HC Deb 02 February 1956 vol 548 cc1144-63
Mr. D. Jones

I beg to move, in page 6, line 45, at the end, to insert: but may in any financial year carry to the credit of the housing revenue account, in addition to the amounts required by section one hundred and twenty-nine of the principal Act, such further amounts, if any, as they may think fit. The introduction of the Bill caused a good deal of consternation amongst local authorities, as the right hon. Gentleman well knows by the very cold reception which his announcement received at Harrogate. The fact that the Bill caused consternation is borne out by the communications which have passed between the Association of Municipal Corporations and the right hon. Gentleman's Department. They culminated in a letter on 31st January in which the Association made it quite clear to the right hon. Gentleman that the Bill caused a good deal of concern.

Whatever the other Clauses have caused to the local authorities—and they have caused a good deal of concern—Clause 8 and its implications have caused the financial officers of the local authorities great consternation. The Amendment seeks to do something to mitigate that consternation. Clause 8 terminates the obligation of local authorities, under a number of provisions in the Housing Acts, to make rate fund contributions to the housing revenue account. These provisions impose obligations but do not confer powers. In these circumstances, although in the future the local authority will be obliged to make good at the end of any financial year any deficiency which is shown on the housing revenue account, it will have no other power to pay money from the general rate fund into that account.

This applies not only to future houses but also to existing houses, and the fact that local authorities have since the war been contributing the equivalent of one-quarter of the total subsidies on post-war houses suggests that even if an economic rent is charged wherever possible and differential rents schemes are introduced, assistance will often be needed from the general rate fund.

Moreover—and this is an important point in the present period of full employment and relatively high wages—the pressure on the housing revenue account is less now than it is likely to be if for any reason an economic depression, coupled with unemployment, should occur; and I think I might add "part-time employment," which is already rearing its head in many parts of the country.

If the sole circumstance in which a local authority can contribute to the housing revenue account is limited to meeting a deficiency shown on the account at the end of the year, two consequences will follow. First, except in specially prosperous areas, there will never be a surplus on the housing revenue account to help to provide for more difficult times. Secondly, it will mean that the local authority's payment will be a restrospective one for which the local authority will not ordinarily have been able to provide in its estimate for the year in which the deficiency arises. Payments will be made in arrear, which is always bad finance.

For all those reasons, the local authority should be able to make contributions to the account as a discretionary power and not as a duty and in this way to maintain a reasonable working balance on its housing revenue account. Further, it is desirable to provide, which the Bill in its present form does not, a fund to cushion the local authority rates from the impact of economic fluctuations. The lowering of the Exchequer contributions, combined with the removal of the local authorities' obligation to contribute, will, particularly if the power to contribute from the general rate fund as proposed by this Amendment is not conceded, inevitably lead in the long or the short run to the disappearance of any balances on the housing revenue account, and local authorities will have no reserves whatever against any hard times which may come along.

If the Government's new policy in relation to subsidies is to be effective, it demands for local authorities the greatest measure of freedom in their financial arrangements. That seems to be fundamental. The ability of tenants to pay a full rent or a high proportion of it is closely dependent on the maintenance of full employment. There will always be a proportion of tenants, for example the low wage-earners and those in receipt of National Assistance and pensions, who will need help. If this group were to increase suddenly—and it might very well do so, if even temporary unemployment struck the district—then the housing revenue account would quickly become depleted and, indeed, might be reduced to nil. The authority might get into grave difficulty and might be faced with a sudden demand for an extortionate contribution from its rate fund to the housing revenue account in order to make it solvent.

For those reasons, it seems to me that the right hon. Gentleman might review the position in connection with local authorities financing the housing revenue account. It seems to me, and I think to the majority of the local authority associations, that if they are to try to even out the contribution which will be required from the rate fund, and if they are to be encouraged to do what the Bill suggests they should do and make contributions at their discretion in the form of subsidy, then there ought to be power and permission to carry a reserve in the housing revenue account. In order to safeguard against fluctuations which might occur, and which indeed, I regret to say, are occurring in many parts of the country at present, and in order to even out over a period of years the contribution from the rate fund to the housing revenue account, this Amendment ought to be conceded.

Commander R. Scott-Miller (King's Lynn)

I hope my right hon. Friend will be able to see his way to accept this Amendment, because it will be one way of alleviating some of the anxiety which is felt by local authorities about finding funds for their housing programme. I understand that at the moment they receive a pretty certain income for their housing fund by way of payment from the general rate fund. They have been able to build up a surplus and they can budget ahead for their annual requirements with some degree of certainty and local planning.

I have received views from my local authority that if it is debarred from making payments from the rate fund it will be hard put to it to find a reserve of money to enable it to carry on as it has been carrying on in the past.

Local authorities are somewhat puzzled because, apparently, under the Bill the Minister can claim the whole of the surplus, if there is a surplus in the fund, at the end of each quinquennial year, quite irrespective of the fact that some of that surplus might well have been contributed by the local authority through its contributions to the subsidy. If that is so, then in the case of King's Lynn, in which I am particularly concerned, it could be to their detriment to the extent of some thousands of pounds.

