HC Deb 13 April 1964 vol 693 cc100-26
Mr. Millan

I beg to move Amendment No. 120, in page 75, line 43, to leave out paragraph (a)

Mr. Speaker

I respectfully suggest to the House that we might discuss with this Amendment the following Amendments:

Amendment No. 122, in page 76, line 10, leave out paragraph (c).

Amendment No. 123, in page 76, line 23, leave out subsection (4).

Government Amendment No. 127, in page 76, line 37, which I shall call for separate Division if required.

Amendment No. 128, in page 77, line 27, leave out "as settled by the scheme".

Amendment No. 129, in page 77, line 31, at end insert: (2A) In this Part of this Act references to surpluses on revenue account are references to the balances from time to time accruing to the local authority out of the net amount of the rent and other payments received by the local authority from persons occupying the house after deducting—

  1. (a) compensation payable by the local authority under section 73 and section 74 of this Act, and
  2. (b) all expenditure, other than expenditure of which particulars have been given under subsection (2) of section 74 of this Act, incurred by the local authority in respect of the house while the control order is in force, together with the appropriate establishment charges.

Amendment No. 130, in page 78, line 11, leave out "as settled by the scheme".

Amendmen No. 135, in page 78, line 28, leave out from "varied" to "on".

Amendment No. 148, in page 82, line 18, leave out paragraph (d).

Amendment No. 165, in page 89, line 30, leave out "as settled by the scheme".

And Amendment No. 166, in page 89, line 31, leave out "74(4)" and insert "76(2A)".

Mr. Milian

That will be convenient, Mr. Speaker.

Amendment No. 120, and the other Amendments which you mentioned, Mr. Speaker, are a group of Amendments dealing with the financial relationships between a local authority which has imposed a control order on a dwelling and the former proprietors or the persons who have in one way or another a financial interest in the house. This is a slightly complicated subject. As there are several Amendments, perhaps I should start by explaining briefly what the Bill does at present, what we on this side of the House object to, and what we are trying to achieve by the various Amendments.

First, from the financial point of view it is provided that, when a control order is imposed on a house, certain compensation will be paid to the former proprietor under Clause 73, where one-half of the gross value is payable, and in the case of furnished lettings under Clause 77, where a certain additional payment is made. That is only the start of the story. It is the most simple part of the Bill. It is further provided that, in regulating the financial arrangements between the local authority and a dispossessed proprietor, a local authority shall be under an obligation under Clause 74 to prepare a scheme for the house.

The scheme does a number of things It lays down the capital works which the local authority thinks ought to be executed on the house and its proposals for executing them. The scheme also makes an estimate of what the revenue account, as distinct from the capital account, of the house will be under the local authority's administration of the property. In that revenue account notice is taken of the rent and any other receipts which the local authority will receive in respect of the property, and, on the other hand, the compensation which will be payable by the local authority wider Clauses 73 and 77, and also all kinds of expenditure which the local authority may have in repairing or in generally managing the property. This scheme is an estimate of what will happen. This is something which is drawn up at the start of the control order. It is simply the local authority's estimate of what the financial outcome of its managing the property will be.

There is provision in the Bill not only for an appeal against the control order itself—the whole principle of placing a control order on the property—but also for an appeal against the scheme. There is a double appeal right at the beginning of the local authority's management of the property. Further, it is provided under Clause 75 that at any time while the local authority is actually managing the property the dispossessed proprietor shall have an appeal to the court to have the surpluses on the revenue account as estimated by the scheme at the beginning of the local authority's management varied, obviously in favour of the dispossessed proprietor. There are three appeals in a sense—an appeal against the control order itself, an appeal against the original scheme, and subsequently an appeal against the actual working out of the scheme if the working out of the scheme is disadvantageous to the dispossessed proprietor.

All this is obviously important from the point of view of the financial settlement between the local authority and the dispossessed proprietor, and is particularly important with regard to the recovery of the capital expenditure, because it is provided that the capital expenditure shall be recovered from the surpluses as estimated by the scheme—not the actual surpluses that the local authority in the event may have in managing the house from a revenue point of view, but the surpluses as settled by the scheme. That is provided for in Clause 76. That Clause also provides that, if at the end of the control order the local authority has not managed to recover its capital expenditure from the surpluses as settled by the scheme, it will be possible for the local authority to put a charge against the property.

It is only necessary to describe the arrangements under the Bill at present to prove that they are extremely complicated. I doubt very much whether anyone who served on the Standing Committee will have wholly followed what I have just said in my brief description of what the Bill provides. It is an extremely complicated operation and some of us in Committee felt that it was unnecessarily complicated. We still feel that it is unnecessarily complicated.

In Committee, I proposed that the whole idea of having a scheme for the property should be abolished and that the local authority, having taken over the property, should be allowed to manage it, to spend money on repairs or on capital expenditure as it thinks fit, and at the end of the day to have a financial settlement with the dispossessed proprietor. I proposed also that, if that arrangement were followed, obviously there would have to be some kind of appeal on the part of the dispossessed proprietor, but again that could very well be an appeal which could take place at the end of the control order if the dispossessed proprietor was dissatisfied either with the sum of money paid over to him or with the balance of capital expenditure remaining as a charge against the property. I still believe that that would be the easiest and most acceptable way of providing for the financial arrangements under control orders. However, the Minister said in Committee that that way would not be acceptable and that there was some necessity to get something financially settled at the beginning of the control order.

I point this out to show that this series of Amendments provides a compromise between the Minister's view and ours, although the Bill will be altered by Amendments which we will discuss later. As I say, that would be the simpler method of proceeding and I still believe it would have achieved the Minister's purpose, particularly since it received so much support in Committee. These Amendments are intended to maintain the idea of having a scheme for managing the property, but to restrict that substantially by providing that only the capital expenditure should be included in the scheme. In other words, there would still be an obligation on the local authority to say at the beginning of the control order what kind of capital expenditure it was intended to execute on the house which had been taken over. Thus there would still be an opportunity at that stage for the dispossessed proprietor to appeal against the capital expenditure.

