. In order not to make the transition too abrupt, we propose, for a year or so, to pay a much reduced annual subsidy of £10 per house.
Since we wish to encourage local authorities to restart the slum clearance campaign with all possible vigour, we have decided, as a matter of policy, to maintain the subsidy on houses built for this purpose at the existing level of about £22.
What I have said about the position of local authorities as a whole does not apply to the corporations of the new towns. They do not possess any pool of low-cost pre-war houses, and, consequently, their rents are substantially above the general average. A special problem arises also in the case of authorities of small towns or districts, which are being expanded to accommodate overspill population from congested cities. We propose, therefore, in these special circumstances, to provide a basic Exchequer subsidy of £24, an increase of £2 over the existing rate. The necessary Bill to effect these and other consequential changes will be introduced next week; and we propose that the new subsidy rates shall apply to any dwellings for which tenders are approved by local authorities after that date.
Unless local authorities will exercise more discrimination in giving rent relief to their tenants, there is bound to be a continued misuse of public money. At present, councils are discouraged from introducing differential rent schemes by reason of the fact that, no matter how much they increase their revenue from rents, they still have a statutory obligation to pay into the Housing Revenue Account a fixed contribution from the rates. We therefore propose to abolish this obligation. This will allow local authorities, if they so desire, to use any savings they may make to reduce the rate burden, and will give them for the first time an incentive to adopt realistic rent policies.
The revision of the subsidies has provided a convenient opportunity to look again at the system of housing allocations. There is no doubt that this control has caused friction; and I have accordingly decided to bring it to an end. Local authorities will henceforth be left to determine the size of their own housing programmes—

§ Mr. Sandys
It is not customary to interrupt during a statement.

§ Mr. G. Brown
Why not?

Miss Lee
On a point of order. I wanted an explanation upon a point that was not clear in the part with which the Minister had just finished dealing, in connection with subsidies in the case of mining areas. The Minister has said that it is not customary to interrupt during a statement. Is it not perfectly proper for an hon. Member who is concerned about subsidies affecting an area like mine—which was the subject I wanted to raise —to ask the Minister for an explanation?

§ Mr. Speaker
The rule of order applying to the case is that unless an hon. Member who has possession of the House gives way it is not in order to continue to stand with the object of intervening.

§ Mr. Brown
But he should give way.

§ Mr. Speaker
Order. I should say that at the end of the right hon. Gentleman's statement there will be an opportunity for supplementary questions to be asked, and I think that that is probably the most convenient time to do it. In that connection, as I am on my feet, may I say that I understood from the statement that there is to be a Bill next week. Therefore, I hope that supplementary questions will be neither too numerous nor too prolonged.

§ Mr. Sandys
I will repeat my last sentence, Sir, which was that local authorities will henceforth be left to determine the size of their own housing programmes; and I look to them to keep their demands upon our building resources within reasonable bounds.
The reduction in the rates of subsidy will tend to encourage local authorities to charge rents more in line with current wages and the present-day value of money. In this connection, the Government recognise that the level of rents of council houses and that of privately-owned houses are inter-related. Since most of these latter are subject to rent control, it will clearly be necessary for us to review the provisions of the Rent Acts. This we shall now do; and we shall announce our conclusions in due course.
380 The proposed changes in the subsidy rates will have the effect of slowing down the annual growth of Exchequer expenditure on housing. But, since they will not affect the subsidies payable on houses already built, they cannot, of course, reduce the present total of the subsidy bill. Nevertheless, I believe that it will be generally recognised that the policy which I have announced represents an important step in the direction of restoring some measure of reality to housing finance.

Hon. Members
Boo!

§ Mr. Speaker
Order! Mr. Mitchison.

§ Mr. Mitchison
Is the Minister aware that his devastating statement covers many matters which, possibly, are in his Bill and require a full and early debate? Is he aware that this is black news for every tenant, whether of a council house or private house, and black news, too, for every man and every family who need a house? Is he aware that what he is doing by this surrender to landlordism is to substitute the ability to pay for the criterion of need when one has to get a house? Is he further aware that his proposals will place an intolerable financial burden upon the backs of local authorities, who have more than enough to do already, and who will not be able to carry out their duty of providing houses in blitzed towns and elsewhere?

§ Mr. Sandys
I really do not know what the hon. and learned Gentleman is talking about. It has always been clear that it was the intention of Parliament that the subsidy should not go to persons for whom it was not needed—[HON. MEMBERS: "Why?"]—and that the relief should be given only to those who need it and only for so long as they do need it.

§ Mr. Bevan
There are three points which I should like to put to the right hon. Gentleman, if he would be so kind as to listen. First, as it has always been customary to consult the local authorities when any revision of housing subsidies is made, can he say whether such consultation did take place, and, if so, what was the result? Secondly, on Tuesday last, the Parliamentary Secretary to the Ministry of Labour and National Service said that special consideration of the provision of houses was being urged by his Department in the recruiting of 381 miners. What provision is the right hon. Gentleman now making in his policy for the allocation of houses for workers in the undermanned industries so necessary to the national economy? Thirdly, in view of the fact that, obviously, it was contemplated some time ago that there would be a revision of the Rent Acts, why did not the right hon. Gentleman have sufficient courage to say so at the Election?

