§ 3.39 p.m.
§ The Minister of Housing and Local Government (Mr. Anthony Greenwood)
I beg to move, That the Bill be now read a Second time.
The Housing Subsidies Bill, which received a Second Reading in December last year and which lapsed when the General Election took place, dealt only with that part of the housing programme which is undertaken by local authorities, new towns and housing associations. The present Bill combines the new subsidies for rented housing in Part I, with entirely new provisions for helping owner-occupiers in Part II.
In moving the Second Reading of the original Bill in December, last year, my hon. Friend the Joint Parliamentary Secretary gave an extremely clear and detailed account of its provisions and I do not propose, therefore, to go through Part I Clause by Clause. Instead, I will briefly summarise the basic concept of the new subsidy system and how it differs from earlier housing subsidies; and I will explain the significant changes which have been made since the earlier Bill was introduced.
Ever since 1919, housing legislation has reflected the social philosophy and economic policies of the Government of the day, and this Bill is no exception. The basis of our housing policy is twofold—first, to overcome the immediate and appalling need for more houses to let at reasonable rents, and, secondly, to help people to own their own homes. Our new Bill is based on that policy.
The White Paper on the Housing Programme set out the justification for the Government's decision to increase the public authority housing output to about 250,000 houses a year in 1970. The crux of it was in one stark and poignant sentence:In Great Britain, some 3 million families still live either in slums, in near slums or in grossly overcrowded conditions.That bald statement has not been challenged and no one in this House denies the crying need to provide better homes for these families. There is no room for complacency and there is certainly no complacency on the part of Her Majesty's Government.
667 But, as the White Paper explained, slums and obsolescence are only part of the picture. We also need 30,000 houses a year to replace those lost through redevelopment and road widening in addition to the slum clearance. We need about 140,000 houses a year to keep pace with our rising population. We need to add about 700,000 to the total stock to overcome shortages and to promote mobility. These are demands which both the public and private sector can help to meet, and I want to see the total programme divided roughly equally between the two sectors.
The problem of homelessness, as the B.B.C. television play "Cathy Come Home" reminded us, is still a tragic one, particularly in London. But the position has improved a lot since the Protection from Eviction Act was passed in December, 1964, followed by the Rent Act, 1965. By increasing security of tenure, these Acts have greatly reduced the number of people evicted from rented accommodation and this has had its effect on the total level of homelessness. In the old L.C.C. area, for example, more than 2,000 homeless families a year had to be taken into welfare accommodation in 1962, 1963 and 1964. In 1965, the total fell to 1,338, but it is still cruelly high.
Voluntary organisations, as I am the first to admit, are doing magnificent work, but we must expect that local authorities will continue to play the biggest part in accommodating families which become homeless. Co-operation between welfare authorities and housing authorities is vitally important, particularly so that families in difficulty can be helped without the threat of the family breaking up. Once that family home is lost, the difficulties of re-establishing that family are vastly increased. The circular which the Minister of Health, the Home Secretary and I issued in October underlines this point, and I commend it to hon. Members who, like me, are concerned about this problem of homeless families.
Our aim must be to eliminate so far as is humanly possible the causes of homelessness and the most important factor of all is to provide good housing to let at moderate rents. We have, therefore, given highest priority to encouraging local authority house-building in the areas of greatest need and the Bill gives substan- 668 tial help to local authorities so that over the next few years they can make a real impact on the housing problem in all its aspects.
Part I, which applies only to England and Wales, marks a major departure in housing legislation. For the first time since 1923 we move away from the standard unit subsidy, that is, the same basic subsidy for each house irrespective of cost, location or changes in interest rates, and we put in its place a 60-year subsidy which is related to building costs, site costs and the costs of borrowing. In place of the present basic subsidy, which was fixed in 1961 at £8 or £24, depending on the state of the local authority's housing revenue account, Clause 2 introduces the aggegrate cost subsidy.
It works like this: the local authority applies to the Minister for subsidy approval for houses—or flats, of course—which it proposes to build, and approval is related to the actual cost or value of the land and the estimated cost of site works and construction at the tender stage. The approved cost of all houses built by the authority in the financial year is then totalled and the subsidy covers the difference between the loan charges incurred in that year and what the loan charges would have been if the money had been borrowed at 4 per cent.
