§ Motion made, and Question Proposed, That this House do now adjourn.—[Mr. Redmayne.]
§ 6.35 p.m.
§ Mr. David Weitzman (Stoke Newington and Hackney, North)
I desire to raise a matter with regard to the sale of requisitioned houses, which is causing the Hackney Borough Council, and probably other councils, considerable concern in connection with housing problems. The Requisitioned Houses and Housing (Amendment) Act came into force on 6th June, 1955. On that date, the Hackney Borough Council held under requisition 1,767 properties, comprising 3,317 housing units. Today, because of the steps which have been taken under Section 4 of the Act, and for other reasons, the number held has been reduced to 1,237, comprising 2,340 housing units.
Under Section 6 of the Act, the Minister of Housing and Local Government gives directions to the council, and he has given the directions for the release of various properties within certain periods or, alternatively, for the making of offers to purchase the houses concerned. The Hackney Borough Council is very anxious in some cases to purchase. It must do so, because of the acute housing problem. But naturally it must be guided by questions of public policy and good administration before it engages in heavy financial commitments. It is of very great importance for the council to know what grant will be made by the Minister.
Under Section 11 (2) of the Act, there is provision for the Minister to contribute to the estimated loss incurred by the local authority in purchasing such houses. The contribution is 75 per cent. of the annual loss "as estimated by the Minister "for a period of 20 years. Note the words, "as estimated by the Minister". Obviously, in arranging its financial commitments, it is of vital importance for the council to know what the grant will be. In the case of Hackney, the field for purchase of satisfactory requisitioned properties for the purposes of the Act has contracted very considerably. The type of house available is 86 often that sort of old house in which three of four families are housed.
It is obviously very necessary that a proper sum should be expended in the adaptation and conversion of the houses to a proper standard. The amount of the contribution depends upon the Minister's estimate. Clearly it is the intention of the Act that the grant given by the Minister should bear some relation to 75 per cent. of the annual deficit, but the deficit is estimated by the Minister.
What guidance does the Ministry provide for a council on this important matter? The Act came into force in June, 1955, seventeen months ago. A circular was issued, No. 39/55, on 31st August, 1955. It said not a word about how the Minister would estimate the deficit or would arrange the basis upon which a grant would be made. All that the circular said was that a further circular on the leasing and purchasing of propertieswill be issued in due course.That statement was made about fourteen months ago.
In a letter, dated 8th June this year, the Ministry wrote to the Town Clerk of Hackney that the Minister was considering a formula that might be used for estimating the amount of the grant to be paid to local authorities, under Section 11 of the Act, in respect of requisitioned houses and houses in substitution therefor, which it purchased and that he note these words—will shortly be consulting local authority associations on the subject.Nearly five months have elapsed since that letter was written, and still there is no guidance showing what a council is to do or upon what basis the grant is to be made.
This delay makes the position very difficult. The Hackney Borough Council has its problem of rehousing the remaining 2,340 licensees. It has to carry out that task within the time available under the Act. The period of five years is rapidly passing. The council, when it is purchasing properties which it requires, or other properties to rehouse licensees, should know definitely what its financial obligations will be. It is obvious that no council can function in a proper manner unless it has that information. Clearly 87 the Ministry has been exceedingly dilatory in the matter.
The situation is made worse by what has happened in actual cases submitted to the Minister. I take one case, about which I put down a Question, and about which the Minister has written to me—74, Alkham Road. The estimated annual deficit by the council in respect of that house was £170 a year. When the Minister was approached for a grant, his determination of the grant was £66 per annum, or 39 per cent. of the estimated net deficit, leaving the remaining 61 per cent., a very considerable sum, to be met from the rates. That could not be said to be related to 75 per cent. of the deficit.
Apparently the Ministry's reason for assessing the grant in that way was that he estimated the net rental of the property as being £130 a year. That means presumably that one could get £130 a year for that property. That figure is 50 per cent. more than the rent currently charged. In fact, the standard rent in respect of that house under the 1955 Act would have been £90 per annum. The same sort of estimates were made with regard to applications for grants in respect of the proposed purchase of other houses.
There was another thing which the Minister took into account and which we say was wrong. The Minister, in making his decision, apparently assessed the properties on the basis that they had about fifty years more of useful life. The houses are nearly eighty years old. On the other hand, council officials take the view that the houses have only about twenty years of useful life.