7.0 p.m.

If my right hon. Friend would accept the Amendment it would enable reserves to be built up and, as the hon. Member for The Hartlepools (Mr. D. Jones) said, those reserves could be used against the coming of a rainy day. That would give some scope to the local authority to be prepared for eventualities such as irrecoverable rents—not that I am suggesting that the people of King's Lynn are likely to default in their rents, but the town has built a lot of new council houses since the war and now hopes to get on to its programme of rehousing people at present living in slum areas. It is a fact that in the slum portions people find it difficult enough to pay the extremely modest rents they are asked to pay today and it would be a great deal more difficult for the council to ask a higher rent from them when eventually they are rehoused. If the council had a reserve fund to meet that deficiency it would be very helpful to its finance department.

There are many contingencies which have to be met from time to time. The hon. Member mentioned unemployment and part-time employment. I do not anticipate those problems returning to us, especially under a Conservative Government, but I think the whole principle of a reserve fund available for local authorities to administer in the way they think suitable is right. Therefore, I ask my right hon. Friend to look at this matter and to see if he can accept the Amendment.

Mr. Sandys

It might save the time of the Committee if I say straight away that I think this a desirable Amendment. I am quite prepared to accept it.

Mr. Martin Lindsay (Solihull)

May I ask my right hon. Friend if he is proposing not only to accept the Amendment but also to cover the problem which arises when the obligation to contribute is terminated? What is to happen to the surplus, if there is a surplus, at the end of a future quinquennial?

Mr. Mitchison

On a point of order, Mr. MacPherson. Is that a question which arises on this Amendment, or—as I thought—on the Motion, "That the Clause stand part of the Bill," when I propose to raise it myself?

The Temporary Chairman

It does not arise on the Amendment.

Mr. Lindsay

I am much obliged, I wanted to make sure that it was covered. I understood that the provisions which would be made by our new Clause would be out of order as being beyond the Money Resolution, and could not be dealt with at that stage.

Mr. A. Fenner Brockway (Eton and Slough)

It is quite unnecessary for me now to deliver the excellent speech I had prepared in favour of the Amendment, but I should like to congratulate the Minister on at last accepting an Amendment to the Bill. I hope that is some promise for future Amendments which are to be moved from this side of the Committee.

Mr. Ellis Smith

The acceptance of the Amendment will be an incentive towards good management, and a municipality should benefit financially from good management. Therefore, I am very pleased that it has been accepted and will reserve the observations I want to make on other aspects of the matter until we reach the Motion, "That the Clause stand part of the Bill."

Amendment agreed to.

Mr. Mitchison

I beg to move, in page 7, line 22, at the end to add: (3) For the purposes of the application of this Act to London—

  1. (a) the reference in subsection (1) of this section to the general rate fund shall be construed, in relation to the London County Council, as a reference to the county fund;
  2. (b) subsection (2) of this section shall not apply to any arrangements made between the London County Council and the council of a metropolitan borough or the Common Council of the City of London under subsection (1) of section one hundred and eighty-one of the principal Act; and
  3. (c) so much of any contribution paid by the London County Council into the Housing Revenue Account under paragraph 8 of the Eighth Schedule to the principal Act as may fairly be regarded as attributable to the cessation under subsection (1) of this section of any contributions mentioned in paragraphs 1 to 3 of that Schedule shall be defrayed as expenses incurred by that council for special county purposes.
This is purely a London matter. There were other Amendments on the Order Paper previously, and I believe that in this respect an agreement has been reached between the right hon. Gentleman and the L.C.C. I move this Amendment in the confident hope that it will be accepted.

Mr. Sandys

I hope to carry on with the good work, and I am glad to tell the Committee that I am happy to accept this Amendment.

Mr. Ellis Smith

This provides us with an opportunity of asking questions on behalf of our municipality.

Mr. Mitchison

On a point of order. We have not yet come to the Motion, "That the Clause stand part of the Bill," and this is purely a London matter. Stoke has not yet annexed London, has it, although it is making some progress?

The Temporary Chairman

It is in fact entirely a London matter, and if the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) wishes to deal with matters other than London he would be well advised to wait until we reach the Motion, "That the Clause stand part of the Bill."

Mr. Ellis Smith

I accept your correction, Mr. MacPherson. I made a slip, but there was no need for sarcasm from my hon. and learned Friend the Member for Kettering (Mr. Mitchison).

Mr. Mitchison

With your leave, Mr. MacPherson, may I assure my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) that I had no intention whatever of being sarcastic at his expense.

Amendment agreed to.

Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.

Mr. Ellis Smith

The City Council of Stoke-on-Trent, has given consideration to this Clause and asked that we should make some observations in order to get an understanding of its application. It has now been improved as a result of the acceptance of the Amendment proposed in page 6, line 45. That is a big step forward.

