HC Deb 18 April 1957 vol 568 cc2182-91

3.56 p.m.

Dr. Barnett Stross (Stoke-on-Trent, Central)

I consider myself fortunate to have the opportunity of raising a matter of great importance, namely, housing construction in Stoke-on-Trent. Will the Minister allow me to thank him for his courtesy in coming to the House, and to assure him that my colleagues and myself, representing the three divisions in Stoke-on-Trent, appreciate very deeply his courtesy in coming here himself, whatever the reply he may give? We look upon it as evidence of the seriousness of the topic I am raising.

My colleagues and I have been deeply disturbed for some time about the effects of recent changes in Government policy, particularly of the high rate of interest which has prevailed in the open money market and the removal of the subsidy from housing except for slum clearance. I know that this applies to every authority, but Stoke-on-Trent and North Staffordshire are in a worse plight than many other areas. It has been the policy of the Stoke-on-Trent local authority to build municipal houses as quickly and cheaply as possible and to let them at rents as low as possible, for a number of reasons which I will give briefly.

Other cities, like Coventry, have suffered very seriously from bombs and blast, but Stoke-on-Trent for a very long period has suffered from blight which has caused the steady corrosion of the houses by gross atmospheric pollution. This has brought about the rapid decay of the very fabric of our homes. The other reason is mining subsidence, which affects almost every dwelling in the city. Within the bounds of the city we have very poor land on which to build homes. The Minister knows that we are put to the expense of providing a concrete raft for each and every house that we build so that it shall be as stable as possible.

I would remind the Minister that our main industry, pottery, has never been very buoyant and has always been vulnerable. Wage rates have not been so high as in many other industries. We have known in the past, and unfortunately we know again today, unemployment and short-time working. Many thousands of our workers are on short time. We have a high birthrate. Our children are our greatest asset, and we do our best to educate and care for them. We therefore regard the housing problem as of tremendous importance, and I am sure that the Minister agrees with that.

Even at the time of the last Census it was noted that 14 per cent, of the houses in the city had no piped water, 12 per cent. had no kitchen sink, 14 per cent. had no water closet and 59 per cent. had no fixed bath. When the war was over, an opportunity came to us to build again. The local authority seized its chance as best it could. Some of the figures of recent years are very heartening.

In 1951, we built for letting 1,201 houses; in 1952, 1,407; in 1953, 2,412; in 1954, 2,502; and in the last two years approximately 2,000 houses in each year. As the Minister will probably agree, this places us virtually at the top of the league in house construction, in that we were building, per thousand of the population, more houses than, perhaps, any other large local authority. We were doing very well in the speed of construction of our municipal houses, and our prices were low, perhaps lower than almost anywhere else in the country. Even today, the price of a two-bedroomed house is £1,600 and that of a three-bedroomed house is £1,750, including services and land.

As long as interest rates were reasonable and we could approach the Public Works Loan Board and obtain our money at, for example, 3 per cent., we could carry on this work with every expectation of continuing with it. Even so, the Minister will know that for a city that is not very well-to-do, we had to carry on the rates a substantial burden. For example, to take the year ended 31st March, 1954, our total rate contribution was £92,000. At the end of that year, the total Capital expenditure on all schemes was £17 million, and out of that our net debt on all schemes was £15½ million at that time. We knew that, with redemption over sixty years at the rates of interest that ruled then, we must find 1s. 8½d. for every £100 that we owed. I am not a very good mathematician, but I have tried to work out what that means on the £.15½ million debt, and it is approximately £690,000 for the year. In that year, the Government were able to assist us with a total subsidy of £255,000.

It is as a result of the two factors I have mentioned—the increase in the rate of interest, and the fact that we have been driven into the open market to borrow our money at 6 per cent., instead of receiving it as we used to do at 3 per cent.—and also because of the loss of the subsidy except for houses which are built following slum clearance, that we have had to cut our cloth to such an extent that we shall be without a coat or waistcoat. Our hopes have been and our plans were to get rid of all the slums in ten years.