To simplify the new system, the local authority associations have agreed that the Minister should specify representative rates each year instead of calculating borrowing costs separately for each of the 1,500 or so authorities. Clause 2, therefore, gives the Minister power to specify the rate or rates of borrowing, after consulting the authorities, by means of an Order subject to a negative Resolution. There has to be power to specify more than one rate, because the borrowing arrangements for the new towns, for example are different from those from local authorities.
Let me give specific examples. On a house costing £3,000, including land, the loan charges at 6¼, per cent. would be £199 a year, and at 4 per cent. £132 a year, a difference of £67. On a flat in a high block costing £5,000—which, I fear, is not by any means unusual—the loan charges at 6¼ per cent. would be £332 and at 4 per cent. £220, a difference of £112. Hon. Members should compare 669 these amounts of subsidy, £67 and £112 a year, with the basic subsidies under the 1961 Act of £8 or £24.
The Bill also provides additional subsidies to meet special needs—for flats in high blocks, housing for industry and town development, the extra costs incurred through mining subsidence, building in local materials such as Cotswold stone, and special provision for expensive sites. In each case the special subsidy is paid in addition to the basic aggregate cost subsidy.
There are two important changes in the subsidy provisions since the introduction of the earlier Bill. In its original form, the Bill provided that the new rates of subsidy for local authority housing would apply only to those houses for which a tender was approved by resolution of a council after 24th November, 1965, the date of the White Paper. This simply followed the precedents in earlier housing legislation.
This was criticised by hon. Members at the time of Second Reading. They argued that some authorities had decided to push ahead with their building programmes in the belief that the Government would not want them to delay until the new financial arrangements for council housing, which we had promised in our 1964 election manifesto, had been announced, and that they would, therefore, be penalised if they did not receive the new subsidies on houses already in the pipeline. The Government agreed that there was a good case for giving special help to a limited number of councils, with exceptional problems of slums or housing shortage, which were already committed to large building programmes.
A Government Amendment to the Bill was put down for committee stage and similar provisions now appear in Clause 1(3)(c) and (d). These provide that, in the case of those selected authorities, the new subsidies will be paid on houses completed on or after the 25th November, 1965. A first list of authorities to qualify under this special provision was published in HANSARD on 28th February this year. A complete list is now being prepared and will be published shortly. My hon. Friend the Joint Parliamentary Secretary will have more to say about the basis of selection for retrospective subsidy when he replies to the debate.
670 The second important change in the subsidy provisions is one which was foreshadowed in the earlier Bill, which said that subsidy would be payable on the cost of the housesso far as that cost is approved by the Minister as having been reasonably incurred".We attach so much importance to this aspect of the new subsidy system that the Minister's powers are now spelt out more fully in Clause 3(4) of the Bill.
To put it quite briefly, costs are related to standards. Although housing standards have been rising, the mandatory minimum standard has not changed in some respects since 1949 or since 1952 in others. The House will recall that improved standards were recommended by the Parker Morris Committee in 1961. I have decided to set a new standard based on the Parker Morris standards, which will come into effect about two years from now.
The new subsidies will help local authorities to achieve the new standard. But there are two pitfalls which, hon. Members will agree, we must avoid. In the first place, the proposed new subsidy will be a percentage contribution towards the cost of each house. I therefore have to ensure that the cost of the house is kept to a reasonable level to avoid an open-ended commitment of Exchequer moneys. Secondly, while we are trying to bring all authorities up to this standard—and the Parker Morris size house is a very good house indeed—we just cannot afford to let other authorities build to even higher standards. The cost of housing schemes from now on will, therefore, be limited by new cost yardsticks which the Ministry have prepared and are publishing. I intend that the new subsidy will be payable only up to the cost limit set by the yardstick. This deals with the difficulty of the open-ended commitment.
Secondly, schemes will not receive loan sanction if their cost exceeds the yardstick by more than a tolerance of 10 per cent. plus, of course, the reasonable cost of items like garages, which do not qualify for subsidy. This will limit the amount that local authorities can spend on each house, even if they are willing to bear the extra cost themselves. We have to prevent a situation where some local authorities might use more than their fair share of the global resources available 671 for house building. This is essential if we are to raise the general standard of local authority housing.