I have before me the housing accounts for the year ended 31st March, 1955, in which almost £1 million is involved. Here are a few examples of the seriousness of housing finance: Exchequer subsidy, £315,984, rate fund contribution £112,833, loan charges £742,226. We find in regard to loan charges that on a house costing £1,750 they have gone up from £1 4s. 3d. in 1951 to £1 15s. 6d.

It is the intention of most housing committees—I can at least speak for the one with which I am familiar—to conduct their finances on as businesslike a basis as possible. Now that the Minister has accepted the Amendment to which I referred, there will be further incentives to that end. If reserve funds are built up they can be financed in two ways, firstly, by the use of any balances which arise from the housing revenue account and, secondly, by contributions made to the fund as a general fund. I wish to ask the Minister whether anything will be put in the way of municipalities building up funds of that kind.

The next question relates to the effect of the quinquennial investigation. The town clerk of Stoke-on-Trent is very uneasy about it. His view is that if at the end of the investigation there is a surplus in the housing revenue account and the Exchequer seeks to apply the concluding part of Section 130 (2) of the Housing Act, 1936—the surplus may be no more then than it is today—it is possible, if the local authority has not contributed to the account and the Exchequer contributions are continued under the Bill, that the Exchequer could claim that the whole of the surplus should be transferred to the Ministry. I want to know whether that could be so. According to my reading of the Clause, although I am not a legal man, that should not be so. I should like answers to my questions before we part with the Clause.

Mr. M. Lindsay

I am very glad to follow the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), and I can assure him that his town clerk is not the only one who has anxiety on the subject. My local authority at Solihull is also worried about it.

Solihull is operating a differential rents scheme. It is anxious to have a surplus in case of bad times. It wants a surplus so that it can make rebates under the differential rents scheme and cover any losses which might be encountered in future.

Naturally, Solihull, like Stoke-on-Trent, is very anxious to ensure that there is some provision in the Bill whereby such local authorities can be safeguarded against raids upon surpluses by the Chancellor of the Exchequer. I need say no more because the point has been put extremely well by the hon. Member, and I hope the Minister will be able to give us the assurance that we seek.

Mr. H. Butler

I am sure that before we part with the Clause many of us would like to evaluate the misery the Bill will cause. We have to consider why it is necessary to insert such a Clause in a Bill of this character.

The Minister has made the position perfectly clear. Before this Bill, the Parliamentary Secretary has been in the fortunate position of sitting on the back benches and firing the bullets for the Minister. Now he has had to stand up to cross-examination. We have admired his explanations while we have deprecated certain things which he has perpetrated.

We have now to look at the logical consequences of the Bill, which flouts the views of every local authority association. The Minister and the Parliamentary Secretary know that there is not a local authority association which believes that the Bill should reach the Statute Book. There is a predominance among such organisations of authorities dominated by the Conservative Party. Therefore, the Conservative Party and the Minister are flouting the requirements of Conservative local authority representatives for dealing with matters affecting their citizens.

7.15 p.m.

In introducing the Bill, the Minister foresaw that he was flouting all local government opinion. The people carrying out our local administration have a sense of civic pride and responsibility in doing their day to day work, and one of the most important parts of their work is the provision of housing accommodation, in which private enterprise has failed. The Minister has introduced the Bill in spite of all that opposition. He knows the opposition exists. He will have received a letter at the end of January indicating the opposition of a local authority association to the whole Bill, and local authorities throughout the country are even now pressing for the Bill to be withdrawn.

The Clause strikes particularly at local government. It is, in effect, saying to reactionary local authorities, "Although in the past you have made a statutory contribution so that housing accommodation could be provided for tenants at rents which they could afford to pay, there is now no necessity for you to contribute." That is the sop to reactionary Tory local authorities who have told the Minister that the Bill was unpopular in their area. The Minister's answer has been, in effect, "I am the agent of Her Majesty's Government, who have said that there are to be cuts in public expenditure on our social services."

The Minister, in relation to cutting subsidies, has said that local authorities should look at their capital expenditure. He has now said, "You boys in the localities, being representatives on the local authorities, need not levy a rate for the statutory subsidy." Obviously, the Minister will abolish the subsidy entirely, and he could not ask local authorities to make any contributions if he himself dissolved the partnership between the central and local governments. However, he is already telling local authorities that after 1st April they may stop making a statutory contribution.

This is the worst thing that could have been done to local government. It is a terrible situation that local authorities should be free to abdicate from their responsibilities. It is one of the most pernicious parts of the Bill. I hope that my right hon. and hon. Friends will take the view that we ought to divide on the Question, "That the Clause, as amended, stand part of the Bill."

Mr. Mitchison

I will begin by asking the Minister two further questions. I do not think there is much doubt about the answer to the first one, but before the right hon. Gentleman accepted the first of the two Amendments to the Clause some local authorities were genuinely puzzled as to whether, and, if so, how and under what powers, they could make voluntary rate contributions towards housing.