The council's case is that the Ministry is wrong in its figures for the repair and management of these houses. It says that the figure to be expended on repairs and management cannot be determined by reference to the expenditure on those items for permanent buildings. The council says that the Ministry is wrong in its assessment of the net annual rental. The assessment assumes that the council will increase the rent now paid by the licensees when the council purchases the houses, but in point of fact no similiar requirement is imposed when the properties are retained on licence or when released to an owner. There is no requirement then that the rent ought to be increased. The 88 Ministry suggests that the council ought to increase these rents, although licensees would not be charged that amount of rent.
The manner in which it is suggested that a grant should be made in respect of these houses belies the words of the Section dealing with the estimate of 75 per cent. By his method of estimating, the Minister is placing a very considerable burden upon the rates. It is also very wrong that there should be this long delay through the failure by the Ministry to lay down a definite formula. This has been long promised and is of vital concern to the Hackney Borough Council.
I have put before the Parliamentary Secretary what I suggest are the considerations in regard to this matter, which I am raising as one of extreme importance to Hackney Borough Council and, in all probability, is of importance to many other councils. The town clerk of the borough has endeavoured to obtain satisfaction on behalf of his council, I have raised the matter by Questions in the House and by writing to the Minister, but there has been this long delay and nothing has been done. I urge upon the Minister that this is a matter of urgent importance which should receive urgent attention.
§ 6.50 p.m.
§ Mr. Herbert Butler (Hackney, Central)
I am sure that we are all grateful to my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman) for raising this question, particularly in regard to property situated in his constituency. My hon. Friend the Member for Bethnal Green (Mr. Holman) and myself are in a similar position, as specific cases have been submitted to the Minister with reference to houses in each of our respective boroughs which come within our constituencies.
My hon. and learned Friend referred to the fact that Section 11 (2) of the Act prescribes that the contribution to be made by the Government shall be an amount equal to 75 per cent. of the annual deficit. The amounts are to be estimated by the Minister. As my hon. and learned Friend pointed out, Circular 39/55 issued on 31st August, 1955, stated that a further circular on leasing and purchasing would be issued in due course. It must be emphasised that fourteen months after that circular and seventeen months after the passing of the Act local 89 authorities have not received any indication from the Minister as to the basis on which the subvention will be given by the Government.
Ever since the Act was passed I have been a member of the housing committee of my council. As my hon. and learned Friend pointed out, we have had 5,500 persons on the waiting list, of whom approximately 2,500 are in requisitioned property. When the Minister was discussing the Bill he proffered the idea that hardship imposed on these people who had lost their homes—in the majority of cases through bombing—would be mitigated as the local authority would be able to purchase the houses. Therefore, as reasonable people charged with the responsibility of administering affairs of local government, we considered whether it was possible for us to maintain and provide homes for these people who have suffered so much.
We find, however, that we are like people in a Persian market. Apparently the Ministry officials discuss with the officials of the local authority and, so far as I am aware, there have been three proposals—three formulae, if that is the proper word—three ways of meeting this difficulty. Local authority officials have to go to borough councils which are pressing for the acquisition of these properties and to submit to them a financial statement as to the implications of such purchase—rent loss, etc. The local authority officials have nothing concrete to place before their members in explanation of what is involved in meeting this dire necessity of the people. We are left in the position in which the Ministry will not issue the circular which was promised under the Act.
As was said by my hon. and learned Friend, a letter was sent on 8th June from the Minister to the town clerk—and I am assured that this kind of thing is going on throughout London—stating quite definitely that the Minister was considering a formula, but five months have elapsed and we still have no formula. The House of Commons is not aware of the basis upon which the Government is to assist local authorities and local authorities are not aware of any basis which the Government have in mind. All that is happening is that officials of local authorities are discussing with officials of the Ministry a possible way of getting 90 somewhere near the figure which was promised to them. An analysis of the figures actually produced by officials shows that in some cases only 28 per cent. of the deficit is to be reimbursed to local authorities.
I remember what happened after the 1914–18 war. Wooden huts were erected in parts of our borough and, although they were due to come down when the war ended, they stayed for five or six years. Conservatives—or, as they called themselves, "Progressive Reformers" or "Municipal Reformers," a peculiar bunch—were in control of the local authority. Certain houses were bought on lines similar to what is now proposed. The financial basis was that we could not provide adequate housing at reasonable rents. Over a period of years we managed to dispose of what were called "conversions".