§ Mr. Sandys
The right hon. Gentleman's first question was about consultation. The usual consultations did take place. I myself had two long meetings with representatives of the local authority associations, and my officials also had further meetings about details. [HON. MEMBERS: "What did they say?"] I never expected the local authority associations to welcome a reduction in the Government subsidy, but, as the right hon. Gentleman knows, consultation does not mean that the Government have to be controlled by the local authorities. What we did was to inform them that it was our intention to make a cut in the basic subsidy, and then we discussed with them very fully what the repercussions of these changes would be on the various other rates. I am not suggesting that this was warmly welcomed by the local authorities.
The right hon. Gentleman's second point was about miners. I think the right hon. Gentleman will find that the Bill—I have not set out all the details in my statement—will ensure that the increased subsidy of £24 will be available for expansion schemes designed to accommodate industry which is moving into an undermanned area.

§ Mr. Bevan
May I pursue the point, as this is a very important matter? Yesterday, for example, the Chancellor of the Exchequer complained, in passing, that there was not an increase in the production of coal such as we would desire. It is well known that one of the reasons is that we cannot get miners into the expanding mining areas, and this has nothing at all to do with overspill. Will any special provision be made for housing subsidies for houses for workers in these areas where basic industries need to expand in the national interest?

§ Mr. Sandys
I said "Yes." Perhaps the right hon. Gentleman will await publication of the Bill. I think he will find that it does provide for precisely what he has in mind. So far as his third question is concerned, the review to which I referred had not then taken place.

§ Mr. C. Davies
May I ask the Minister a question about the small towns and rural areas? Does the right hon. Gentleman realise that, in the rural areas, the ratio of rents of new houses to wages is higher than it is elsewhere? In these cases, as we all know, there is no pool of pre-war houses. What I want to know is whether the concession which the right hon. Gentleman proposes to make to these areas will apply generally or only to those cases where there is building for overspill? Unless it is for general purposes, there will be a still greater exodus from the rural areas.

§ Mr. Sandys
I do not believe that there will be many cases in which local authorities will be unable, without difficulty and without hardship to the tenants, to continue the building of such houses as are needed in their areas with the subsidy rates which I have announced, assuming two things: first, that they will regard all their subsidies as a single pool from which to draw, and, secondly, that they will subsidise only those tenants who require subsidising and only to the extent that they need the subsidy. I would add that there may be exceptional cases. Under the existing law, we already have powers to give an additional subsidy to local authorities which have exceptional difficulty—possibly cases such as the right hon. and learned Gentleman has in mind. It is our intention in the new Bill not only to preserve that power, but to make it somewhat more flexible.

§ Mr. Alport
May I ask my right hon. Friend whether he is aware that the pioneers of the principle of paying rent subsidies on a basis of need are Socialist-controlled local authorities? May I ask him, further, whether he has included in the category of slum clearance those Service camps which local authorities, in accordance with Government policy, are doing their best to get rid of, which, in fact, in many cases, are nothing better than slums?

§ Mr. Sandys
My hon. Friend is quite correct in his first supplementary question. As far as the second question is concerned, whether the sub-standard accommodation in camps will receive the same special treatment for subsidy as slum clearance, the answer is "Yes."

§ Mr. Bellenger
Has the right hon. Gentleman formed any estimate of what global saving there will be to the national Exchequer as a result of the policy which he has just announced?

§ Mr. Sandys
As I think I made clear in my statement, the effect of these changes on public expenditure will, of course, depend on how many houses the local authorities decide to build, and what proportion of these will attract the higher subsidy for overspill. It will also depend on what proportion of the house building programme—which I cannot forecast—is devoted to slum clearance and what proportion to general needs.

§ Dame Irene Ward
Is it the intention of my right hon. Friend to give guidance to local authorities in the assessment of need? Is he aware that it is extremely difficult for local authorities to assess need if they have not had the experience which appears to be necessary in dealing with a very complicated matter of this kind? Does he not feel that local authorities would probably be glad to receive guidance so that there would be a common policy throughout the country on a fair assessment of need?

§ Mr. Sandys
I believe that my hon. Friend is referring to the introduction of differential rent schemes. If that is what she has in mind, let me make it clear that local authorities must be left to decide whether they wish to introduce such schemes. I hope that they will increasingly adopt some form of differential rent scheme. To assist them I am thinking of sending out a circular giving them the results of the experience of those local authorities who have already introduced such schemes.

§ Mr. G. Brown
In view of the fact that the existing differential in favour of agricultural houses, farm workers' houses, is higher than that mentioned by the right hon. Gentleman, may I ask whether it is intended to maintain the present differential in favour of farm workers' houses?

§ Mr. Sandys
Yes, Sir.

§ Sir T. Moore
Is my right hon. Friend aware that his realistic and courageous proposals will command wide support from all thinking members of the community?

§ Mr. Speaker
Order. We are to have a Bill next week.

§ Mr. Mellish
On a point of order. Surely, on a matter of this kind, it is important to most hon. Members on this side of the House that further questions should be asked between now and the coming of the Bill, Mr. Speaker. Most of us realise that waiting lists will have to be completely abolished by local authorities and that the hardship created will possibly be very severe. Surely further questions should be asked.

§ Mr. Speaker
There will be ample opportunity for all these points to be brought up before anything is done. That is the main thing that I am anxious about.