If he will—and this in itself is no contentious matter—I want the right hon. Gentleman to make the most categorical statement that local authorities can and may make what rate contributions they please towards housing, or none if they please, if the Clause goes through. I am quite certain that that is what the right hon. Gentleman intends. He has said so on many occasions, and it is the case that many local authorities now make them. I confess that I have been a little puzzled as to what powers they make them under, but I think that the fact that they can make them should be said quite categorically and with such particularity as the right hon. Gentleman can give to the statement.

The second is a slightly different point. Under the Clause the right hon. Gentleman has repealed all but one of the relevant paragraphs of the Eighth Schedule of the principal Act, that is the Housing Act, 1936. That, of course, would leave the eighth paragraph of that Schedule, which is important in this connection, in operation if it had some Section in the Act itself to hang on to. After all, the Schedule to an Act is introduced by some Section. If the paragraph appears as a Schedule at the end without any indication of it in a previous Section, it has no more effect than a bit of waste paper.

I have to refer for a moment to the Third Schedule in connection with the repeal under Clause 8 (1, a.)The right hon. Gentleman has repealed Section 114 of the principal Act upon which that Schedule seems to me to depend for its purpose. I put that second point, probably a drafting one, now in case I have no time to put it later. If the Minister can assure me that I am wrong, he need not bother to tell me why or how. I will take it from him and his advisers that that is so. Equally, if anything needs to be done about it, I will take his answer now that he will consider it. That is the end of the reign of peace about this Clause.

The right hon. Gentleman will understand that our having put forward Amendments and his having accepted them by no means reconciles us to the substance of the Clause. I put the substance of it in this way. The effect of the reduction of Government subsidies is to make it incumbent upon local authorities who go on to meet their general housing needs—as I hope they will do—to take out what they have lost by way of Government subsidies either from rates or from rents. They have no other resource, in general, for the purpose. The effect, therefore, of the Bill as a whole is to invite every local authority to consider how they are going to make good the deficiency which this piece of legislation will create in Government subsidies and how far they are going to do it out of the rates and how far out of rents.

I say at once to the right hon. Gentleman that when that is the position it certainly is not the moment to remove the obligatory rate contribution, because it will tempt a great many local authorities to put it all on the rents. I go one further. I am afraid that my opinion is that the party opposite would be rather glad if they did put it all on the rents. I suspect that the modern Tory philosophy looks at it this way. It says, "Here we have housing of various kinds, housing provided from private and from public sources, and we want open competition between them. We are cutting down now, and shall be totally removing, the general housing subsidy from Government sources, and we are not at all anxious that local authorities should in general make any contribution from rates at all. We really should like to see the rents equalised on strict economic lines."

I cannot come to any other conclusion; otherwise I see no reason whatever to cut down compulsory rate contribution, though—although I do not agree with them—I can see the right hon. Gentleman's reasons for reducing the Government contribution. What is the fundamental reason for removing the obligatory rate subsidy at the moment? I do not believe that we have ever heard it. Is it a means of obliging local authorities to spend less by way of rates on housing? I think that we must assume that it is.

If it is, let us note that it has not been reduced but has been completely abolished as a compulsory contribution. It will result in one or two things. Either the Government's purpose will be effected and there will be a substantial reduction in the now voluntary contribution to be made towards housing, or housing will very largely be stopped. I should add a third alternative, following on the first, that the cost will be put on the rates.

We on this side of the Committee do not seem to be agreed with hon. and right hon. Gentlemen opposite on the function and nature of public housing. We regard it as a fundamental service to the community. We regard it, as Government after Government have previously regarded it, as something that has to be assisted from Government funds and also from local funds. It has been so treated for a very long time indeed. It certainly was so treated by Labour Governments ever since the war. It was a mere recognition of the fact that if we try to put more on to the rents, for that is the effect of removing this compulsory rate contribution, we are simply going to increase the already considerable calls on people who cannot afford a council house.

This is very largely, though not entirely, a considerable rural problem. Every hon. Member who sits for a part of the countryside, including myself, knows perfectly well that there are in these villages many people very badly housed and sorely in need of rehousing who ought to be rehoused on any social standard but who cannot be rehoused because they cannot afford to pay even the present rents.

If we are going to prevent a compulsory rate contribution, to some extent and in some places we shall enlarge that class. The extent of that class is a scandal to the community. Its growth will be an even greater scandal. Those who take any measure whatever, for whatever purpose, which will have the result of increasing that class among our fellow citizens ought to think again and ought to be ashamed of themselves for what they have proposed. It is dead wrong that there should be people in this country living under miserable conditions when in fact they could be and should be helped by the State and helped out of rates to live in reasonable conditions. Surely, that elementary proposition is recognised even by hon. and right hon. Gentlemen opposite.

7.30 p.m.

We shall be told that this is not the effect. I agree that it is open for councils still to make these contributions, but far too much of the countryside is still electing councils which will seize the opportunity to cut down the rates at the expense of rents for the working class. That is wrong, and in the House of Commons nobody should defend such a practice. Yet that is the effect of this Clause, given the existence of that class of person and given the existence of some councils, which we all know exist, and which will be only too glad to have a cut at the rates at the expense of the rents charged for the smaller type of houses to those who are comparatively badly off.