If one really needs safeguards for the dispossessed proprietor, he should be in the position of saying that no major works should be carried out on the property if he had not been informed of them at the beginning of the control order. Beyond that, the local authority would work on the expenditure and receipts on the property from the revenue point of view. In other words, there would be no estimate at the beginning of the control order of what the revenue account concerning the property was going to be. There would simply be an obligation, which is already in the Bill, on the part of the local authority to keep proper accounts of the property and draw up a profit and loss account. There is already an obligation in Clause 85 for the local authority to keep proper accounts. There is also the safeguard that the dispossessed proprietor is able to look at those accounts as the control order proceeds.

That is what would happen on the revenue side of the account. All the complicated arrangements for dealing with the revenue side of the property would be completely eliminated by this series of Amendments. The Minister is likely to argue that if one does this the local authority could be extravagant in its management of the property, might disregard the proper revenue earning capacity of the property and, in general, could do what it liked with the property because there would be no financial disincentive for it to do otherwise. That is not so, because under the Amendments—and I will explain them individually later—if there were a deficit on the revenue account at the end of the control order, that would be irrecoverable. There is no provision for a deficit to be otherwise and the local authority would not be extravagant in its management of the property for that reason.

In any case, one would expect that in normal circumstances there would not be a deficit at the end of the control period, taking account of the payment made to the dispossessed proprietor of half the gross value under Clause 73. Indeed, one would expect that the account would be in balance. If there were a deficit the local authority would bear that, as it will under the Bill as drafted. On the other hand, if there were a surplus, that would be used to pay off the capital expenditure. It would not be appropriated by the local authority. I suggest, therefore, that far from being unfair to the dispossessed proprietor, the Amendments lean over backwards to be fair to him, although I would have preferred a system which was not this fair to him.

Mr. Cole

What would happen in the event of there being a surplus?

Mr. Millan

There could not, by definition, be a surplus on the capital side. I suppose that it is only in terms of the revenue account that one could talk about a surplus.

Mr. Cole

If there were a surplus on the capital side and it was transferred to the capital account, then in that case the dispossessed proprietor would not lose?

Mr. Millan

What is the hon. Member's question?

Mr. Cole

The hon. Member has said that there is no question of there being any surplus on the revenue side or that, therefore, it would be transferred to the capital account in regard to a scheme. I agree, by definition, that that is so, but what is the purpose of transferring it to the other side of the account?

Mr. Millan

I do not follow the point of the hon. Member's intervention. I am saying hat if there were a surplus on the revenue account, that would go towards paying off the capital expenditure. What would happen in the event of there being no capital expenditure or if it were already paid off, no doubt the surplus would go to the local authority; but considering that the deficit would have been borne by the local authority, I should have thought that that would be reasonably fair.

7.15 p.m.

I find no element of penalty in all this. Even if there were I would not necessarily think it a bad thing. We are, after all, sealing with the most unscrupulous kind of landlord; and had the Minister been willing to accept the idea of having a penalty in the financial arrangements I would have been only too delight to have tabled Amendments to that effect. Instead, we are now considering how to get a reasonable compromise between the exact terms of the Bill, which are far too unfair to the local authority, and the views of my hon. hon. Friends and I.

Mr. Cole

Since the hon. Member has referred to penalties, I might make it clear that in referring to the local authority and surpluses I merely wanted to mention the question of surpluses so that the matter could be cleared up and not left hanging in mid-air, as it were.

Mr. Millan

It is unlikely that there would be a surplus because there would be capital expenditure to be paid for in respect of almost all of these properties. As I say, even if these Amendments did impose a penalty on the dispossessed landlord—although I do not believe that they do—I would not necessarily think that there was anything wrong in that.

It might be convenient to hon. Members if I explain the purpose of each Amendment. Amendment No. 120 is designed to eliminate from the scheme to be produced by the local authority an estimate of the cost of carrying out the capital expenditure works. This Amendment is somewhat separate from the rest and could stand or fall by itself. It is simply an attempt to reduce the complications that exist in the Bill as drafted.

Amendment No. 122 would eliminate the account that has to be drawn up of what the estimated surplus on revenue account will be. This Amendment is really the basic one in the group Amendment No. 123 is consequential on it.

Amendment No. 127 would eliminate altogether the appeal by the dispossessed proprietor against the revenue account as settled by the scheme because, once one goes away from the idea of having the revenue account as settled by the scheme to that of actual revenue account, Clause 75 is completely unnecessary—and so, incidentally, are the Amendments that the Minister has put down subsequently to take the place of Clause 75.

Amendment No. 128 is consequential in the sense that it provides for that recovery of capital expenditure shall be from the actual surpluses on revenue account as distinct from the surpluses estimated on revenue account as the Bill is now drafted. Amendment No. 129 simply gives a definition of surpluses of revenue account in almost exactly the same words as appear in Clause 74; it simply shifts a bit of Clause 74 into Clause 76.

Amendments Nos. 130 and 135 are consequential, and so is Amendment 148, because if the scheme does not provide for an estimate of surpluses on revenue account, one of the grounds of appeal against the scheme under Clause 79 falls out; paragraph (b) is eliminated. Amendment No. 165 is consequential, and Amendment No. 166 is a drafting Amendment that becomes necessary if the other Amendments are accepted.

I hope that I have reasonably clearly explained the purpose of the Amend- ments, and the Amendments themselves. I assume for the moment that the Amendments are drafted satisfactorily, but I should not be surprised to be told that there was a defect in one or other of them—they deal with a rather complicated subject.

In anticipation of what the Minister will say, perhaps I might refer to the Government's Amendments to Clause 75, and the addition to Clause 79. In effect, the Government are eliminating Clause 75 altogether and then, by Amendments Nos. 149 and 150, are putting similar but rather extended provisions in another part of the Bill. The effect of the Government's Amendments is that, still working on the estimated surplus on revenue account, it will be possible not only for the dispossessed proprietor to appeal to the court for variation, but also for the local authority to have the surplus on revenue account as settled by the scheme varied in the event of the actual surpluses turning out to be rather different from the estimate at the beginning of the control order.