These measures will help local authorities with their housing programmes. They will know with certainty what subsidy they may expect to get on each scheme. They will know in advance the cost limits within which they must operate. They will have full freedom within these limits to vary designs to suit the needs of their tenants at a standard which meets modern needs.
I believe that local authorities will welcome arrangements under which they will be able to plan the cost of their programmes with greater assurance and can introduce and operate the most modern methods of cost control. The local authority associations have been consulted. All have accepted the principle of the new cost control arrangements. The majority have also accepted the new yardsticks, but the G.L.C. and the London boroughs feel that they ought to be higher for London. My hon. Friend will be discussing this point with the Greater London Council next week.
I should like to summarise very briefly the principal objectives of the new subsidy system. They are, first, to enable local authorities to increase and sustain their building programme. Secondly, to relieve them of the uncertainty about interest rates which stands in the way of that long-term planning which improved productivity demands. Thirdly, to encourage them to move towards Parker Morris standards. Lastly, to introduce a new discipline of cost control, which will help to restrain rising prices and stimulate greater efficiency in house building.
I turn now to part II of the Bill, which applies to Great Britain as a whole and which will come into operation on 1st April, 1968. I hope that my task in explaining it may have been made a little easier by the White Paper, "Help Towards Home Ownership", which we published on the day that the Bill was introduced. We want to bring home ownership within the reach of more families, and this is what is what part II is designed to do. It goes without saying that those who are better off are more likely to be able to buy their own homes, than 672 those on low incomes. But one of the absurdities of our present arrangements is that we give substantial assistance to those who are better off, rather less to those who are not quite so well off, and none at all to those who are at the bottom of the scale.
This derives from the tax reliefs which are given on interest payments. If a man has sufficient income liable to tax at 8s. 3d. in the £, he is entitled to tax relief at that rate, or strictly at 6s. 5d. after account is taken of earned income relief, on all his mortgage interest. His interest, in fact, is effectively reduced by about one-third. Those who pay tax at only 6s. in the £ or 4s. in the £ before taking out a mortgage, get correspondingly lower tax reliefs, and the man who pays no income tax, of course, gets no relief at all.
We want to remove those anomalies and to put those on lower incomes in broadly the same position as the taxpayer at the standard rate. We shall be evening up, not evening down. We propose to do so by introducing, with the co-operation of the lending agencies, a new type of mortgage which has come to be called an option mortgage. On these, interest payments will not be eligible for Income Tax relief. On the other hand, however, they will attract an Exchequer subsidy.
The borrower himself who is taking out a mortgage will have a choice. He can either choose to have tax reliefs as at present, or he can have the Government subsidy. The same choice will be available to those who already have mortgages. People's individual circumstances and prospects vary, and every borrower will have to make up his own mind which will suit him best.
Those whose tax relief is below that available to the taxpayer at the standard rate will usually find that the new scheme is better from their point of view. It will certainly be so for the great majority of the borrowers who pay tax at 4s. in the £, and for those who pay no tax at all. At present, there are 500,000 borrowers in these two categories, and more will be attracted into home ownership by the scheme. Many of the 750,000 people who pay tax at 6s. in the £ will also find the option mortgage scheme advantageous. But they would 673 be wise to consider their prospects of becoming standard rate taxpayers.
On annuity type mortgages of the sort normally given by building societies and local authorities, the subsidy will be 2 per cent on the capital outstanding from time to time. Or, to put it differently, the interest payable on the mortgage will be reduced by 2 per cent.—subject to an interest "floor" of 4 per cent.
In the case of endowment type mortgages, where the capital is not repaid until the end of the period for which it is borrowed, a 2 per cent. subsidy would provide a very much greater benefit. To keep the subsidy on the two types of mortgage broadly in line therefore, only l¾ per cent. will be paid on endowment mortgages.
The present scheme is a modification of that outlined by the Chancellor of the Exchequer to the House last March. The principle is the same, but the subsidy is to be calculated on a quite different basis and that is the reason why it has now been fixed at 2 per cent. instead of 2½ per cent.
Under the original scheme, the subsidy in the case of the normal annuity type mortgage would have been the difference, on the one hand, between the payments which the borrower would have had to make if they had been calculated at the rate of interest due to the lender and, on the other, what they would have been if calculated at a rate of interest 2½ per cent. below that. It would have been a fixed sum each year which would have remained constant throughout the mortgage.