Therefore, we take the strongest objection to this Clause, not so much because of its effect upon progressive, Labour-controlled councils which will make on a voluntary basis the contributions part of which was originally obligatory. We take objection to the Clause because of in, effect on councils which cannot think beyond the rates, which have even forgotten what a very distinguished Conservative politician, Joseph Chamberlain, said when he was Mayor of Birmingham, "High rates and a healthy city." That was his motto then. It is true that he lapsed afterwards——

Mr. Denis Howell (Birmingham, All Saints)

Would my hon. and learned Friend allow me to remind him that at that time Joseph Chamberlain was a Liberal?

Mr. Ede (South Shields)

He was a Republican.

Mr. Mitchison

I am not quite at fault in my history, but perhaps I did not put it clearly. At any rate he is venerated, with too little distinction between the successive periods of his life, by numerous Conservatives and numerous Conservative bodies. Joseph Chamberlain organised Birmingham remarkably well for the party of hon. Gentlemen opposite and I thought that if I waved such a good Conservative name in front of those benches it might induce hon. Gentlemen to change their minds on this occasion.

To conclude, I say simply that the effect of this Clause will be to encourage reactionary, short-sighted, unprogressive councils, particularly in rural areas, to take it all off the rates, put it all on the rents, and increase the number of people who ought to have a council house and cannot afford one. For those reasons we oppose this Clause violently and we will divide against it.

Mr. Sandys

The hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) asked me a simple question of fact, namely, which was the relevant provision in the 1936 Act governing paragraph (8) of the Eighth Schedule, which is the operative one in this respect. It is Section 129 (1, e). He also asked under what power local authorities can make the rate contribution to housing now in view of the provisions of this Bill. The answer is that as the Bill stood originally local authorities had the duty to make up any deficiency which, of course, was not altogether satisfactory. Now, as a result of the Amendment which has been adopted, they will have the right to pay such sums as they think desirable into the housing revenue account.

Various points were raised about the creation of a reserve account, and also the right of the Exchequer to transfer any surplus there might be from time to time to the Exchequer. The powers referred to arise under Section 130 of the Housing Act, 1936. This provides that with the consent of the Minister the local authority may decide whether any surplus may be applied in whole or in part either by transferring it to the housing repairs account or by carrying it forward in the housing revenue account to the next financial year. In so far as that has not been done, and some remains in the housing revenue account—as it could if the Minister had not agreed to one or other of the two courses—then it is within the rights of the Exchequer to claim that the remaining surplus shall be shared between the local authority and the Exchequer in the proportions in which the Exchequer subsidy and the local authority's rate contribution are being made.

That is the provision in the 1936 Act, but as far as I know the Exchequer has never claimed that right. The issue came before me only the other day, because it arises only once every five years. The decision I gave was that any surpluses should be carried forward in the housing revenue account, which seemed to me the right way of dealing with it under those provisions.

Mr. Mitchison

Then in that respect local authorities may expect no substantially different treatment from what they have had in the past?

Mr. Sandys

The hon. Gentleman the Member for Stoke-on-Trent, South (Mr. Ellis Smith) gave me a quotation from his speech, which I will read to the Committee. He said it might be the case that the surplus was no more at the end of the quinquennium than it is today, but that if the local authority had not contributed to that account—and it might not have done so as a result of the abolition of the rate contribution— and the Exchequer contributions are continued under this Bill, it is possible that the Exchequer could claim that the whole of the surplus should be transferred to the Exchequer"— notwithstanding that it was originally built up at a time when the local authority was contributing a proportion of the subsidies under the now existing law. I am not sure about that. The hon. Gentleman may be on a good point there. It is not our intention that such a situation should arise, so I will look at the point most carefully between now and Report stage.

Mr. Ellis Smith

As I do not believe in claiming credit for myself, may I say that it was our town clerk who pointed this out?

Mr. C. W. Gibson (Clapham)

Assuming that there is a balance, would the local authority concerned be entitled to absorb it in reducing rents? That is what has happened in the past on more than one occasion.

Mr. Sandys

Yes, of course it could use any surpluses or any money in the housing revenue account——

Mr. Gibson

To reduce rents?

Mr. Sandys

Yes, that is where the subsidisation of rents comes from.

Mr. Mitchison

The right hon. Gentleman did not quite answer my question, although I believe he intended to do so. Is it the case that local authorities in this matter can expect not to have any substantially different or worse treatment than that which they had in the past?

Mr. Sandys

If the hon. and learned Gentleman means, have I any intention of raiding their funds, I think he can accept it that we shall not do so. I have no reason to suppose that we intend to adopt any different attitude from that adopted by successive Governments in the past.

The hon. and learned Gentleman made a general case at the end against the Clause, and I understand that he proposes to divide against it.