We can deal with this when the Government Amendments are moved, but I say now that if Amendments Nos. 149 and 150 are accepted, and if the local authorities and the dispossessed proprietors keep a running check on the actual revenue account as compared with the revenue accounts as originally estimated, one will get into the rather absurd position that the financial arrangements between the dispossessed proprietor, on the one hand, and the local authority, on the other, will be settled, in this very roundabout way, on the basis of the actual surpluses and deficits on revenue account as distinct from the estimated surpluses and deficits, because as soon as the surplus actually brought out under the local authority's management becomes higher than the surpluses as estimated originally the dispossessed proprietor will be able to appeal for a variation to increase. As soon as the surplus is less than that originally brought out by the scheme, the local authority will be able to appeal to the court for a variation to bring it nearer the actual.

I seriously suggest to the Minister that this is a completely absurd way of doing things, and is unnecessarily complicated. The Government would do much better to look either at the suggestion I originally made in Committee, or at this series of Amendments. It is necessary to get a reasonable balance of fairness between the local authority and the dispossessed proprietor, but it is also necessary to get this kind of control-order administration working as effectively and simply as possible. I could hardly devise a scheme more complicated than the Government s scheme, even as it will be if their Amendments are accepted. One would think that someone had really tried to make the thing as complicated as possible.

If anything will act as a disincentive to local authorities putting on these control orders it will be these extremely complicated financial arrangements, with the right of the dispossessed proprietor to appeal against the control order, to appeal against the scheme, and to appeal, from time to time during the operation of the control order, against the financial results brought out by the scheme. It is all quite absurd, and completely unnecessary even from the point of view of protecting the interests of the dispossessed proprietor, so I hope that the Government will look seriously at this series of Amendments.

Sir K. Joseph

I must begin by congratulating the hon. Member for Glasgow, Craigton (Mr. Millan) on what I thought a masterly performance. It only upset me a little that he also managed to include my answers—or some of them, at any rate. As he said in his closing words, this will be an argument on balance. I cannot produce the Government bell, book and candle and say that the hon. Member s scheme is absolutely absurd and that ours is perfect; this is an argument on where the balance of advantage lies.

As I see that the hon. Member for Fulham (Mr. M. Stewart) is momentarily—and I know that it is only momentarily—out of his place, perhaps I can whisper to hon. Members—because this is an argument that always infuriates the hon. Gentleman—that this scheme was put to the local authority associations early in the proceedings, and they have not objected to it. This is not a decisive argument one way or the other. The Government often have to impose ideas which local authorities do not like; they cannot, therefore, shelter behind some degree of local authority approval when the local authorities show no objection.

I thought that I should say that early on, as the hon. Member for Craigton stigmatised the Government's proposals as being bound to act as a serious disincentive. This is not as it has so far appeared to the local authority associations, but I do not lean too heavily on that.

I must, for the completeness of my argument, put again some of the things the hon. Gentleman has said. He seeks, as he rightly said, to alter the basis of recovery of capital expenditure from a scheme of fixed surplus to the mere chance of what surplus if any emerges on current revenue account.

7.30 p.m.

I ought to remind the House of the sequence of events. The local authority is under an obligation to produce a capital scheme. Nobody questions that. It is obviously right that the interests, including the dispossessed proprietor of the property, should know what is proposed because ultimately, one way or another, they have to pay for it. Under the Government scheme the local authority requires to produce a revenue and expenditure estimate in which it includes, or the one hand, likely income from the property and, on the other hand, compensation payable to the dispossessed proprietor, the rates, and similar expenditure, which must be met, reasonable provision for maintenance, and any other apt and relevant provision which it thinks fit to make within Clause 74 (3,c). The balance of the revenue and expenditure that it proposes will provide the settled surplus, to which I have referred. It is the sum represented by the settled surplus that will be treated as writing down the capital debt on regular basis. Any remaining capital debt at the end of the control order will be a charge on the property.

I hope that the House appreciates the benefits of this. First, the local authority is very unlikely to suffer any damage. It will be able realistically to assess its income and its likely expenditure. Under Amendments to be moved later by the Government, it will be able to revise these, if it wishes, during the passing of the control order. Secondly, the local authority will know fairly accurately how it will recover the money that it will spend on its capital scheme. Thirdly, there will be a fair chance by this procedure proposed by the Government that there will be no appeal against the settled surplus.

If the dispossessed proprietor and any other person interested in the property are satisfied that there is a sensible estimate of revenue and expenditure, they will be the less inclined to challenge the whole capital scheme, since they will see that the settled surplus will during the currency year of the control order write off at least what is fair of the capital expenditure necessary, leaving only what remains fair as a charge on the property, if any remains to be paid. All these seem sensible things, and we must remember that in imposing on the property and on the property owners the drastic weapon of a control order it seems right that the local authority should have some framework of financial discipline to which it subjects itself.

I realise that we are asking the local authority to do what the hon. Member for Fulham (Mr. M. Stewart) correctly described on Second Reading as scavenging, but nevertheless these are strong powers and it does seem right to ask the local authority to make a forward estimate. I agree at once that the hon. Member for Craigton has gone as far as he reasonably can to meet the Government's attitude here. He has not maintained the original drastic Amendments which he put forward in Committee, but if we accept the Amendments the local authority is no longer under any discipline. The local authority does not have to estimate its revenue or its running expenditure. It is utterly at large on both. As the hon. Member says, no local authority of course will run a current deficit, because it will not recover it even under the hon. Member's scheme, but it could still minimise its expenditure or minimise its revenue, or at least balance the two on a low level of rent, at a lower level than justified, so as to eliminate or reduce any such surplus, and leave the whole of the money, rightly spent on the property to be a charge on the property after the control order.