That scheme was not acceptable to the building societies, which believed that the amount of administrative work involved—in particular, in calculating their claims upon the Exchequer for subsidy payments—would have been too onerous. The present scheme, I am happy to say, will be much easier for them to administer.
The 2 per cent. subsidy to be paid by the Exchequer will be calculated on the capital outstanding from time to time in the same way as the interest on a loan is calculated. Since the capital debt on a mortgage is reduced year by year, so the subsidy will be reduced year by year.
It is not possible to make any direct comparison between the 2½ per cent. proposed under the earlier scheme and the 674 2 per cent. proposed under this one, but the total subsidy paid over the first 10 years would be roughly the same in each case. This is important, because most mortgages are paid off within the first 10 years as people sell their houses and take out a fresh mortgage to buy another. The method by which the subsidy is passed on to the borrower will be laid down in schemes made by the three Housing Ministers. It will vary with different types of mortgages, and different types of lending agencies.
For the ordinary type of building society annuity mortgage, the new borrower in the future will, in effect, get a mortgage at 2 per cent. below the current rate of interest charged by the society, and his periodical payments will be calculated accordingly. Apart from lower payments, he will have the advantage of having his capital debt paid off rather more rapidly. This is because it is inherent in annuity type mortgages that, the lower the interest rate, the quicker the capital debt is reduced.
Existing borrowers whose mortgages have been running for some time present a special problem. Payments have often been maintained at their original level, although interest rates have changed and the payments will often bear no relation to current rates of interest. To get over this difficulty, the existing payments of all existing borrowers who opt to take the subsidy will be reduced by a uniform one-sixth, which represents roughly the effect of the subsidy in other cases. Any disparity will be corrected by a small adjustment of the period.
For the other types of mortgage the calculations, I am happy to say, are rather easier. It is simply a matter of recalculating the interest due each year at 2 per cent. lower than the rate being charged by the lending agency—or for endowment mortgages, 1¾ per cent.
Co-ownership housing associations in which the members own co-operatively the houses they occupy have been treated as being on all fours with owner occupiers for tax purposes and we propose to extend the right to receive the subsidy to them by regulation.
Even with the advantage of the option mortgage scheme, some people may still find it difficult to buy a house because they cannot raise the deposit. Linked 675 with the option mortgage scheme, therefore, is a new scheme by which guarantees will be provided so that loans can be made in excess of the amount which would normally be advanced by a building society. It has been agreed in principle with the Building Societies Association and the British Insurance Association.
There are, of course, existing arrangements under which mortgages above the normal level are often advanced on the collateral security of an insurance indemnity. Under those arrangements the maximum advance is normally 90 or 95 per cent. of valuation, while our new scheme contemplates advances of up to 100 per cent. of valuation in suitable cases.
We have thought it right to graft the new scheme on to the existing arrangements and the guarantee will be provided by an insurance policy in the ordinary way. The Government will join with the insurance company in sharing the risk and the premium which the borrower has to pay will be reduced accordingly. He will be able to add the premium to his mortgage debt, even if it means going above 100 per cent. of valuation, and repay it over the period of the loan. Clause 29 of the Bill provides for these arrangements to be brought into operation on a date to be prescribed in a statutory instrument.
The option mortgage scheme will inevitably make substantial new demands on sources of finance for house purchase. So, too, will the guarantee scheme. It would run counter to the whole object of the schemes to introduce the guarantee arrangements before we were sure that adequate finance was available. To do so, indeed, would only be to increase the size of individual loans at the expense of the number of people who would get them.
We must, therefore, proceed by stages, starting with the option mortgage scheme and moving on to the guarantee scheme when we are sure that this can be done without jeopardising our main purpose. This approach is strongly supported by the building societies and the other lending agencies.
That is the main outline of the option mortgage scheme. It will be worked through the main lending agencies—the 676 building societies, the insurance companies, the friendly societies and the local authorities. We have had lengthy discussions with their representatives over the past months to produce a workable scheme, and I should like to express my warm thanks to them for all the help and co-operation that they have given us.
This is a proud moment for the Government and a great day in our social history. In two years we have restored security of tenure. We have provided machinery for fixing fair rents. A record number of houses have been built. We have helped the less prosperous ratepayers with their rates. Today, we are commending to the House a Bill which symbolises our Socialist housing philosophy. It helps councils to swell the stock of houses to rent and it brings home ownership within the reach of large numbers of families to whom in the past it has been denied by low pay and the inertia of our predecessors.