Mr. Ellis Smith

I did not want to interrupt the right hon. Gentleman when he was replying on the quinquennial issue, because it was better to have his reply, but am I correct in understanding from it that the municipalities will be allowed by good management to build up a reserve balance in any way they desire?

Mr. Sandys

We were dealing with the question of the surplus in the housing revenue account and I said that the hon. Member for Stoke-on-Trent, South might have found a flaw in the Bill in that it might conceivably be argued—although it is a little far-fetched because the Exchequer has never raided these funds—that in fact the Exchequer would have such powers. I think it most unlikely that the Exchequer would use some flaw in the Bill in order not only to claw back what it had given but also to take what the local authority itself had put into the fund. If there is any anxiety on that score and if the point should be a sound one I will see whether it ought to be corrected on Report. I am sure there is no serious ground for anxiety on that score.

The hon. and learned Gentleman suggested that by removing the rate contribution we were deliberately encouraging local authorities to increase rents. What we are doing is giving them discretion to do what they think proper in these matters. Again and again, when I have taken some line on a particular issue, I have been criticised by hon. Members opposite for not trusting the local authorities. I am told always that the local authorities know best and that I can leave them to decide; they are the people on the spot who know the local conditions. But when we give them some discretion, as in this Clause, we are told that the local authorities cannot be trusted and that they will use this new discretion in order to raise rents for everybody to levels beyond those which they can reasonably be expected to pay. Hon. Members cannot have it both ways.

Mr. J. A. Sparks (Acton)

The right hon. Gentleman is having it both ways.

Mr. Sandys

Well, if hon. Members are allowed to have it both ways, then I should be allowed to have it both ways, too.

It seems to me that we are doing something very reasonable in that we are giving local authorities discretion to decide how much money should be put into their housing revenue account to meet their current needs in the light of local circumstances. At the moment, regardless of the cost of housing, of the rents being paid and of the large surplus they may already have in their housing revenue accounts, local authorities have a statutory obligation to go on paying into the housing revenue account a fixed sum each year in respect of each house.

Where there is a large surplus it means that the local authority has very little incentive, except its sense of responsibility, to try to run its housing management on more economic lines. That is not a good position either from the standpoint of the country as a whole or from the standpoint of the ratepayers in the area. The discretion which we are giving to local authorities in the Bill will, I am sure, not be abused. I am equally sure that it will provide a very welcome incentive to local authorities for good management and economy.

Question put, That the Clause, as amended, stand part of the Bill:—

The Committee divided: Ayes 201, Noes 160.