We have 12,000 houses which we wished to abolish, and we considered that we would abolish 1,200 slum houses a year, and, for overcrowding and other purposes, we would build another 1,000 houses per year. That was our plan, but, in effect, after the most careful deliberation—and if ever the term "an agonising reappraisal" were true, it is in this case—the local authority have come to the conclusion that all it can build in the next year will be 800 houses, and these for slum clearance only. This means that we cannot build in the next year for other purposes.

The Minister will be interested to know that, even building about 800 houses and receiving the full subsidy, as we shall on each one, there will be a loss to the housing department of the city of £30,000 on that limited programme alone. He will also understand what a loss there would be if we built 1,200 houses for slum clearance and another 1,000 houses for other purposes. This £30,000 loss means that from 1st April, 1959, every tenant of every municipal house in the city, and I think that we have about 23,000 houses which are municipally owned, will have to pay an extra 6d. per week on the rent in order to cover this. That is for one year's building of 800 houses with the full subsidy. That, of course, is not the only increase in rent which we have had to face, nor will it be the only increase in the future, for increases must continue as long as interest rates are as high as at present.

The alternative for us has been stated by the Minister, namely, that we should increase the rents of the houses we have already built. He has pointed out to us that our rents are very low compared with the rest of the country. They are lower than in the rest of the country for two reasons. One reason is that we built more cheaply and tried to pass on the benefit. The other reason is that we do not believe the majority of our tenants can pay appreciably higher rents without their families suffering. If we are to, go on building, therefore, we must either raise rents to everyone—and to build appreciably they must be raised steeply—or we must have some form of differential rents scheme, against which the housing committee in Stoke-on-Trent has set its face, for reasons which the Minister knows as well as I do.

There is a great variation of view in the country about that method of enabling citizens to bear each other's burdens. We are not anxious in Stoke-on-Trent to set up a new department which would have to go round asking people what they could pay and what are the circumstances in which they live. Nor did we think it good to separate neighbour from neighbour in that way. I must remind the Minister that excessive rents, if rents become excessive, may bring about ill-health and premature death from malnutrition. I do not have to quote the work of Dr. MCGonigal in Stockton-on-Tees. In addition, many people are living on housing estates and have travelling expenses which are not borne by many others who live near their work.

A three-bedroomed house in Stoke-on-Trent costs us at the moment £1,750. If there is no subsidy and if interest rates are 5½ per cent., we must let them at an economic rent of £2 4s. 5d. as against the present 17s. 11d. In the open market at the moment we are not paying 5½ per cent. but 6 per cent. Some of the loans we raised in the past were on low rates of interest. They must now be repaid and we must go into the market at much higher rates. That is a further burden on a poor city. The Minister will agree that at £1,750, if we are to borrow money at 6 per cent. instead of 3 per cent., that alone means virtually an extra 20s. a week on the rent, actually £51 a year extra. It is £53 at 3 per cent. and £104 at 6 per cent., and that takes no account of subsidy.

I gave notice to the Private Secretary to the Minister that I would say a word about brick production and, in the two or three minutes left to me, I shall do so.

His Parliamentary Secretary wrote to my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) earlier this month, stating that local stocks of bricks had risen but that the rise was not very high, and that for the Berry Hill Works it represented only two or three weeks' production. I will give the Minister the real facts. The total increase in stocks of bricks manufactured over the five months, October to February, inclusive, for Region No. 9 of the Midlands area was 30½ million. Secondly, the Berry Hill Works in March had three and a half weeks' production in stock; the Clanway Works had four weeks' production in stock and the New Haden Works, ten weeks' production in stock. Production this year by these works has been cut by 130,000 bricks per week over the past thirteen weeks, which is a very substantial reduction. Another point is that two works have closed down altogether.

This has meant that our housing programme has been crippled and that we are suffering unemployment and short-time working not only in the brick-making but in the building industry. We are deeply disturbed, and I am therefore happy to have had this opportunity to tell the Minister that we should like him to use all his influence with his Cabinet colleagues to see that authorities like Stoke-on-Trent should be able, as soon as possible, to borrow their money for purposes such as these not at 5½ per cent. or 6 per cent. but at the former 3 per cent.

4.12 p.m.