Local authorities are rather chary of embarking on the purchase of property and saddling ratepayers with responsibility without precise knowledge of what the financial implications are. Therefore, as we are anxious to do all we can, irrespective of our views about the responsibility of the Government in the matter, so far as the local authority possesses powers to assist in the housing of the people, we are anxious to use those powers to the fullest extent.
The Minister has fixed an arbitrary date at which these properties have to be released. He has said to the owners of these requisitioned properties, "If you do a certain thing I will do this for you". He has met the requirements of the property owners and given them a sweetener and all sorts of things to make them amenable to accepting tenants. We are asking that local authorities should now be told exactly, in terms which they can understand, what the Minister is going to do for local authorities.
I have no desire to prolong this debate after the momentous announcement made today, but I say to the Parliamentary Secretary that apparently by the calculations being used by officials of his Ministry, these properties are in many cases eighty years old. Apparently, the officials still take the view that they have up to fifty years of useful life. We are continually investigating the condition of existing properties, and our officials say that in their view twenty years, or a 91 maximum of thirty years, is the limit of life for this type of property. Using that possible fifty years of useful life has an effect on the contribution of the Minister which is very detrimental to the people of the Borough of Hackney. I believe the calculation of proposed rents made by the Ministry takes into account a notional figure which has been allowed under the Housing Repairs and Rents Act.
There is, therefore, a great disparity between the figures which we suggest as a rental and those proposed by the Minister. These are specific matters which affect many people, and I hope that the Parliamentary Secretary will be able tonight to give some indication that the members of local authorities, through their officials, will have some concise and clear formula so that when they are considering the purchase of a house to let to people from requisitioned properties, they will know what the cost will be and what the subvention from the Government will be, and will be able to make their decision when in possession of the full facts.
§ 7.1 p.m.
§ Mr. Percy Holman (Bethnal Green)
My hon. and learned Friend, the Member for Stoke Newington and Hackney, North (Mr. Weitzman) and my hon. Friend the Member for Hackney, Central (Mr. H. Butler) have put the case for Hackney admirably and there are very few words which I wish to add. My association with Hackney has been only a recent one—since the last General Election, when a slice of Hackney was added to my own borough of Bethnal Green for Parliamentary purposes. Nevertheless, our problems are much the same and there are requisitioned houses in the three wards of Hackney which I represent which will come under similiar conditions to those mentioned by my hon. Friends.
It is, in my view, especially serious for London and one or two other centres that this matter should be cleared up and that local authorities should know exactly where they stand. My hon. Friend the Member for Hackney, Central said that the deficiency as calculated by the Minister appears to be extremely variable, with the result that instead of the grant being 75 per cent. of the deficiency as estimated by the local authority, it 92 varies from about 28 per cent. to, in a few exceptional cases, 80 per cent.
I must tell the Minister quite definitely that he and his officials have a much lower standard of housing for this country in the future than have the great majority of the people. What was considered excellent fifty years ago we now call substandard, when we are being polite. Where families share such facilities as bathrooms and lavatories the accommodation is today called substandard, although when we are speaking more colloquially we use much stronger language about it.
I should have thought that the Ministry would also have taken the view that the housing standards which have been set since the war should become general standards in a very much shorter period than fifty years. Many of these old houses contain two, three or four families, who have to share these facilities. They need to be practically gutted to modernise them, even if the outside walls are fit to last for fifty years.
The assessment of the deficit must vary considerably between the Ministry, which is prepared to face substandard properties for as long as fifty years ahead, and local authorities, who give it a much more limited life. The legislation has been passed and we have now only about three and a half years before all these properties have to be derequisitioned.
The extent of the slum clearance in the London area makes it very difficult for any local authority to find alternative accommodation for the families from requisitioned properties. Slum clearance will take practically all the properties which local authorities will be able to build in the next few years and all the vacancies, but within that time a considerable number of these requisitioned houses must be purchased. Local authorities must have a formula so that they may know what the cost to the rates will be in deciding their policy in this matter.
I appeal to the Minister for rapidity of action now that over a quarter of the limited period during which derequisitioning is to take place has already elapsed. Time is getting short and alternative accommodation is extremely difficult to provide. I appeal to him at least to make the Ministry's intentions absolutely clear to the local authorities—to Hackney 93 and Bethnal Green, in particular, and to other London boroughs who face a similar situation. I urge him to brook no further delay.
§ 7.7 p.m.