I hope that the Bill will receive the unanimous support of the whole House.
§ 4.7 p.m.
§ Mr. Geoffrey Rippon (Hexham)
I am grateful, as I am sure the House will be, to the right hon. Gentleman for his careful explanation of the detailed provisions of the Bill and to the Government for agreeing to a Second Reading debate before the Christmas Recess. But I am afraid that I cannot follow him along the lines of his passionate peroration. If the Government really regard this as a proud moment, heaven help us in the future.
We have serious reservations about Part I of the Bill, relating to subsidies to local authorities which I will indicate briefly and which we will pursue in detail in Committee. At the same time—and this is why we are glad to have the Second Reading today—we are anxious that the provisions in Part II, relating to the mortgage option scheme, should be strengthened and brought into operation as soon as possible. We are glad that the Government have adopted the Conservative scheme and abandoned their own later and unworkable one.
We regard it as particularly regrettable that the mortgage option scheme is not to come into operation until 1st April, 1968, and that no date at all is fixed, as the right hon. Gentleman has told 677 us, for the introduction of the guarantees for mortgages up to 100 per cent. of valuation. This delay is the more inexcusable because, as he said, there is in the Bill the decision to make the increases in housing subsidies to local authorities retrospective to November, 1965, although I gladly accept the Minister's declaration that that is in accordance with precedent.
One thing must be made clear at the outset. This Bill cannot in any sense be regarded as a fulfilment of the Government's manifold pre-election pledges. It does no more than provide a meagre mitigation of the disastrous effect of the Government's housing and financial policies. What we have to consider today is the effect of the Bill against the background of a sagging housing programme, soaring building costs, rising land prices and unprecentably high interest rates.
Those facts make nonsense of the Minister's mathematics about a reduction of 2 per cent. in terms of reduced loan charges. On 27th March this year the Prime Minister said at Bradford—and I am glad that I was able to refer to this at Question Time today:Starting from last year's total of 318,000 houses and flats, we shall go on, year by year, exceeding this total.The Minister told us the other day that the figure this year was likely to be 380,000. We will not get 400,000 houses this year, we will barely get 380,000, whatever the December figures are, and we will not get any more next year. So much for what the Prime Minister described, in his inimitable fashion as, not a promise lightly given but a pledge. [Interruption.]
I am sure that hon. Members do not like my referring to this matter. The only comfort that we have is that the Prime Minister did not say, "I mean it sincerely" otherwise we would really be in the cart. All that we have in housing at the moment, taking both sides of the equation, the private and public, is virtual stagnation. In his election address in October, 1964, the Minister followed many of his colleagues in promising that the Labour Party would build more houses, both for rent and for sale. Now we know that they will not. On the Ministry's own figures there are likely 678 to be 30,000 fewer houses built for sale next year.
This is importing an inflationary element into the mortgage option scheme which ought not to be there. The House has to recognise that as a result of the Government's housing policies, and this is relevant, against the background of 3 million families in slum houses, to which the Minister referred, 170,000 families who would have had new homes under a Conservative Government by next year will have to remain in those slums and substandard accommodation. That is the fact and it is on the record in almost every document which the Minister receives from the building industry and from the estimates made.
§ Mr. Frank Allaun (Salford, East)
Whatever the right hon. and learned Gentleman's criticisms of the Government's housing achievements may be, would he not admit that this Measure will give substantial help in increasing the present building programme, and that it is something which his party has refused to do, despite repeated requests from Labour Members over the last 10 years?
§ Mr. Rippon
What I will establish is that whatever this Bill does, in every respect the country is worse off than in 1964. At the same time, as the Government have failed to maintain the momentum of the building programme which they inherited, in spite of all that we have done to lay the foundations of industrialised building, costs have been rising dramatically and since 1964 the price of a new house, including the price of land, has risen by 16 per cent. The cost of land has not cheapened under this Government.
The cost of an acre of land in London has risen by 50 per cent. since 1964.
§ Mr. Reginald Freeson (Willesden, East)
Is the figure of 16 per cent. a rise in prices or a rise in building costs?
