HOUSING (WELL-MAINTAINED HOUSES) (Hansard, 9 April 1963)

§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. F. V. Corfield)
I beg to move, That the Housing (Payments for Well-Maintained Houses) Order, 1963, dated 1st March, 1963, a copy of which was laid before this House on 7th March, be approved. This Order alters the multipliers used for the purpose of calculating the well-maintained allowance under the Housing Acts. As the House knows, the general rule, where an unfit house is included in a clearance order, or a demolition order, or a compulsory purchase order, is that no compensation is paid for the worn out bricks and mortar. Indeed, the basis is that a house which is unfit for human habitation ceases to be of value as a house, and compensation is confined to the site value. But there are certain exceptions, perhaps one of the most important of which is where a house, despite its inherent defects, has been well-maintained. In such cases a well-maintained allowance is payable which dates broadly from the 1935 Housing Act, though it was extended somewhat, not in scope, but in amount, in 1956.
The payment to which the owner, or the tenant, depending upon who is responsible for repairs, is entitled is whichever is the higher of two alternative amounts. The first alternative is the actual expenditure on the house for maintenance over the last five years, less one and a quarter times the rateable value. This, I think, might be conveniently referred to as the expenditure formula, its purpose being to reimburse a landlord for expenditure on maintenance, less a proportion of the rent—one quarter was thought to be suitable—which over five years comes to one and a quarter times the rental value, or rateable value which is used for this purpose.
I point out to the House that this formula is fixed in the 1935 Act and its successor the 1957 Act; it is not alterable by Order, and is not affected by this Order. It is the alternative formula with which we are concerned, and that is the rateable value multiplied by what is described as the appropriate multi- 1234 plier. This is designed to produce broadly the same result where a landlord can produce no accounts. The appropriate multiplier laid down in the 1935 Act was one and a half, and there was then a second multiplier of double that amount, three, for the case of the owner-occupier to whom the first alternative did not apply as he was not in receipt of rent.
In 1956, owing to the very substantial increase in maintenance costs since the war, powers were taken in the Slum Clearance (Compensation) Act, 1956, to alter the multiplier by Order, and the Order of that year increased the multipliers to four and a half and nine respectively. That is the Order which is still in force, although the enabling power under which the present Order is brought forward is now contained in the Second Schedule of the Housing Act, 1957.
The reason we have to come forward with another Order stems from the new valuation lists, because clearly the present multipliers of four and a half and nine would have no possible relevance to those lists, and would produce very inflated sums. What we have done is to select alternative multipliers which, on the basis of the average increase in rateable values, which is approximately two and a half times in this type of housing property, will produce broadly the same amounts as are payable under the present system. These multipliers have been found to be two and four respectively, which are the figures in the Order, and I assure the House that on the basis of the average amounts produced are slightly above those available under the present system.
I do not pretend that there is any great science behind the original concept of these formulae, but we are not empowered to consider them. All that we are able to do is to bring the multipliers forward in relation to the conditions under the new valuation lists.

§ Mr. Michael Stewart (Fulham)
It is clear that in the main this Order is a necessary consequence of new valuations. But I think that there are a few things which one might usefully say about it. In the first place, the fact that the expenditure formula cannot be altered by Order will give the result that after this 1235 nobody will choose the expenditure formula. I did some rough calculations and, so far as I can see, it may very well cause the grant obtained under the expenditure formula to fall to only half what one might get under the old formula. Whether that is considered to be likely to do anyone an injustice I do not know, but I should not have thought so. The formula would give about the same result. The only effect on the owner of Property is that, in effect, he has only one choice instead of two.
There is another aspect. If we assume, as the Ministry does, that in the main, valuations have been multiplied by two and a half, if we apply that to the changed multipliers in the year we get a result like this. If we take half of the new valuation on a rateable value of £20, the amount payable before the Order was made would be £90. Under the Order, if the valuation were multiplied by two and a half, it would be £100, and similarly for the owner-occupied house.
Roughly speaking, what the owner of a house to which this Order applies would get would be pushed up by about one-ninth on average, though here predominantly the average is likely to be misleading as there will probably be considerable variations. I suppose that one should not let anything which increases what local authorities have to pay pass without some comment, however small. I wonder whether the Minister is able to say how much money local authorities pay out in a year as a rule under this provision, and if we assume, as I did, that the amount they would have to pay out per house will go up by perhaps one-ninth, what extra expenditure will that involve?
I think one should notice also that this will, of course, affect some local authorities decidedly more than others. Before making the Order, has the Ministry considered whether the moderate increase in what local authorities will have to pay is likely to act in any way to make them more reluctant to proceed with slum clearance? I should not think that likely, but it is a matter one ought not to neglect and perhaps the Ministry will have considered it.