§ Mr. Victor Collins (Shoreditch and Finsbury)
My hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman), my hon. Friend the Member for Hackney, North (Mr. H. Butler), my hon. Friend the Member for Bethnal Green (Mr. Holman) have done a very considerable service in raising this matter, which occurs similarly in many London boroughs. Each of them represents a different section of the Borough of Hackney, but the problems of which they have spoken arise in those London boroughs nearest to Central London which have a large amount of substandard property and, generally speaking, a very considerable waiting list. They certainly apply in the two boroughs of Shoreditch and Finsbury, which I represent, and both of which are immediately adjacent to the City of London.
The Parliamentary Secretary will recall that when we were discussing the Requisitioned Houses and Housing (Amendment) Act, both in Committee and on the Floor of the House, many of us expressed very strong misgivings to his right hon. Friend on this very point. We referred to the extreme housing shortage and my hon. Friends mentioned that in the Borough of Hackney there was a waiting list of 5,000. In the two boroughs which I represent there is a total waiting list of 7,000. We had 22,000 dwellings before the war and have built more than 4,000 new dwellings since the war, but now have only 21,000 dwellings. The Minister will, therefore, appreciate how acute this problem is and that anything which prevents our making the utmost possible use of even a few hundred dwellings is adding to our difficulties.
His right hon. Friend assured us that in many ways our fears were groundless. He told us that in various ways the present requisitioned properties would continue to be used, either by the present tenants under private landlords who took them over, or in other ways, including people remaining as council tenants after requisitioned houses had been bought from the present owners. I remember 94 asking in Committee how long it would be before he reached a decision and before he informed hon. Members and local authorities what his intentions were. He said, quite honestly, that it would be some time. He said we should have to begin to see how things worked out before local authorities definitely received instructions as to what houses they could buy and how they could buy them.
The Minister will appreciate that however much local authorities may object to certain legislation, once an Act is in law which affects them they do their utmost, he will agree, honourably to carry it out in the interests of the people they represent. That is the case with the local authorities in the areas represented by my three hon. Friends and myself and with other local authorities in London. They have done their best with what has been and what is a difficult and complicated task. They have had to have surveys, they have had to write to the owners, they have had to make the offer for the house in question, and eventually they have obtained a list of houses which for one reason or another they think they can and should purchase.
The questions then arise, what are to be the conditions governing purchase? What will be the cost to the ratepayers? Immediately we come back to the point, what part of the cost will be borne by the Exchequer? In other words, what is the proper contribution of the Government to the cost, which has been put at a suggested figure of 75 per cent.?
My hon. Friends have referred to the circular of August, 1955–14 or 15 months ago—paragraph 14 of which stated that a further circular on leasing and purchasing properties would be issued "in due course." What is "due course", when the end date is 1960, by which time all these things have to be completed? Will the Parliamentary Secretary say that in the event of any further delay being occasioned he will ask his right hon. Friend to consider extending the date beyond 1960, because of all this delay for which he himself has been responsible? It is most urgent that the Minister should state his proposals at the earliest possible date.
Details have been given about the Borough of Hackney, and I have some details about one of my boroughs—Shoreditch. At the latest available date, 95 there were 411 properties still under requisition there. Of that number, it is estimated that 159 will be difficult to deal with unless the council is able to make offers to the owners for purchase. That, of course, is not 159 dwellings as separate units of accommodation, but 159 properties. The actual number of families concerned would be considerably more than that.
The council would like to buy the majority of these houses, provided that they could get some financial assistance. About one-third of these properties are in good repair, and the average annual cost of maintenance is likely to be normal. It is estimated that a further one-sixth are worth purchasing and maintaining, at an expenditure of £200 to £500 per house on structural repairs.
That is another point of considerable importance to local authorities, as influencing their decision to buy. Will the Minister say whether the cost of the structural repairs will be included as part of the purchase price, and taken into account when calculating the local authority loss? The hon. Gentleman will appreciate that in regard to substandard houses of that kind that will be an extremely important factor in determining whether or not the local authorities can buy.
The remainder of the properties under requisition are very old, and with extremely heavy maintenance costs, due principally to the very age of the proper-lies. The Minister will appreciate that I and, to a large extent, my hon. Friends, represent constituencies where, apart from local authority dwellings, an 80-year-old dwelling is a young dwelling. That is a point that has to be borne in mind—that when we are talking about properties to purchase, the best of them are at least eighty years old, and some of those we are considering having to buy are older still. There will, therefore, be an extremely heavy maintenance cost for some of this property. It is estimated that on such property the expenditure which a council will incur on repairing and maintaining will exceed by many times the statutory repairs deduction.