Division No. 100.] AYES [7.43 p.m.
Agnew, Cmdr. P. G. Grosvenor, Lt.-Col. R. C. Molson, A. H. E.
Ashton, H. Gurden, Harold Nabarro, G. D. N.
Atkins, H. E. Harris, Frederic (Croydon, N.W.) Nairn, D. L. S.
Baldock, Lt. Cmdr. J. M. Harris, Reader (Heston) Neave, Airey
Baldwin, A. E. Harvey, Air Cdre. A. V. (Maoclesld) Nicolson, N. (B'n'm'th. E. & Chr'oh)
Balniel, Lord Harvey, Ian (Harrow, E.) Noble, Comdr. A. H. P.
Barber, Anthony Harvey, John (Walthamstow, E.) Nutting, Rt. Hon. Anthony
Barter, John Harvie-Watt, Sir George Oakshott, H. D.
Baxter, Sir Beverley Heald, Rt. Hon. Sir Lionel O'Neill, Hn. Phelim (Co. Antrim, N.)
Beamish, Maj. Tufton Heath, Rt. Hon. E. R. G. Ormsby-Gore, Hon. W. D.
Bell, Philip (Bolton, E.) Hicks-Beach, Maj. W. W. Osborne, C.
Bennett, Dr. Reginald Hill, Rt. Hon. Charles (Luton) Page, R. C.
Bevins, J. R. (Toxteth) Hill, Mrs. E. (Wythenshawe) Panned, N. A. (Kirkdale)
Biggs-Davison, J. A. Hinohingbrooke, Viscount Partridge, E.
Birch, Rt. Hon. Nigel Hirst, Geoffrey Pickthorn, K. W. M.
Bishop, F. P. Holland-Martin, C. J. Pilkington, Capt. R. A.
Black, C. W. Holt, A. F. Pitt, Miss E. M.
Body, R. F. Hope, Lord John Pott, H. P.
Bowen, E. R. (Cardigan) Horobin, Sir Ian Powell, J. Enoch
Boyle, Sir Edward Howard, John (Test) Price, David (Eastleigh)
Brooman-White, R. C. Hudson, Sir Austin (Lewisham, N.) Profumo, J. D.
Bryan, P. Hughes Hallett, Vice-Admiral J. Raikes, Sir Viotor
Buchan-Hepburn, Rt. Hon. P. G. T. Hughes-Young, M. H. C. Rawlinson, Peter
Bullus, Wing Commander E. E. Hulbert, Sir Norman Redmayne, M.
Burden, F. F. A. Hylton-Foster, Sir H. B. H. Renton, D. L. M.
Butler, Rt. Hn. R.A.(Saffron Walden) Iremonger, T. L. Roberts, Sir Peter (Heeley)
Campbell, Sir David Irvine, Bryant Godman (Rye) Robinson, Sir Roland (Blackpool, S.)
Carr, Robert Jenkins, Robert (Dulwich) Roper, Sir Harold
Cary, sir Robert Jennings, J. C. (Burton) Ropner, Col. Sir Leonard
Channon, H. Johnson, Dr. Donald (Carlisle) Russell, R, S.
Clarke, Brig. Terence (Portsmth, W.) Johnson, Eric (Blackley) Sandys, Rt. Hon. D.
Cooper, Sqn. Ldr. Albert Johnson, Howard (Kemptown) Scott-Miller, Cmdr. R.
Cordeaux, Lt.-Col. J. K. Joynson-Hicks, Sir Leonard Sharples, R. C.
Corfield, Capt. F. V. Keegan, D. Shepherd, William
Craddock, Beresford (Spelthorne) Kerby, Capt. H. B. Simon, J. E. S. (Middlesbrough, W.)
Crosthwaite-Eyre, Col. O. E. Kerr, H. W. Smithers, Peter (Winchester)
Cunningham, Knox Kershaw, J. A. Spearman, A. C. M.
Dance, J. C. G. Kirk, P. M. Spence, H. R. (Aberdeen, W.)
Davidson, Viscountess Lancaster, Col. C. G. Stevens, Geoffrey
D'Avigdor-Goldsmid, Sir Henry Leather, E. H. C. Steward, Harold (Stockport, S.)
Deedes, W. F. Leavey, J. A. Storey, S.
Digby, Simon Wingfield Legg-Bourke, Maj. E. A. H. Stuart, Rt. Hon. James (Moray)
Doughty, C. J. A. Legh, Hon. Peter (Petersfield) Summers, G. S. (Aylesbury)
Dugdale, Rt. Hn. Sir T. (Richmond) Lindsay, Hon. James (Devon, N.)
Dunoan, Capt. J. A. L. Lindsay, Martin (Solihull) Sumner, W. D. M. (Orpington)
Duthie, W. S. Linstead, Sir H. N. Teeling, W.
Emmet, Hon. Mrs. Evelyn Lloyd, Maj. Sir Guy (Renfrew, E.) Thompson, Lt.-Cdr. R. (Croydon, S.)
Thorneycroft, Rt. Hon. P.
Errington, Sir Erlo Lloyd-George, Maj. Rt. Hon. G. Thornton-Kemsley, C. N.
Farey-Jones, F. W. Longden, Gilbert Tiley, A. (Bradford, W.)
Fell, A. Lucas, P. B. (Brentford & Chiswick) Touche, Sir Gordon
Finlay, Graeme Lucas-Tooth, Sir Hugh Turner, H. F. L.
Fisher, Nigel Macdonald, Sir Peter Turton, Rt. Hon. R. H.
Fleetwood-Hesketh, R. F. Mackeson, Brig. Sir Harry Vickers, Miss J. H.
Foster, John Mackie, J. H. (Galloway) Vosper, D. F.
Freeth, D. K. McLaughlin, Mrs. P. Wakefield, Edward (Derbyshire, W.)
Galbraith, Hon. T. G. D. Maclay, Rt. Hon. John Walker-Smith, D. C.
Garner-Evans, E. H. Maclean, Fitzroy (Lancaster) Wall, Major Patrick
George, J. C. (Pollok) Macmillan, Rt. Hn. Harold (Bromley) Ward, Hon. George (Woroester)
Godber, J. B. Macpherson, Niall (Dumfries) Whlteiaw, W.S.I. (Penrith & Border)