§ Mr. Graham Page (Crosby)
As my hon. Friend the Parliamentary Secretary has said, this Order arises out of the 1236 Housing Act, 1957, under which the owner whose property is taken from him by reason of a clearance order, or certain other orders, would otherwise receive only site value. But if he has expended money on the property and maintained it well, he is entitled to a certain arbitrary figure. But he is not necessarily entitled to the expenditure he has incurred in carrying out repairs and improvements to the property.
As has been indicated, there is a fixed figure in the Schedule to the Housing Act, 1957, which will work rather unfairly in the future towards an owner who has maintained his property well. That is the minimum figure below which he will receive no well-maintained payment at all, 1¼ times the rateable value. When he is, in fact, entitled to receive some payment for maintenance he may be entitled to receive only an arbitrary amount, the rateable value multipled by certain appropriate multipliers.
I have the advantage of having in front of me figures relating to an investigation carried out by the National Federation of Property Owners to ascertain the effects which the change in the multiplier will have on the payments made to owners who have maintained their houses well. I do not think it is any good taking national averages of the change in rateable values as the hon. Member for Fulham (Mr. M. Stewart) did, nor is it really right to take the average of any particular district. It is the houses of lower rateable value which will be affected by that. These are usually the type of houses which are included in clearance orders or demolition orders or subject to a compulsory purchase order by reason of being unfit. So one must take the rateable values of the houses which are already subject to compulsory purchase order or are likely to be subject to such an order.
It has been found in the North, for example in Manchester, taking old rateable values between £8 and £12 which now become new rateable values of between £21 and £29, that the new multiplier results in more favourable payments to the careful owner. Yet in one case, in the nearby City of Liverpool, with a sample which was taken of those which were definitely affected by compulsory purchase orders over somewhat the same 1237 rateable values, it was found that 50 per cent. had slightly better payments but 50 per cent. would be well below the previous figure. So even in two towns as near as Manchester and Liverpool the effect on the amount which the careful owner will be entitled to receive works out very differently.
Let us take also Leeds and Sheffield. Taking some of the old rateable values between £5 and £13 in Leeds which turn out as new rateable values of between £12 and sometimes up to £35, I have a sample of 77 of which 68 will have better payments, three will have the same payments and six will be much worse off. All of a sample of 60 in Sheffield will be about £1 or £2 better off, much the same result.
Yet in the Midlands the position is very different. For example, I have a sample of 80 houses in Birmingham which are subject to clearance orders and have the new rateable values of £14-£27. Out of that 80 only nine will be better off, and that by only £1 or less than that; 28 turn out to be the same, and in 43 cases the careful owner will be much worse off under the present order than under the previous law—sometimes to the extent of £17 worse off. In Wolverhampton the losses certainly exceed the gains in the samples which have been taken.
What emerges from all this is that this Order really sets a most arbitrary figure. It does not reward the owner who has been careful and has maintained his property. It is not in any way a valuation of the good maintenance of the house which is being taken from him. It is a pity that in some form the order could not have swept away this arbitrary figure and really recompensed the careful owner by some better valuation of the good work which he has done on his house. It could have done so if the appropriate multiplier had been fixed a lot higher, despite the fact that this might put it at a limit which would seldom be reached if the owner was then left to prove the expenditure he had made on the house and had to come under paragraph 2(1) of Part I of the Second Schedule, proving his actual expenditure and merely getting back what he had spent on the house.
As it is he is getting a figure which is no encouragement to him to keep the house in repair if there is any danger 1238 of it coming within a clearance area. The hon. Member for Fulham said that we must be careful not to increase the liability of local authorities to pay money under these provisions, but surely we must also not discourage the owner from keeping his property in good repair. Some of them are discouraged by the fact that they may find their property in a clearance area and have it taken from them, with the threat of having it taken at situ value. If they see that coming within the next five or ten years, with no real compensation for what they spent on the property, they are not likely to spend money on the property.

§ Mr. Corfield
The hon. Member for Fulham (Mr. M. Stewart) asked me if I had any figures as to the amounts payable. I am afraid that I have not, but I shall see what I can compile and let the hon. Member have it in writing. We must realise that the amounts payable are not necessarily by any means to the disadvantage of local authorities. As my hon. Friend the Member for Crosby (Mr. Graham Page) pointed out, it cannot be to anyone's interest where we have slums which will have to be occupied for some years, and near-slums, that they should deteriorate more rapidly, or that we should penalise people doing their best, despite the inherent defects of their properties, to keep them as decent homes as possible.
If the local authority associations think that this payment is too much and the property owners' associations think it is too little, I think that is some proof that we have got it about right. I agree that averages are a little dangerous and in some of the worse slum towns probably the rateable values will not have gone up in the same relation to the national average as the better-class property will have done. There may be anomalies and discrepancies for the average to which my hon. Friend drew attention.
We are looking at this whole problem afresh because, as my hon. Friend said, these are somewhat ad hoc figures. There is no great science in them. We are looking to see if a better and more sensible basis can be devised. As the House will appreciate, that would not be appropriate for this Order. This is 1239 something needed in connection with the valuation lists coming into force this month.
I hope that the House will now approve this Order.