This might or might not be a penalty on the dispossessed proprietor. His interest might lapse when the control order lapses. It might be entirely a penalty on third parties who have no moral responsibility whatsoever. I therefore believe that on every ground the hon. Member's group of Amendments is inadequate as a financial discipline and safeguard for the interest not only of the dispossessed proprietor but of the other interests concerned.

The Government, as the hon. Member rightly said, have accepted at a later stage some of the proposals put forward by him to give the local authority the right to seek a reduction in the settled surplus. We shall be discussing that later. I must say also that the hon. Member's attempt to give the dispossessed proprietor and other interests in the property a retrospective right of challenge is unrealistic. He says, "Let the dispossessed proprietor and other interests at the end of the control order challenge the financial conduct of the local authority. Let them question at that stage what the revenue should have been."

Mr. Millan

I said that in Standing Committee, but that does not apply to this group of Amendments. It was to meet the Minister's objection that these Amendments were drawn in a different way.

Sir K. Joseph

I beg the hon. Member's pardon. That was a mistake of mine. But if the hon. Member thinks that by avoiding any settled scheme of revenue and expenditure the local authority can avoid being harassed during the control order he is wrong. If the Amendments were accepted and if the local authority charged rents which nobody could reasonably challenge as being too low, or even if it did not, there might be a considerable amount of nagging by the dispossesssed proprietor. Admittedly that nagging would be administrative and by correspondence and visits and could have no legal status, but the local authority would be harassed, whereas by the settled scheme, to which it is true there is a right of appeal, there is a fair chance of the control order passing with a minimum of administrative difficulty on the financial side.

These are not and cannot be conclusive arguments. I cannot say infallibly that the hon. Member's alternative is absolutely bad and ours is absolutely right, but I believe that on balance the Government's proposals, which enable the local authority, the dispossessed proprietor and other interests in the property to know their position from the beginning, is far more satisfactory for all concerned, including the local authorities, than the very adventitious and chancy scheme proposed by the hon. Member.

Finally, Amendment No. 127, which is included in this group, is of course a Government Amendment to which hon. Members opposite have added their names. The Government therefore will want to accept that, because it forms part of their later Amendments. I will not go so far as to hope that the hon. Member's Amendments will not be pursued, but I hope that I have explained why the Government advise the House not to accept them.

Mr. Willis

It is a great pity that the Minister will not accept my hon. Friend's Amendments. During our debates on the Bill he has talked about the strong powers that the Government have given to local authorities to enable them to introduce a control order in respect of the typo of property that we are discussing. But all the time at the back of my mind is the thought that we are dealing with a peculiar set of people. We seem to lose sight of the fact that we are dealing with the worst landlords in the country. We are dealing with people who are letting property in such an unsuitable state that the living conditions are a danger to the safety, health and welfare of the people. We are dealing with a thoroughly undesirable set of people who are exploiting the housing shortage in order to impose quite intolerable conditions on ordinary folk.

However, we never hear of this. The right hon. Gentleman keeps harping on the enormous powers that we are giving to local authorities. Never does he show us the other side of the coin. As I said in Committee, if somebody steals an apple he is sent to gaol. If somebody sells rotten fruit he is suitably punished. But the kind of fellow whom we are discussing tonight is not punished to any considerable extent. Not only are we dealing with the most undesirable type of landlord, but, whilst the control order is in operation, we compensate him by paying him half the gross annual value of the property. He does not have to do a thing. He does not have to manage the property. He does nothing, yet he receives half the gross annual value of the property.

It is pathetic to listen to the reasons given by hon. Members opposite, all because of this doctrinaire approach to private property, the golden calf of private property to which hon. Members opposite bow down whenever an Amendment is moved by the Opposition. One would think that we were dealing with a set of people whom we were anxious to help. I should think that a great number of them ought to be in gaol instead of being assisted and compensated.

The Minister says, "This is really a question of balance of advantage". Very well, let us approach it from that point of view. Towards whose side should we lean so as to be fair? When we talk in terms of balance of advantage we cannot get an exact balance We lean over to one side or the other But my complaint against the Government is that they lean over towards the owner of his disreputable and unfit property which is a danger to people's safety, welfare and health. The Government do not lean over towards the local authorities. Instead, the local authorities can be harassed. The Bill enables them to be harassed by the owners. The owners can appeal against the order, the scheme and the way in which it is carried out.

I know the right hon. Gentleman's argument about the poor person in the background who does not know what is happening to the property, but this does not cut a great deal of ice with the people who have to endure these conditions. The right hon. Gentleman is leaning over backwards to make it possible for these landlords to harass local authorities in an unbelievable manner.

My hon. Friend's proposals in Committee were perfectly reasonable. Here is an intolerable situation, mainly found in London, although to a small extent in other places as well. We ought to be anxious to clear it up as soon as possible. We ought to encourage the local authorities, instead of putting all sorts of difficulties in their way. They cannot even introduce the order without somebody appealing against it. Then they have to draw up this most elaborate scheme under Clause 74(3), and once again the owner can appeal against it. I should have thought when the local authorities were taking over the property and paying the owner compensation of half the gross annual value each year, they ought to be allowed to get on with the job of making the property fit to live in and the conditions of the tenants reasonably happy, instead of having all sorts of hindrances put in their way.

7.45 p.m.

But that is what we do in the sacred interest of not being unfair to the Rachmans. We must not be unreasonable towards those people. We must not upset them. That attitude seems to me to be quite wrong. My hon. Friend's Amendment would remove those injustices. As I say, the proposals that he made in Committee were reasonable, namely, that there should be an opportunity for the owner to appeal in the first place, after which the local authority should be able to get on with the job and present its accounts at the end of the day. That is a way of encouraging the local authority to do the job as quickly as possible.