The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke)

It is entirely right that an opportunity should be taken upon an Adjournment day such as this to discuss the housing problems of a great city. I very much appreciate what the hon. Member for Stoke-on-Trent, Central (Dr. Stross) said about my presence here. I regard the housing problems of every great city, including Stoke, as among my major responsibilities, and I do not think that he or any of my political opponents have ever charged me with being callous or hard-hearted towards the human side of these extremely serious problems.

The position that he has put to me—and I have no quarrel with his figures about the course of house-building in Stoke—is that the Stoke City Council, on account of the combination of high interest rates and the ending of the general needs subsidy, is no longer able to carry on with house building at anything like its previous rate of about 2,000 houses a year. I recognise that the run-down has already started. According to figures that I have, on 31st March, 1956, the council had 1,700 houses under construction and a further 1,200 in tenders which had been approved, although the work had not yet started. The present figures are very different. On 31st March, 1957, the number under construction had fallen to 900—that is a further fall since the figure of 1,300 which I gave recently in the House, in respect of the position at 31st December, 1956—and at the end of March, 1957, the number in tenders approved but not yet started had fallen to 100.

I understand from the hon. Member, and from what I have read, that the Stoke City Council believes that it cannot now afford to build at a rate of more than about 800 houses a year, using the slum clearance subsidy for those 800 but not extending its building beyond those which will qualify for this slum clearance subsidy. That is the position he has put to me, and he is arguing that it is so grave that special action, either for Stoke alone or for other cities in a similar situation, ought to be taken to rectify it.

So far as I know, the full achievement of the council in house building over the years is that altogether it owns about 23,000 houses, of which about 8,600 are pre-1939, and the remainder post-war. He said, rightly, that the council has always pursued a policy of charging low rents. He argued that that had been possible through its managing to build cheaply, and because it felt that on social grounds it was wise to do so. I do not think, therefore, that he will raise objection to my bringing it to the attention of the House that the rents of council houses in Stoke are now distinctly lower than the average in similar cities.

According to my information, the average exclusive rent for a three-bedroom council house in Stoke is about 12s. 9d. a week. I can tell the hon. Gentleman that the average council rent for a similar house in other big cities, and in towns generally, is quite materially higher than that.

Dr. Stross

When the right hon. Gentleman says 12s. 9d. a week, does he mean the average for all the 23,000 houses? I may say that today the rent is 17s. 5d. a week, plus water, plus rates —which is about 27s. a week for those houses that were built last year and which we are building this year.

Mr. Brooke

I was speaking of the average. It is quite possible for a council to pursue a policy of fixing the rent for each house according to the actual cost of building it. Successive Ministers, not only of my party, have deprecated that policy, because it seems rather unfair that a tenant should pay rent according to the chance of when his house was built. The house may be no better or worse than another council house, yet, under that policy, if it happened to have been built in a cheap or in an expensive period of building, the rent charged will differ widely.

The policy which is much more extensively pursued nowadays by councils of all political colours—and I can say that advisedly—is to pool rents in such a way as to iron out differences which arise solely from the level of building costs at the time the house was built. Nowadays, the general attitude of local housing authorities is rather to assess the quality and the amenities as well as the size of each of its council houses, and to seek to fix a rent which will reflect that; in other words, the true value of the house to the tenant, rather than the actual financial cost of building it. Indeed, that is a policy which is commonly pursued in all matters of price fixing, and not only in housing matters.

The hon. Gentleman urges that though rents might be raised a little above the average of 12s. 9d., there is very little scope, and he and the council believe, I am sure with all sincerity, that if they go on building at the present interest rates and without subsidy, they will need either to fix the rents of their new houses at very high figures, or else to subsidise them profusely, as it were, out of the rates.

The last thing I want to do today is to exacerbate any differences. There is a difference of approach. I would much rather find a way through this without any quarrelling at all. I am sure that the hon. Gentleman and I are not quarrelling today.

Dr. Stross indicated assent.

Mr. Brooke

I am anxious for Stoke to go on with its building. I should like to see it building at a greater rate than 800 houses a year. But I must ask the hon. Gentleman, and through him the Stoke City Council, to consider whether it would be right for me or for any Minister in any Government to impose an additional charge on the taxpayers as a whole in order to enable those councils which wish to charge low rents to be able to continue to do so.