Comme-Duncan, Col. Sir Alan Maddan, Martin Williams, Paul (Sunderland, S.)
Gough, C. F. H. Maitland, Cdr. J. F.W.(Horncastle) Williams, R. Dudley (Exeter)
Gower, H. R. Mai Hand, Hon. Patrick (Lanark) Wills, G. (Bridgwater)
Graham, Sir Fergus Manningham-Buller, Rt. Hn. Sir R. Wilson, Geoffrey (Truro)
Grant-Ferris, Wg. Cdr. R.(Nantwlch) Marlowe, A. A. H. Woollam, John Viotor
Green, A. Marples, A. E. Yates, William (The Wrekln)
Gresham Cooke, R. Mawny, R. L.
Grimond, J. Maydon, Lt.-Comdr, S. L. C. TELLERS FOR THE AYES:
Grimston, Sir Robert (Westbury) Milllgan, Rt. Hon. W. R. Mr. Studholme and
Colonel J. H. Harrison.
Ainsley, J. W. Anderson, Frank Benson, G.
Albu, A. H. Bacon, Miss Alice Beswick, F.
Allaun, Frank (Salford, E.) Baird, J. Bevan, Rt. Hon. A. (Ebbw Vale)
Allen, Arthur (Bosworth) Bence, C. R. (Dunbartonshire, E.) Blackburn, F.
Allen, Scholefield (Crewe) Benn, Hn. Wedgwood (Bristol, S. E.) Boardman, H.
Bowden, H. W. (Leicester, S.W.) Howell, Denis (All Saints) Price, Philips (Gloucestershire, W.)
Bowles, F. G. Hubbard, T. F. Probert, A. R.
Boyd, T. C. Hughes, Emrys (S. Ayrshire) Proctor, W. T.
Braddock, Mrs. Elizabeth Hunter, A. E. Reeves, J.
Brockway, A. F. Hynd, H. (Accrington) Rhodes, H.
Broughton, Dr. A. D. D. Hynd, J. B. (Attercliffe) Roberts, Albert (Normanton)
Burke, W. A. Irvine, A. J. (Edge Hill) Robinson, Kenneth (St. Pancras, N.)
Burton, Miss F. E. Irving, S. (Dartford) Rogers, George (Kensington, N.)
Butler, Herbert (Hackney, C.) Isaacs, Rt. Hon. G. A. Ross, William
Butler, Mrs. Joyce (Wood Green) Janner, B. Royle, C.
Callaghan, L. J. Jeger, George (Goole) Shinwell, Rt. Hon. E.
Chapman, W. D. Jcger, Mrs. Lena (Holbn & St. Pncs, S.) Short, E. W.
Clunie, J. Jones, David (The Hartlepools) Shurmer, P. L. E.
Collick, P. H. (Birkenhead) Jones, Elwyn (W. Ham, S.) Silverman, Julius (Aston)
Collins, V. J.(Shoreditch & Finsbury) Key, Rt. Hon. C. W. Silverman, Sydney (Nelson)
Corbet, Mrs. Freda Lawson, G. M. Simmons, C. J. (Brierley Hill)
Craddock, George (Bradford, S.) Ledger, R. J. Smith, Ellis (Stoke, S.)
Cronin, J. D. Lee, Frederick (Newton) Snow, J. W.
Dalton, Rt. Hon. H. Lever, Leslie (Ardwick) Sorensen, R. W.
Davies, Ernest (Enfield, E.) Lindgren, G. S. Sparks, J. A.
Davies, Stephen (Merthyr) Mabon, Dr. J. D. Steele, T.
Deer, G. MacColl, J. E. Stewart, Michael (Fulham)
de Freitas, Geoffrey McKay, John (Wallsend) Stokes, Rt. Hon. R- R. (Ipswich)
Dodds, N. N. McLeavy, Frank Stones, W. (Consett)
Ede, Rt. Hon. J. C. Mahon, S. Stross, D r. B arnett (Stoke-on-Trent, C.)
Edwards, Rt. Hon. John (Brighouse) Mann, Mrs. Jean Summerskill, Rt. Hon. E.
Edwards, Robert (Bilston) Marquand, Rt. Hon. H. A. Sylvester, G. 0.
Edwards, W. J. (Stepney) Mellish, R. J. Thomas, lorwerth (Rhondda, W.)
Evans, Albert (Islington S.W.) Mitchison, G. R. Thornton, E.
Fernyhough, E. Moody, A. S. Timmons, J.
Fienburgh, W. Morris, Percy (Swansea, W.) Ungoed-Thomas, Sir Lynn
Fletcher, Eric Morrison, Rt. Hn. Herbert (Lewis'm, S.) Viant, S. P.
Fraser, Thomas (Hamilton) Mort, D. L. Weitzman, D-
Gibson, C. W. Moyle, A. West, D. G.
Grenfell, Rt. Hon. D. R. Mulley, F. W. Wheeldon, W. E.
Grey, C. F. Neal, Harold (Bolsover) White, Mrs. Eirene (E. Flint)
Griffiths, Rt. Hon. James (Llanelly) Oliver, G. H. White, Henry (Derbyshire, N.E.)
Griffiths, William (Exchange) Oram, A. E. Wilkins, W. A.
Hall, Rt. Hn. Glenvil (Colne Valley) Owen, W. J. Willey, Frederick
Hamilton, W. W. Padley, W. E. Williams, David (Neath)
Hannan, W. Paling, Will T. (Dewsbury) Williams, Rev. Llywelyn (Ab'tillery)
Harrison, J. (Nottingham, N.) Palmer, A. M. F. Williams, Rt. Hon. T. (Don Valley)
Hastings, S. Panned, Charles (Leeds, W.) Williams, W. R. (Openshaw)
Hayman, F. H. Parker, J. Wilson, Rt. Hon. Harold (Huyton)
Healey, Denis Parkin, B. T. Winterbottom, Richard
Henderson, Rt. Hn. A. (Rwly Regis) Pa ton, J, Yates, V. (Ladywood)
Hobson, C. R. Pearson, A. Zilliacus, K.
Holman, P. Plummer, Sir Leslie
Houghton, Douglas Price, J. T. (Westhoughton) TELLERS FOR THE NOES:
Mr. Holmes and Mr. J. Taylor.