My hon. Friend offers this compromise, though it does not give to local authorities the freedom that I think they deserve—because I trust the local authorities. During the next two or three weeks hon. Members opposite will be making speeches in Scotland, in Edinburgh, Glasgow and all over the place, saying how they trust the local authorities and how we must strengthen local democracy. But they do not really trust the local authorities. They must crib, cabin and confine the local authorities, but not the Rachmans.

The present series of Amendments present something in the nature of a compromise. They do not enable the local authority to issue a complete control order and then to get on with the job. There are certain provisions whereby the owner can appeal and there are certain financial arrangements which are not so free as those which were suggested in Committee. The right hon. Gentleman says that if we accept this proposal the local authority would not know where it stood. I know the Edinburgh city treasurer very well and I cannot see him drawing up a scheme to put property into good order without knowing what the capital cost would be, what would be the income from the property, how it should be let and what the surplus would be. If the right hon. Gentleman thinks that city treasurers in the larger towns do not know what they are doing, he ought to think again.

Mr. Manuel

Or in any town.

Mr. Willis

It is the larger towns with which we are concerned at the moment. My experience is that the city treasurers in places like Edinburgh are among the most competent people one would wish to meet. The Edinburgh city treasurer does not administer the affairs of Edinburgh without knowing what he is doing. The right hon. Gentleman says that we must make the local authorities draw up these schemes. This is the sort of thing they will do, but they should be enabled to do it without let or hindrance and also in the manner which they think is best suited for the job they have to tackle.

Even if the right hon. Gentleman thinks that this is a matter of judging the balance of advantage, I cannot see why he should not lean over a little more towards the local authorities and trust them, recognising that they are quite competent to deal with this sort of thing. Whitehall does not know best, as the right hon. Gentleman seems to think. He should let the local authorities get on with the job.

Mr. Manuel

My hon. Friend the Member for Edinburgh, East (Mr. Willis) is doing a reasonable job, in spite of the unreasonable approach by the Minister. At the same time, I think my hon. Friend is being very easy on the Government Front Bench and on the people who own this type of property. Is he aware that the local authority has to pay half the gross annual value and to keep a day-to-day balance? Is he not also aware that under this Clause compensation is considered as accruing from day to day, and that if there is a review and the gross value is increased from what it was when the control order was applied, the owner gets half of the new gross value? My hon. Friend has not reached his top form tonight.

Mr. Willis

I did not think that I had been too tolerant to the Rachmanites. I make no apology for being tolerant to the Government because one of my fundamental principles is never to kick anybody when he is down. They are still a bit punch drunk after the events of last week. One has to make allowance for that. I like to encourage them and cheer them on. I do not wish to be really hard on them. Nevertheless, I think that the right hon. Gentleman is bending over the wrong way towards the Rachmanites instead of towards the local authorities. I am quite sure that if it was not for this doctrinaire approach his better instincts would lead him to lean over towards the local authorities.

I suggest to the right hon. Gentleman that in all fairness he ought to cast these doctrinaire ideas aside for once, get on with the job to be done, and do it in a manner which will encourage the local authorities and enable them to do it quickly and without interference from the people whose job they are doing, the owners of the property.

Mr. MacColl

The right hon. Gentleman congratulated my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) on the way in which he presented this series of Amendments. I think that he might have congratulated me because my hon. Friend has been engaged upstairs on business of the House and had he not been able to be in the Chamber in time it would have fallen to me to move this Amendment. The more I listened to my hon. Friend doing so, the more I congratulated myself on having got out of an extraordinarily awkward job, because I think that he made his case in an unchallengeable way. He drove a coach and horses through the whole idea of a scheme based on estimates.

Nothing that the right hon. Gentleman said has enabled me to see really why it was necessary to have it. I can see the case for the scheme and for saying that when we are dealing with something which will be a capital charge extending beyond tie limits of the control order we have to be clear what burden we are placing on the property. I accept that argument because it is at least a coherent argument.

But it is fantastic to go through this elaborate farce, because that is what it is, of thinking of an estimate of what will be the rent or the revenue and what will be the expenditure and playing an elaborate frame like this as the basis of the operation, when all the time the dispossessed proprietor will be breathing down the local authority's neck and looking over its shoulder at the accounts, and the mo rent that they go up into the credit side, going along to get a variation of the order, and then, in response to the local authority when things get a little worse, going again to get the position put back.

The right hon. Gentleman struggled heroically to try to get his case, but when he reduced himself to saying that unless we have this elaborate pantomime, how do we know that the local authorities will prepare estimates of their expenditure and revenue?—

Sir K. Joseph

indicated dissent.

Mr. MacColl

I am sorry that the right hon. Gentleman indicates that he did not say that. My hon. Friend the Member for Edinburgh, East (Mr. Willis), who is astute in spite of the criticisms that have teen made of him today, in quoting the city treasurer of Edinburgh, was making precisely the same point that I am making. Any local authority which is administering something which ultimately may be a charge on the public funds has to prepare estimates on both sides of the account. Even if it is not a direct charge on the rate fund, if it is preparing estimates going to the housing repairs account it has to be most careful to prepare estimates on both sides of what the cost and the revenue will be. Whatever is done, any local authority, whose accounts will be subject to district audit, will look carefully at its accounts and make adequate estimates. Therefore, there is no case at all for saying that it is necessary to have these statutory estimates put into the administration.

The other point, which has not been made clear enough, is that we are not only thinking in terms of balance between the dispossessed proprietor and the local authority in the case of a particular house but we are also looking at the problem of the balance between the gains and the losses on different houses with different control orders.

I should like to remind the right hon. Gentleman that in Committee he said: We would assume that in the big cities there will be a handful of control-order dwellings in a number of authority areas, and we would assume that a local authority would probably make neither a profit nor a loss on the total transaction. We would assume that sometimes it sets its expectations—the repair and contingency reserves—a little on the high side or the low side but that, in general, it will break even. That is the intention."—[OFFICIAL REPORT, Standing Committee E, 25th February, 1964; c. 1060.] But how can one have this rough and ready measure of saying that the swings and roundabouts will balance when all the time one knows that there will be an appeal as soon as the dispossessed proprietor realises that there will be an advantage on one side?