It is clear that it would be to the benefit both of the Government and the local authority if financial assistance could be given by the Government to the local authority to enable the majority of these 96 requisitioned houses to be purchased. If they are not, then the loss of accommodation is one which we just cannot face. Indeed, in my submission, it would be a breach of the Minister's undertaking, given at the time of the discussion of the Act, if any difficulties were placed in the way of local authorities so they could not effectively acquire these houses.
If the Minister does come forth with his proposals, and if they are reasonable proposals, within our understanding of what he said in Committee, it will, to some extent, alleviate the additional difficulties in which the local authorities are likely to find themselves in 1960, when the period of the requisitioning of houses ends.
My hon. Friends have given examples of the method of calculation of annual deficit used by the Minister. The hon. Gentleman will appreciate that that is a matter of very vital concern. I am not in a position to quote an example comparable to that quoted, where the recovery was only about 28 per cent., but it is the case that unless there is a difference in the Minister's final proposals as compared with the interpretations of them which have so far come out in discussions with officials, the amount which would be recovered by the local authorities would be nothing like the 75 per cent. stated.
The maximum annual deficit that the Minister will recognise is £100 per dwelling, in which case the contribution from the Minister is likely to be not more than a maximum of £75 per annum per dwelling, which will continue on a purchased house for a period of twenty years. Local authorities would, on the whole, regard this as satisfactory, but the vitally important thing is this question of the calculation.
My last point concerns, again, the question of delay. I tell the hon. Gentleman that any further delay would be quite unconscionable, and grossly unfair to local authorities who are doing their utmost to carry out what has been enacted. Indeed, on the part of some local authorities there has been a suspicion, which I hope the Parliamentary Secretary will dispel both by words and action, that the circular is being held up until the Minister has put through legislation to raise rents.
97 We heard today in the Gracious Speech that a proposal of that kind was to come before us. Whatever the proposals are, we know that it will take a long time for them to be enacted, but the point is that we are now discussing this Act, which was passed in 1955. Promises were made, and understandings were given. We are asking tonight that they be fulfilled and that the Minister will give an assurance that the circular of instructions on this point to local authorities will be sent out within a very few days or a week or so.
§ 7.17 p.m.
§ The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. Enoch Powell)
The hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) gave the House, at the outset of his speech, some figures of the numbers of requisitioned houses in Hackney in 1955 and at the latest available date, which show a reduction of approximately one-third during about one-quarter of the time available before 31st March, 1960. I mention that because it does underline how local authorities of all political complexions have, since the passing of the Requisitioned Houses and Housing (Amendment) Act of last year, co-operated with the Ministry in an endeavour to wind up requisitioning in the period prescribed by Parliament.
The experience of Hackney is roughly parallel with that of authorities generally which have requisitioned properties. The figures which I have in front of me show that of nearly 90,000 dwellings which were requisitioned when the Act came into force, there are now left only about 58,000. Therefore, in this first quarter of the time, it cannot be denied that local authorities, which have got down to this matter with really great attention—and it is a detailed matter, which has called for a lot of work—have made very great inroads into the number of requisitioned houses existing in June, 1955.
Undoubtedly they will not be able to comply with the requirement placed upon them by Parliament without resorting in varying degrees to the purchase of some of these properties or, as the Act provides, of properties in lieu, as one of the instruments available to them. In this initial period, however, it was desirable—I think we should all be agreed 98 about this—to see how far one was getting by other means. If the owner of a property was prepared to accept the-licensee as a sitting tenant, that was a very simple and satisfactory solution, and it was clearly desirable that in as many cases as possible where that could be arranged it should be arranged. Therefore, initially there was no urgency—indeed, there was every reason to the contrary—for considering purchase on any considerable scale.
Local authorities, of course, have had to purchase where they decided so to exercise their option under Section 6 of the Act, namely, where the Minister gave a direction by reason of the hardship suffered by the owner, and where the local authority then exercised its option to purchase. In those cases, it was clearly essential that the local authority should know immediately what would be the Minister's interpretation of Section 11, which the hon. and learned Gentleman explained to the House. In those cases the Department have furnished to the local authorities, so far as I am aware without delay, the calculations upon which the Minister proposed to base his grant.