§ Mr. Rippon
From the Ministry of Public Building and Works. I will give the hon. Member a copy of the full table, it is provided year by year. The Government have not cheapened the cost of land, 679 because an acre of land acquired for all purposes by the L.C.C. in 1964–65 cost £44,162, while the same amount of land cost the G.L.C. in the first nine months of this year £66,217. The Land Commission Bill will not help because market prices will still prevail, while the levy will add to the cost of the land and go to the Exchequer. In addition the molt-gage rates have risen from 6 per cent. in 1964 to 7⅛ per cent. today
§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish)
Is the right hon. and learned Gentleman saying that if the Government were to promote legislation to control land prices, his side of the House would support us?
§ Mr. Rippon
We warned the country in 1964 of what would happen if it elected a Labour Government pledged to cheapen the cost of land, but with no Measures to do SO. [HON. MEMBERS: "Answer."] The pledges have been made by the Labour Party. The Government were elected on a pledge to cheapen the cost of land and they did not do so. Let the Government answer that. It is the Government who are in the dock on this. [Interruption.]
§ Mr. Rippon
In London, the average total cost of a three-bedroom "unit of accommodation", as the G.L.C. calls it, completed in the year ended 31st March, 1966, was £4,760. including £580 for land, compared with £3,974, including £388 for land in the year ended 31st March, 1964.
Taking into account the higher interest rates prevailing today the amount payable over a 60-year loan period is £20,000 in 1966, compared with £14,000 in 1964. If anyone says that that comparison is purely mathematical, all that I can say is that it was the favourite mathematics of the Socialists when in opposition.
We must judge the mortgage option scheme against the Prime Minister's speech at Stevenage on 16th September, 1964, when he said:We shall cheapen the cost of housing by our interest rate policy.The price of housing has not been cheapened and nothing in this Measure will reduce the cost to the local authority 680 or the house purchaser to anything like 1964 levels. Instead we have the "Great Mortgage Fraud", perpetrated "in all sincerity" by the Prime Minister and his Government.
Let us examine the facts. The table annexed to the White Paper published last week is already out of date. We need a new one based on 7⅛ per cent. And we should have one based on 6 per cent. and a standard rate of tax of 7s. 9d. to get a fair comparison with 1964. The Minister was one of those who repeatedly complained that high rates of interest under the Tories meant that the actual cost of buying a house was nearly double the price.
Now, under a Labour Government, it is more than double the price. The table at the back of the White Paper shows that the total cost of borrowing £1,000 over 25 years at 6¾ per cent. is £2,097; at 7⅛ per cent., which we now have, it is £2,169. In 1964 at 6 per cent. it was £1,955 or £214 less for every £1,000 borrowed than it now is under the Labour Government. Every house purchaser, whether he pays tax or whether he goes into the mortgage option scheme, now pays and will continue to pay substantially more to borrow £1,000 than he did in 1964.
That is leaving entirely out of account the fact that with the rise in costs of housing, £1,000 will buy less. To put it another way a man taking out a £3,000 mortgage at 6 per cent. for 25 years in 1964 and paying the standard rate of tax of 7s. 9d. would have paid just under £3 10s. net a week in the first year. With housing costs up 16 per cent., the standard rate up to 8s. 3d. in the £ and the mortgage rate of 7⅛ per cent., to buy an identical house he would have to raise £3,480 and make a corresponding weekly payment of £4 6s.
This means that all standard rate house purchasers are much worse off than in 1964, and the Bill and the mortgage option scheme will do nothing to help. On the same basis the less well-off house purchaser, paying tax at 6s. would pay £4 14s. a week compared with £3 14s. 6d. in 1964. If he exercises his option under the Bill, he will pay—this is in the first year, of course—£4 16s. 2d. or 2s. a week more; it is not till the fifth year that he begins to get the benefit at all.
681 That was why I thought it was important that the Minister emphasised that people considering whether or not to use the mop gage option scheme if they are at 6s. in the £ will be wise to consider their prospects of becoming standard rate taxpayers. This is important because once existing and prospective buyers have exercised their option their decision will be irrevocable. But whether a man exercises his option or not, all borrowers will be paying about £1 a week more for houses they could have bought on a £3,000 mortgage under a Conservative Government in 1964.