8.0 p.m.

As my hon. Friend the Member for Edinburgh, East said, we are not here dealing with prudent, wise and impressive citizens who are entitled to have their property rights carefully safeguarded. We are dealing with people who are either so wicked or so incompetent that they have let their property get into such an outrageous state that this drastic power must be enforced. We are dealing with people who have utterly neglected their property and let it sink so low that it is necessary for the local authority to step in and, as my hon. Friend said, do a spot of scavenging. No local authority will do it for the fun of the thing. No local authority will say, "Goody goody, we shall make a little on the rates by bunging in a few control orders to stop us

having to increase the rated in election year".

It will be an appalling job. The cost, the worry and the strain on officials, public health inspectors, housing managers, accountants and the rest, quite apart from anything which might come back in terms of finance, will put an appalling strain on the local authority in trying to do this miserable job because property has been allowed to becomes so degraded that it has to step in.

It is utterly foolish to put any financial burden unnecessarily upon the local authorities. Anybody who thinks about it for a moment will realise that the sensible thing to do is to say to the local authority, "You have balanced your expenditure and your income. You will pay to the landlord, the dispossessed proprietor, the gilt-edged dividend of half gross value, guaranteed on the rate fund, utterly regardless of how much money you have to spend on the property. He will have his gilt-edged security for the duration of the control order. For the rest, if he is lucky and there is a surplus, let him have it, but almost certainly there will not be anything and he ought to whistle for it because he has altogether failed in his duty".

Although it is a very complicated and technical Amendment, there is a very important point of social principle behind the argument. We must put a limit to the extent to which we are prepared to distort the administration and play this elaborate pantomime just to safeguard the interests of these bad property owners.

Question put, That the words proposed to be left out stand part of the Bill:—

The House divided: Ayes 182, Noes 139.

