HC Deb 31 July 1956 vol 557 cc1161-6
The Secretary of State for Scotland (Mr. James Stuart)

With your permission, Sir, and that of the House, I should like to make a statement on housing subsidies in Scotland.

As the House is aware, a review of the housing subsidies payable in Scotland has been taking place, in consultation with the associations of local authorities and I am now able to announce the changes which the Government propose to make. Relevant facts were assembled by a Working Party of Departmental and local authority officials set up at my first meeting with the associations last April and its report is available in the Vote Office today.

It should be borne in mind that, after May, 1957, local authorities will cease to be liable for owners' rates in respect of their own houses, and that the subsidies of over £9 million a year at present being paid for these contain £1,400,000 a year for owners' rates. As it is not proposed to disturb these earlier subsidies, this amount should be taken into account in assessing the level of the new subsidies.

It has already been announced as the Government's policy that, while no one should be asked to pay more rent than he can afford, subsidies ought not to be given to those who are not in need. Many tenants are, however, being subsidised at present to a greater extent than is necessary. If the rents of existing houses were raised to a reasonable level, the deficits on the housing accounts of local authorities would disappear and their rate burdens would be reduced. Further, the existing pool of Exchequer subsidies, with a fair contribution from the rates, would provide a substantial margin to help finance the future building programme.

Taking these factors into account, the Government consider that local authorities could carry on building with a reduced subsidy for new houses of £24 per house a year for sixty years. This flat rate subsidy would take the place of the present three-tier subsidy structure for houses of different sizes.

I promised last year that in considering the new subsidies the Government would have regard to special Scottish needs. The Working Party concludes that in Scotland as a whole the need for houses for homeless families and to relieve overcrowding is greater than the need for houses to replace unfit houses. I accept this view and, accordingly, the basic subsidy of £24 will be made available for all approved housing needs.

I come now to some special needs which justify rates of subsidy greater than the basic £24.

The first is for houses required to accommodate overspill. For these houses the proposed rate is £42 a year for sixty years. This, along with a reasonable contribution from the sending authority, and the payment of reasonable rents, should avoid any undue burden on the housing account of the receiving authority. Next, we think it reasonable to pay a special rate where a local authority builds a substantial number of houses to meet the needs of incoming industry. To encourage this it is proposed, in approved cases, that the rate of subsidy should be not £24 but £30 a year.

Thirdly, many local authorities will have to build multi-storey flats, and the Government are prepared to take a fair share of the extra burden. They propose that for these houses the basic subsidy of £24 should be paid, with an additional contribution calculated, in each case, to cover two-thirds of the amount by which the tender costs exceed the tender costs of ordinary houses at the time. This additional contribution will apply normally to buildings of eight storeys and over, but also, where necessary, to buildings of six and seven storeys.

I propose that the new rates of subsidy should be payable for houses covered by tenders received in my Department after today. Houses in tenders received up to today, which receive approval, will qualify for the present rates of subsidy.

The Government have decided that the existing statutory obligations of local authorities to contribute fixed contributions from the rates should be abolished. This will give the authorities greater freedom than before in considering in what proportions the housing burden should be borne by tenants and by the ratepayers. The new subsidy proposals assume, however, that local authorities will still contribute a fair share from the rates, amounting to about one-third of the Exchequer contributions.

There may be a few authorities who will be able to show that the reduced rates of subsidy will impose an undue financial burden on the rates. In approved cases of this kind, the Scottish Special Housing Association will be authorised, within the limits of their annual programmes, to assist these authorities by building a number of the houses required in their districts. The Association will also be authorised, within the same limits, to build houses to take "overspill".

No change is proposed in the existing arrangements for the payment of additional assistance in respect of houses built by local authorities in remote areas or for the agricultural population. The Government will introduce legislation to provide for these changes as soon as possible. Hon. Members will recollect that I have also indicated my intention of introducing town development legislation. I intend this legislation to be introduced in the same Bill as that to give effect to the revision of subsidies. Discussions with the local authority associations about town development proposals will begin shortly.

Mr. T. Fraser

The Secretary of State will appreciate that he has made a statement of grave importance to Scotland. Does he appreciate, when he talks about the need to increase the rents of existing houses to make a contribution towards the financing of future programmes, that local authorities will require to increase the rents of existing houses by about 150 per cent. to 200 per cent. before they remove the deficits on such houses?

Will he also bear in mind that recent legislation, which removes the burden of owners' rates from local authorities, has transferred that burden to the tenants, so that tenants have a much heavier burden to carry? Does he appreciate that although he has said that the local authorities might make a contribution of about one-third of the Exchequer contribution, if the Exchequer makes a contribution of only £24 local authorities are likely to have to make a contribution of £50 or £60 a year, even charging a rent increase of £35 or £40 a year? Since the Government's policy is said to be one of stabilising costs and prices, will he tell us what contribution this proposal makes to that policy?

Finally, what were the reactions of local authorities towards the proposals which he has put before us today?

Mr. Stuart

The average general rent contemplated in working out these new proposals is about 15s. a week, which is not unduly high in relation to the present average weekly wage or salary. To carry out this policy we feel that some relief is necessary to the general taxpayer, and that reasonable rents should be paid. It is a question how the burden is divided between those who pay the rent, the ratepayer and the taxpayer, and the 15s. a week to which I have referred is about 7½ per cent. of the average weekly wage payment.

The hon. Member asked how we thought that this would assist in keeping down prices. All I can say in reply is that it is the general policy of the Government that subsidies should not be paid where they are not necessary, and that where people cannot afford to pay the rent special provision must be made.

Mr. Fraser

Will the Secretary of State bear in mind that when tenants are paying 15s. a week in rent they are probably paying another 15s. a week in rates? It is the total paid for housing accommodation which must be taken into account. I should like to know what were the reactions of local authorities to these proposals.

Mr. Stuart

I did not anticipate that local authorities would welcome these proposals. The convention did not accept them; indeed, it felt that higher rates were necessary. The County Councils' Association would have been content with the present rate of subsidy, and the cities, with the exception of Edinburgh, have not commented up to date. I think that that answers that question. As for the additional burden of rates, it is a fact that rent rebate schemes should, and no doubt will, be operated in cases where they are necessary.

Mr. McInnes

Does the right hon. Gentleman realise that these drastic reductions in Scottish housing subsidies, from an average of £42 to £24, with a corresponding reduction in the local rate of contribution, will entail an average increase in rental of £25 to £30 a year for 500,000 municipal tenants in Scotland? Does not that make nonsense of the Government's policy of wage restraint? How can the Secretary of State possibly expect the co-operation of working-class people in the freezing of wage demands when, at the same time, he imposes such a tremendous burden upon the average family budget?

Mr. Stuart

The fact is that wage rates have gone ahead of the rents charged. In other countries—America, and elsewhere—it will be found that the average contribution to rents from weekly wage earnings is higher than what is contemplated here, which works out at about 7½ per cent. of the average weekly wage.

Mrs. Mann

The right hon. Gentleman mentioned that the new subsidy would be £24, and stated that the local government subsidy would probably be about one-third. Is it his intention to take steps to limit the local contribution to one-third, or may local authorities contribute as much as they like?

Mr. Stuart

Under the new proposals it is a matter entirely for local authorities.

Several Hon. Members rose

Mr. Speaker

There is to be legislation upon this matter. The debate should go on then, and not now.