I will come now to the important, or at any rate the controversial elements of these calculations, and then pass to the other question which has been raised in this debate, that of some general guidance which will be relevant to purchase by local authorities outside the ambit of Section 6.
The three factors which have been mentioned in this debate and which I would agree are the acid factors in the assessment of the deficit, of which the Exchequer bears 75 per cent., are, first, the rent which it is assumed that the local authority could obtain; secondly, the cost of maintenance and management; thirdly, the assessment of the life of the dwelling, which will clearly determine the annual loan charges. May I take those in order?
First, as regards rent, the principle which the Minister has followed is to assume that the local authority would obtain the rent which a good landlord under contemporary conditions would be able to obtain, that is to say, a landlord whose property was in such a condition and who had spent such sums on repair that he could qualify under the terms of the 1954 Act for the repairs increase. It 99 has been on that basis that the local authority has been credited, as part of its incomings, with what would have been the rent obtainable by a private landlord who had the repairs increase under the 1954 Act.
I would emphasise that that does not imply that a local authority must charge that rent—a local authority is entitled to charge less or more; it has full discretion in the management of its houses—nor that the Minister supposes that in each individual case that will be the actual rent which will be charged, any more than, in the case of a council house provided with subsidy, it is the residual rent which the calculations produce in each particular case that is charged. Where a house is released under Section 4, Parliament had to provide some means by which local authorities could, in necessitous cases, reduce the sums actually paid by the tenant; but here they have the matter in their own hands. So, as regards rent, the calculation is based on the sum which a private landlord in comparable circumstances would be entitled under the law to charge.
The second factor which I mentioned is the cost of maintenance and management. Here the assumption normally made is that upon which the 1954 Act was based. I think that this aspect of the 1954 Act was not in fact controversial, namely, that current costs of maintenance and management, taking one year with another, were probably in the region of three times the statutory repairs deduction. That is the assumption made here in calculating the deficit, with the single modification that the rather higher statutory reductions which prevail in the County of London have been applied to all requisitioned houses, whether inside the county or not.
The hon. Member for Shoreditch and Finsbury (Mr. Collins) asked me about large sums which may have to be spent by a local authority upon putting the property in repair. Of course, we must remember that these houses have been managed by the local authorities in most cases for a matter of fifteen or sixteen years, and they have known that they would have to return the property either with terminal compensation or in a good state of repair. They have been managing these properties and have been responsible 100 for maintaining them all those years. It is, therefore, reasonable to continue the assumption of a roughly level annual sum which will go on being paid in order to maintain them in a habitable condition.
§ Mr. Weitzman
Does the hon. Gentleman mean that no allowance is to be made for conversion and adaptation? Does he not appreciate that local borough councils have had tenants as licensees and a certain amount has been charged? He is now putting forward the standard of the good landlord in taking a proper rent for the house in good condition. Surely we must allow an adequate sum for conversion and adaptation.
§ Mr. Powell
The point made by the hon. Member for Shoreditch and Finsbury which I was answering—and I noted his words very carefully—was restricted to repair and did not refer to adaptation and conversion.
§ Mr. Collins
That is not correct. I referred to structural alterations, and I would ask the Minister to realise that local authorities have been under a limit on what they could spend on these houses. That is the first point. The second is that some of those houses are extremely old, and apart from this Act which we are discussing, the local authorities would not buy those houses unless they were going to spend money on structural repairs, because the houses would not last the minimum of twenty years which they would have to last to be anything like an economic proposition.
§ Mr. Powell
So far as we are concerned with repairs—and we must carefully distinguish between repairs and structural alterations and improvements—I say that it is fair, considering that the local authority has had the administration of these houses for many years, to assume that over the years, both before and after the purchase, the necessary sums will be spent on keeping the properties in a fit state, and that those sums will be of the order which, after very considerable investigation, was taken as the average cost of maintenance for the purposes of the 1954 Act.
The third point is the assessed useful life of the dwelling acquired. The hon. and learned Gentleman, and I think one of his hon. Friends, referred to a figure of 101 fifty years as the assumed life. I am sure this is a misunderstanding; for I am informed that the loan charges are calculated upon a period of twenty years over which the capital sum will be repaid. That is to say that the lieftime for these properties does not exceed twenty years. I am assured that that is the basis which is used in these calculations.