Division No. 72.] AYES [8.1 p.m.
Agnew, Sir Peter Black, Sir Cyril Chichester-Clark, R.
Allan, Robert (Paddington, S.) Bossom, Hon. Clive Clark, Henry (Antrim, N.)
Allason, James Bourne-Arton, A. Clark, William (Nottingham, S.)
Arbuthnot, Sir John Braine, Bernard Clarke, Brig. Terence (Portsmth, W.)
Ashton, Sir Hubert Bromley-Davenport, Lt.-Col. Sir Walter Cleaver, Leonard
Awdry, Daniel (Chippenham) Brooke, Rt. Hon. Henry Cole, Norman
Balniel, Lord Brown, Alan (Tottenham) Cordeaux, Lt.-Col. J. K.
Barlow, Sir John Buck, Antony Corfield, F. V.
Barter, John Bullard, Denys Coulson, Michael
Batsford, Brian Bullus, Wing Commander Eric Courtney, Cdr. Anthony
Bennett, F. M. (Torquay) Burden, F. A. Craddock, Sir Beresford (Spelthorne)
Bennett, Dr. Reginald (Gos & Fhm) Campbell, Gordon Crawley, Aidan
Biffen, John Carr, Rt. Hon. Robert (Mitcham) Critchley, Julian
Bingham, R. M. Cary, Sir Robert Cunningham, Sir Knox
Bishop, Sir Patrick Channon, H. P. G. Curran, Charles
Currie, G. B. H. Johnson Smith, Geoffrey Redman, Rt. Hon. Martin
Dalkeith, Earl of Jones, Rt. Hn. Aubrey (Hall Green) Roberts, Sir Peter (Heeley)
Deedes, Rt. Hon. W. F. Joseph, Rt. Hon. Sir Keith Roots, William
Digby, Simon Wingfield Kerans, Cdr. J. S. Ropnor, Col. Sir Leonard
Donaldson, Cmdr. C. E. M. Kerby, Capt. Henry Russell, Sir Ronald
Drayson, G. B. Kerr, Sir Hamilton Scott-Hopkins, James
Elliot, Capt. Walter (Carshalton) Kershaw, Anthony Seymour, Leslie
Elliott, R. W. (Newc'tle-upon-Tyne, N.) Kimball, Marcus Sharples, Richard
Farey-Jones, F. W. Kirk, Peter Shaw, M.
Farr, John Langford-Holt, Sir John Shepherd, William
Finlay, Graeme Legge-Bourke, Sir Harry Skeet, T. H. H.
Fletcher-Cooke, Charles Linstead, Sir Hugh Smith, Dudley (Br'nt'fd & Chiswick)
Fraser, Ian (Plymouth, Sutton) Litchfield, Capt. John Stainton, Keith
Freeth, Denzil Lloyd, Rt. Hn. Geoffrey (Sut'n C'ld field) Stevens, Geoffrey
Galbraith, Hon. T. G. D. Lloyd, Rt. Hon. Selwyn (Wirral) Stoddart-Scott, Col. Sir Malcolm
Gammans, Lady Loveys, Walter H. Storey, Sir Samuel
Glover, Sir Douglas Lucas, Sir Jocelyn Studholme, Sir Henry
Glyn, Dr. Alan (Clapham) Lucas-Tooth, Sir Hugh Taylor, Sir Charles (Eastbourne)
Gower, Raymond McAdden, Sir Stephen Taylor, Frank (M'ch'st'r, Moss Side)
Grant-Ferris, R. MacArthur, Ian Teeling, Sir William
Green, Alan McLaren, Martin Temple, John M.
Gurden, Harold Maclay, Rt. Hon. John Thomas, Sir Leslie (Canterbury)
Hamilton, Michael (Wellingborough) Maclean, Sir Fitzroy (Bute & N. Ayrs) Thompson, Sir Kenneth (Walton)
Harris, Frederic (Croydon, N.W.) McMaster, Stanley R. Thompson, Sir Richard (Croydon, S.)
Harris, Reader (Heston) Markham, Major Sir Frank Thornton-Kemsley, Sir Colin
Harrison, Brian (Maldon) Marten, Neil Touche, Rt. Hon. Sir Gordon
Harrison, Col. Sir Harwood (Eye) Matthews, Gordon (Meriden) Turner, Colin
Harvey, Sir Arthur Vere (Macclesf'd) Mawby, Ray Turton, Rt. Hon. R. H.
Harvey, John (Walthamstow, E.) Maxwell-Hyslop, R. J. Tweedsmuir, Lady
Hay, John Maydon, Lt.-Cmdr. S. L. C. van Straubenzee, W. R.
Heath, Rt. Hon. Edward Mills, Stratton Vickers, Miss Joan
Hiley, Joseph Montgomery, Fergus Walker, Peter
Hill, Mrs. Eveline (Wythenshawe) Morrison, John Wall, Patrick
Hill, J. E. B. (S. Norfolk) Neave, Airey Ward, Dame Irene
Hirst, Geoffrey Osborne, Sir Cyril (Louth) Whitelaw, William
Hobson, Rt. Hon. Sir John Page, Graham (Crosby) Williams, Paul (Sunderland, S.)
Holland, Philip Pannell, Norman (Kirkdale) Wills, Sir Gerald (Bridgwater)
Hollingworth, John Partridge, E. Wilson, Geoffrey (Truro)
Hornby, R. P. Pearson, Frank (Clitheroe) Wise, A. R.
Hornsby-Smith, Rt. Hon. Dame P. Peel, John Wolrige-Gordon, Patrick
Hughes Hallett, Vice-Admiral John Percival, Ian Woodhouse, C. M.
Hughes-Young, Michael Pickthorn, Sir Kenneth Worsley, Marcus
Hulbert, Sir Norman Pitt, Dame Edth Yates, William (The Wrekin)
Iremonger, T. L. Powell, Rt. Hon. J. Enoch
James, David Prior-Palmer, Brig. Sir Otho TELLERS FOR THE AYES:
Jennings, J. C. Proudfoot, Wilfred Mr. Hugh Rees and
Johnson, Eric (Blackley) Pym, Francis Mr. Jasper More.
Ainsley, William Fitch, Alan Lipton, Marcus
Allaun, Frank (Salford, E.) Fletcher, Eric Mabon, Dr. J. Dickson
Bacon, Miss Alice Forman, J. C. McBride, N.
Bence, Cyril Galpern, Sir Myer McCann, J.
Bennett, J. (Glasgow, Bridgeton) Gourlay, Harry MacColl, James
Benson, Sir George Greenwood, Anthony MacDermot, Niall
Blackburn, F. Griffiths, David (Rother Valley) McLeavy, Frank
Blyton, William Hamilton, William (West Fife) Manuel, Archie
Boardman, H. Hannan, William Mapp, Charles
Bowden, Rt. Hn. H. W. (Leics, S.W.) Harper, Joseph Mason, Roy
Bowles, Frank Hill, J. (Midlothian) Mayhew, Christopher
Braddock, Mrs. E. M. Hilton, A. V. Mendelson, J. J.
Bray, Dr. Jeremy Holman, Percy Millan, Bruce
Broughton, Dr. A. D. D. Hooson, H. E. Milne, Edward
Butler, Herbert (Hackney, C.) Houghton, Douglas Mitchison, G. R.
Butler, Mrs. Joyce (Wood Green) Howell, Charles A. (Perry Barr) Monslow, Walter
Carmichael, Neil Hughes, Emrys (S. Ayrshire) Morris, John (Aberavon)
Chapman, Donald Hunter, A. E. Mulley, Frederick
Craddock, George (Bradford, S.) Hynd, H. (Accrington) Neal, Harold
Cronin, John Hynd, John (Attercliffe) Oliver, G. H.
Cullen, Mrs. Alice Irvine, A. J. (Edge Hill) O'Malley, B. K.
Dalyell, Tam Janner, Sir Barnett Oram, A. E.
Davies, S. O. (Merthyr) Jeger, George Oswald, Thomas
Deer, George Jenkins, Roy (Stechford) Paget, R. T.
Delargy, Hugh Johnson, Carol (Lewisham, S.) Parkin, B. T.
Dempsey, James Jones, Dan (Burnley) Pavitt, Laurence
Dodds, Norman Jones, Elwyn (West Ham, S.) Pearson, Arthur (Pontypridd)
Doig, Peter Jones, J. Idwal (Wrexham) Pentland, Norman
Duffy, A. E. P. (Colne Valley) Jones, T. W. (Merioneth) Popplewell, Ernest
Ede, Rt. Hon. C. Kelley, Richard Prentice, R. E.
Edwards, Robert (Bilston) Lawson, George Price, J. T. (Westhoughton)
Edwards, Walter (Stepney) Lee, Miss Jennie (Cannock) Probert, Arthur
Evans, Albert Lever, L. M. (Ardwick) Pursey, Cmdr. Harry
Fernyhough, E. Lewis, Arthur (West Ham, N.) Rankin, John
Redhead, E. C. Skeffington, Arthur Symonds, J. B.
Rees, Merlyn (Leeds, 8.) Slater, Mrs. Harriet (Stoke, N.) Taverne, D.
Rhodes, H. Slater, Joseph (Sedgeftetd) Taylor, Bernard (Mansfield)
Roberts, Albert (Normanton) Small, William Thornton, Ernest
Roberts, Goronwy (Caernarvon) Snow, Julian Wade, Donald
Robertson, John (Paisley) Soskice, Rt. Hon. Sir Frank Warbey, William
Robinson, Kenneth (St. Pancras, N.) Spriggs, Leslie Wilkins, W. A.
Rogers, G. H. R. (Kensington, N.) Steele, Thomas Willis, E. G. (Edinburgh, E.)
Ross, William Stewart, Michael (Fulham) Winterbottom, R. E.
Short, Edward Stones, William Woof, Robert
Silkin, John Stress, Sir Barnett (Stoke-on-Trent, C.) Yates, Victor (Ladywood)
Silverman, Julius (Aston) Swain, Thomas
Silverman, Sydney (Nelson) Swingler, Stephen TELLERS FOR THE NOES:
Mr. Grey and Mr. Whitlock.