What we do admit—this is something—is that those who pay no tax, or tax at a low rate, will, in the very difficult circumstances in which they find themselves under a Labour Government, get some help—assuming they can afford to buy a house at all with rising prices, the difficulties of bridging finance, and current interest rates. But, in any event, they will be worse off than in 1964, despite all the Labour Party's pledges. Moreover, it is quite manifest that the falling level of private house building at present means that there is a strong likelihood that this scheme may lead to higher prices and so have an inflationary effect. I saw one property correspondent—I believe, in the Newcastle paper, the Journal, my own local paper—was saying that while the subsidy may be £36 a year the additional price of a house could go up £30 a year and there was a balance of about £7.
No doubt this is precisely why the Government have put no date on the provisions of the Bill dealing with guaranteed advances, and yet the finding of the deposit is the greatest problem of a young couple trying to buy a house of their own.
§ Mr. Freeson
Since it appears that the right hon. and learned Gentleman has finished with Part II and sees no benefit in the option mortgage scheme, does that mean that, in the unlikely event of the Tory Party being returned to power, a Tory Government will scrap it?
§ Mr. Rippon
Of course not. It will be made to work in much more favourable circumstances. What I am trying to prevent is fie Government from misleading the House and the country into thinking that there is some improvement which they have brought about, when all they 682 are doing is mitigating the effects of their policies.
The average mortgage loan at present is between 72 per cent. and 75 per cent. of valuation. Even if a building society gives up to 95 per cent. after an insurance guarantee has been arranged the gap between loan and price is often formidable.
We on this side of the House made no promises about 100 per cent. mortgages, which, building societies believe might discourage people from saving for housing. What we did suggest, and promised indeed, was a capital grant scheme to assist young people in their task of saving, just as is done, for example, in Australia. The Prime Minister, on the other band, did make the clearest promise in his Election address in 1964:100 per cent. mortgages, lower interest rates, and cheaper loan charges will help those who wish to buy.They have still got to wait for the 100 per cent. mortgages while interest rates and repayments are, as I have demonstrated, at record levels, and will remain so even after we have passed the Bill.
In all these circumstances, it was an act of cynical hypocrisy for the Chancellor of the Exchequer to assert, as he did on Monday, that the mortgage option scheme is the substantial fulfilment of the Government's election pledges. It is nothing of the kind, as the hon. Gentleman the Member for Westhoughton (Mr. J. T. Price) recognised at the time, and as many other hon. Gentlemen in their hearts must also recognise.
I was asked if we would repeal this Bill. No; we would not repeal it. We hope to improve it. The Bill is better than nothing. What I am saying is that life was better under the Conservatives, and unfortunately, we are letting Labour ruin it.
I turn now to that part of the Bill which deals with the provision of subsides to local authorities. This, the Minister explained, is in substantially the same form as that in the Bill we debated on Second Reading on 15th December last year. We on this side of the House have the same strong reservations, or most of them, that we expressed then. We do not dispute that housing subsidies must be reviewed from time to time and in 683 the light of changing needs and circumstances.
This has been done frequently in the past, and regard must now be had once again to the effect on local authorities and their tenants of soaring costs and higher interest rates. Some upward revision of subsidies in these circumstances was inevitable, but what concerns us—
§ Mr. Roy Hattersley (Birmingham, Sparkbrook)
The right hon. and learned Gentleman says that in the past the housing subsidies had to be reviewed, and now they are to be reviewed, but would he tell the House that on four occasions when that was done with rising prices they were revised downwards?
§ Mr. Rippon
Of course, when things get better one can do it. When they get worse, as under the Labour Government, one has to increase them.
What concerns us is that while the taxpayer will have to shoulder a substantial additional burden no attempt has been made by the Government, in the Bill or elsewhere, to rationalise the subsidy scheme or to ensure that the help goes where it is most needed.
The cumulative cost of this new scheme is formidable. The Explanatory and Financial Memorandum to the Bill gives the total of Exchequer subsidies to local and public authorities for the current year at £83 million. That figure is estimated to rise as a result of the Bill to £145 million a year by 1970–71 on the optimistic assumption that there is an average borrowing rate of 6½ per cent. The Memorandum says that if there were a reduction in the borrowing rate by ½ per cent., that would reduce the additional cost by nearly one-third. It should have been probably, in present circumstances, the other way round. An increase in borrowing rate of ½ per cent. would increase the additional cost by nearly one-third.