§ Mr. H. Butler
I can assure the hon. Gentleman that the information from the people who have been negotiating with his officers definitely shows that in the computation and calculations that are made an assumption of fifty years' life is introduced. How far it affects the calculations I am not competent to say, because I do not know the intricate discussions which have been gone through with the Ministry's officials, but we are assured that the extent of the life of the property makes a considerable difference in the ultimate calculation.
§ Mr. Powell
I will certainly look into anything on that which the hon. Member likes to send me. But my advice is, as I informed the hon. Member for Stoke Newington and Hackney, North in my letter to him of 30th May, thatthe outgoings for purchase are the amount of the annual loan charges needed to repay the cost of purchase over twenty years.If I may now turn from these interim calculations which have had to be made where local authorities have got to go ahead and purchase under Section 6, to the question of general guidance, this general guidance was, it is true, forecast in the initial circular of August, 1955, though, as I have explained, there was no urgency about the matter, since in this early period one was concentrating upon other methods of disposing of requisitioned houses. But it will be clear that the salient factor in the finances of this operation—certainly the salient factor in assessing the amount of Exchequer assistance to the local authority—is the rent assumed in the calculation as that which the local authority will receive.
As the hon. Member for Shoreditch and Finsbury reminded the House, the Gracious Speech, the reply to which we have just ceased debating, indicates that the Government intend to introduce legislation which will alter—I can go no further at this moment—the rent which in certain circumstances a good landlord—the hypothetical good landlord—might 102 expect to receive, and thus the basis of this factor in the calculation.
It would clearly have been wrong to give local authorities guidance based upon a state of the law which was likely to be superseded in the near future. But I would like to make this clear: my right hon. Friend fully recognises that local authorities with a requisitioned housing problem will now be wanting to make their plans, and to see the financial implications of those plans, so far as purchase is a method which they are going to use between now and 1960. He recognises their anxiety to have the financial as well as the physical side of the problem in front of them as soon as possible so that they can frame their intentions; and he will certainly lose no time in providing local authorities, against the background of the new legislation, with the necessary guidance on the financial calculations.
§ Mr. Weitzman
I wish to raise a question which I put before. Will the expense of conversion and adaptation be taken into account? As I understand, it was not taken into account in the specific cases which were brought to the attention of the Ministry. Have they been taken into account in the past and will they be taken into account in the future?
§ Mr. Collins
Before the hon. Gentleman answers that point, may I ask him this question? Does what he has just said mean that local authorities will not get general guidance until his right hon. Friend has announced to the House his new proposals with respect to rents?
§ Mr. Powell
Clearly the general guidance must be based upon the state of the law as it will obtain over the next three or four years. But I would repeat that the importance of as early guidance as possible to local authorities on this matter is fully appreciated by my right hon. Friend.
On the point relating to the cost of conversions, I shall be glad to look into any particular case and let the hon. and learned Member have an answer.
§ Mr. Butler
Surely the point that we are concerned with is this. The Ministry's officials have been discussing with officials of local authorities certain formulae for dealing with these matters. It is no answer to say that because legislation is coming forward he cannot tell 103 the House what was the formula. What we are asking is for the formula to be stated, so that local authorities may have it before them.
§ Mr. Powell
Wherever local authorities so far have required to know what would be the financial implications of purchasing a particular house, there has been no delay and no difficulty in the Department furnishing the local authority with the proposed basis and the proposed calculations. I have pointed out that we are now, and only now, entering the phase in which local authorities require to consider their plans generally—not for purchasing individual houses but for using purchase as one of the methods of finally liquidating the problem of requisitioned houses.
I reaffirm that my right hon. Friend realises that in that phase they will be anxious to have the necessary financial information as soon as possible and that, consistent with it being based upon the new state of the law, he is anxious that they should have it as soon as practicable.
§ Mr. Weitzman
I should like to put one further point. We are not allowed to 104 anticipate legislation or to discuss it now, but is the Parliamentary Secretary aware that there have been at least three different formulae mentioned by the officials in dealing with this matter with borough council officials? All of them have been entirely unsatisfactory and no account has been taken in them of the points that I have raised. Will the hon. Gentleman look into the matter and see that more attention is given to it and that the cases are dealt with on an expeditious basis?
§ Mr. Powell
I would only say that the criterion of the rent which a good landlord of the property would obtain as the law stands is a factor common to all these calculations, and that therefore, while that was likely to be changed, it was impracticable and undesirable for general guidance to be given. But the withholding of general guidance so far has not in any way prejudiced the operations of the local authorities.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-three minutes to Eight o'clock.