Amendment made: In page 76, line 1, leave out from beginning to "what" and insert "specify".—[Sir K. Joseph.]

Sir K. Joseph

I beg to move, in page 76, line 27, to leave out "next following" and insert: "following provisions of this".

Perhaps we can take with this Amendment those in page 76, line 28, leave out from "appeal" to "under" in line 29 and insert "or an application", in line 30, at end insert: (5) The local authority may at any time vary the scheme in such a way as to increase the amount of the surpluses on revenue account as settled by the scheme for all or any periods (including past periods); in Clause 76, page 78, line 28, leave out from "under" to "and" in line 29 and insert "this Part of this Act"; in line 30 leave out "by way of appeal" and insert: under the following provisions of this Part of this Act"; in line 32, leave out "the appeal is"; in line 36, leave out "on the appeal" and insert "in the proceedings"; in page 79, line 47, leave out "on the appeal" and insert "in the proceedings"; in Clause 79, page 82, line 24 leave out from beginning to "if" in line 25 and insert: (2) Without prejudice to the right of appeal conferred by the foregoing subsection, either the local authority or any person having an estate or interest in the house may at any time apply to the county court for a review of the estimate of the surpluses on revenue account in the scheme. (3) On an appeal or an application under this section the court may, as it thinks fit, confirm or vary the scheme (but on an application under subsection (2) not so as to affect the provisions of the scheme relating to the works). (4). in line 31 at end insert: (4) On an application under subsection (2) of this section the surpluses on revenue account as settled by the scheme may be varied for all or any periods, including past periods, and the county court shall take into consideration whether in the period since the control order came into force the actual balances mentioned in section 74(3)(c) of this Act have exceeded, or been less than, the surpluses on revenue account as settled by the scheme as for the time being in force, and shall also take into consideration whether there has been any change in circumstances such that the number of persons or households who should live in the house, or the net amount of the rents and other payments receivable by the local authority from persons occupying the house, ought to be greater or less than was originally estimated.

Mr. Deputy-Speaker

If that is agreeable to the House, yes.

Sir K. Joseph

This is the group of Amendments which carries out the Government's undertaking given in Committee to allow the local authority to appeal to the court to reduce the settled surplus so as to balance the right given to the dispossessed proprietor, which was originally in the Bill, to appeal to the court to raise the settled surplus. In amending the Bill, we have found it easiest to eliminate Clause 75 as drafted and to redistribute the various parts of it into Clauses 74 and 79.

This is a series of drafting Amendments, but the real substance of the matter is to put into Clause 74 a power to the local authority to raise the settled surplus at its own discretion either on its own initiative or on the approach of any party interested in the property. This means that if the dispossessed proprietor or any other party interested in the party seeks to have the settled surplus raised and the local authority agrees that it should be raised, there is no need to bother the court.

In all other cases in which either the local authority wishes to have the settled surplus reduced or a party interested in the property wishes to have it raised but the local authority does not agree, there is now in Clause 79 a right of appeal to the court and a right given to the court to vary the settled surplus up or down.

There are two other points which I should mention. The first is that the application to the court for an alteration in the settled surplus shall not in any way hold up the effectiveness of a works order. The second is that the court shall take into account the trend of the actual settled surplus—that is, the outcome of the actual revenue and expenditure account. But the whole flavour of the Bill gives the settled surplus a long-term standing. I suggest that the court would not be willing to alter on a review without seeing the alteration supported by a real long term trend. Otherwise, it would only bring work upon itself by inviting applications on every minor fluctuation.

I put the Amendments to the House in order to achieve a number of minor drafting points.

8.15 p.m.

Mr. Millan:

I mentioned on the previous Amendment in anticipation a criticism of this series of Amendments. Perhaps I can make it briefly now.

If these Amendments are carried, the position will be much fairer than it is under the Bill and we shall also get an increasingly artificial position. We are now giving local authorities as well as the dispossessed proprietor the right to appeal to have the surplus varied. That is only just, because the surpluses may have been estimated at too high a figure. That part of the Amendment is, naturally, acceptable. All the Amendments are certainly an improvement on the Bill.

However, an absurd position is reached when we see in the Amendment in Clause 79, page 82, line 31, that any adjustments to the surpluses, the estimates, can be retrospective. The Amendments say that they can be for all or any periods, including past periods…". It is misleading for the Minister to say that the whole flavour of the Bill is intended to give the surpluses as settled by the scheme a long term aspect. That is not what will happen. I imagine that one will not necessarily get applications to the court every six months of every year, but if the application is successful and the adjustments are made retrospectively this can bring the whole financial transaction on to an actual as distinct from an estimated basis, which is precisely the matter about which we were arguing on the previous Amendment.

I find it extremely difficult to see why the Minister should have been so adamant about refusing the other Amendments and so pleased with these Amendments. To have gone right over from the actual to the estimated surpluses would have got us there in one jump without the necessity of all these applications having to be made to the court. I do not know what happens about legal expenses. I suppose that the court could make an order about them. I do not know what the legal position is.

Apart from this being a complicated way of going about the matter which is likely to lead to certain delays and anxieties for the local authority, it must be a very pensive way. Although what is proposed is better than the Bill as it stands, I am very disappointed that the Government should have chosen this elaborate way of doing things.

Amendment agreed to.

Further Amendments made: In page 76, line 28, leave out from "appeal" to "under" in line 29 and insert "or an application".

In page 75, line 30, at end insert: (5) The local authority may at any time vary the scheme in such a way as to increase the amount of the surpluses on revenue account as settled by the scheme for all or any periods (including past periods).

In page 76, line 37, leave out Clause 75.—[Sir K. Joseph.]