As I say, the average level of rents in Stoke is materially lower—not just fractionally lower—than the average for the big towns and the other towns generally. The hon. Member argued that this would naturally be so, because wages in Stoke were not very high and the pottery industry has not been having altogether easy times. I know that the pottery industry is not a high wage industry. He and I, however, when we are studying a question like this, have both to look at the facts and figures which are available.

According to the official figures as at October, 1956, the average earnings in the pottery industry were £11 4s. a week. That is for a man over 21. I know that that does not mean to say that everybody was earning that amount, but nevertheless, there is a surprisingly wide gap between average male adult earnings of £11 4s. a week and an average exclusive rent of 12s. 9d. for a three-bedroom family council house.

I know, too, that the pottery industry is not the only industry which affects Stoke. There must be many miners living in council houses in Stoke. I quoted the figure of £11 4s. for average earnings in the pottery industry. The average earnings for mining at the same date were £15 6s. On these counts I must put it to him that the Stoke City Council is pursuing a policy of what appear to me to be surprisingly low rents.

The hon. Gentleman mentioned the possibility of a differential rent scheme. He told the House that the council would have set its face against anything of that kind, because it did not wish to set up additional management staff to administer a scheme like that, and in principle it thought that it was not good to separate neighbour from neighbour.

I know that the hon. Gentleman will accept from me that those arguments cannot be sustained merely on party grounds. I, as a London Member, am only too well aware that the first differential rent scheme in London—the first since the war, certainly—was established by a Metropolitan borough council which for years and years has been under Socialist control and which, for its part, did not think the objections were insuperable.

On the contrary, that council and many other councils under the control of both parties, which have adopted such schemes, have come to the conclusion that that is the fairest way of fixing council rents, because by charging more to those who are found to be able to afford more and not to need the subsidy, the local authority is thereby provided with funds wherewith it can subsidise the more those tenants who, because of unemployment or short-time or family misfortune or any other reason, really do need to be housed at low rents if the children or the other members of the household are not to suffer through rent taking up too large a proportion of their incomes.

I realise that the Stoke City Council holds firm, indeed, dogmatic views on these rent questions. I know that at one time it was approached by the National Coal Board to inquire whether it would build houses for miners. There would have been the opportunity to have a subsidy of no less than £24 per house per annum, with a further £8 for some years from the Coal Board, making £32 altogether. Even with all that financial assistance offered, the council refused to go on, because, I think, it believed that even in those circumstances a slight addition might have to be made to the rents of its pre-war houses.

Dr. Stross

The Minister must not do the council an injustice. Its real reason was that it knew it could build more quickly for the miners if it built in its own way, and more cheaply. Also, the council did not want the miners lumped together in what was called a "ghetto", but interspersed with the rest of the population.

Mr. Brooke

I certainly accept what the hon. Member says about that. I am sure that he will not resent my having referred to the case, because it certainly seemed that the council was adopting a somewhat negative attitude even when there were substantial subsidies available to it.

On the face of things, the Stoke City Council appears to be in a better position than many other authorities to continue building and to combine building for slum clearance purposes with building for general needs. It appears to have something in hand, because it would apparently be possible either by adopting a differential rent scheme or by carrying further the policy which I described, of pooling the rents of the newer and older houses, to gain a substantial further income from rents without hardship to any of its tenants. The council thereby would be enabled to continue to build and yet avoid placing a burden on the rates.

The hon. Gentleman has stated his case frankly and bluntly and, at the same time, most courteously. I have sought to reply in the same spirit. From outside, certainly from my position, it seems that the attitude of the Stoke City Council may be in danger of amounting to saying that it would rather not provide a house for somebody who needs one than charge a reasonable rent to somebody who could afford to pay more than he is at present paying. That is the difference between us. I cannot, I am afraid, hold out any hope to the hon. Gentleman or to the Stoke City Council that there will be a change in the subsidy policy of the Government. Neither he nor I can foresee the future of interest rates.

I trust that the hon. Gentleman will pass on sympathetically, in the spirit in which we have been debating the matter, what I have said today. I should be sorry indeed if anything I said were to exacerbate relations or lessen the chance of Stoke City Council meeting the needs of those of its citizens, who, I know require further housing.