The White Paper on Housing, Cmnd. 2858, in describing this new subsidy arrangement said:The whole system of housing finance also needs much deeper study than this Government have yet had time to give to it".They have had another year. When is this study to be completed? No doubt the Parliamentary Secretary will be able 684 to tell us. And how long is it envisaged that the new system of the Bill will last—if a revision is made? Local authorities are concerned to have a degree of stability in planning their operations over the period. We shall certainly wish to examine closely in Committee the financial implications of the new system and its likely effect both on particular areas and on particular needs.
In his speech at Bradford on 8th July—Ministers do talk a lot—the Minister's predecessor, the new Leader of the House, emphasized:The need is to ensure that the Government's generous new housing subsidies are not frittered away but will go to those who need them.He went on:I must hold myself responsible for ensuring that councils follow policies which apply the most help where it is most needed.Well, that is certainly not happening now in a great many cases. According to the housing statistics published by the Institute of Municipal Treasurers and Accountants for 1964–65, nearly one-half of the local authority tenants with incomes of up to £10 a week or less paid more than one-fifth of their incomes in rent. On the other hand, 95 per cent. of those who earned £20 or more paid rent of less than one-tenth. As the Lord President of the Council said:This is not only morally indefensible: it is thoroughly bad housing managementand so, he said, he proposed to take the matter up with the local authority associations, and then, with their approval, with the authorities themselves, so that they could review their rent rebate schemes, if they had them, and consider whether, if they did not, they should have them. I hope that the Parliamentary Secretary will say something about the progress which is being made in this matter.
The Minister, speaking in London on 14th November, spoke also of his responsibility to Parliament for the expenditure on housing subsidies, but he directed his observations then, as he has virtually done today, solely to the fact that the average cost of a three-bedroom council house rose by nearly 10 per cent. between the first quarter of 1965 and the first quarter of 1966. This is serious enough in all conscience, but it is not really the important consideration here.
685 The Minister, quite rightly, emphasised in his speech the concern which is felt in the House, and outside, about the large number of people who are not as well off as the rest of us. He says that it is the Government's intention to help them. What is he doing to follow up what his predecessor said about this, to see that these large subsidies go to those who need them?
The time has surely come when we must insist on sensible rent policies. There are widespread discrepancies between the rents charged by different authorities for similar properties. We have had a detailed analysis of this. It shows that 275 authorities out of 983 still charge maximum rents of less than 30s. a week for post-war three-bedroom houses. There is an obvious disparity between this and rents paid by tenants of other local authorities, and by tenants in the private sector who have a fair rent assessment.
I hope that the Minister is studying carefully the recent report of the working party set up by the Chartered Land Societies Committee of the Royal Institution of Chartered Surveyors, the Chartered Land Agents' Society, and the Chartered Auctioneers and the Estate Agents' Institute. This is an authoritative body, as its title presupposes, and it examined the position in regard to rents and subsidies in the public sector. It stated, and, I think, rightly, that they are in a chaotic state.
The working party concluded that there was no reason why rents in the public sector should be assessed in any different way from those in the private sector, since there was no substantial difference between the income of the tenants in the two groups. This is substantially what the Lord President of the Council said in his speech at Bradford. The report went on to declare that subsidies to local authorities should be paid only on proof that fair rents were being charged but were insufficient to meet outgoings.
I believe that the Minister must see that the local authorities who receive these large sums keep their housing revenue accounts in a proper state. As matters now stand, many additional millions of pounds of public money are to be spent without any guarantee of relief to the 97,000 tenants whose earnings are less than £10 a week, and who are 686 paying more than one-quarter of their income in rent. These are the people who ought to be helped. These are the people whom both sides of the House want to help. These are the people who ought to be lifted above the subsistence level at which they exist, and not the people whose housing subsidy is, in effect a subsidy on their motor cars.
§ Mr. Arthur Blenkinsop (South Shields)
I am following the right hon. and learned Gentleman's argument very carefully. Does he mean to imply that he will recommend a definite mandatory provision that local authorities must adopt rent rebate schemes of a particular character?
§ Mr. Rippon
I am not in favour of that. What I am in favour of is that we should take steps, as we said in our election manifesto, to see that fair rent schemes are brought into operation. I think that the best way of doing this is to ensure that local authorities keep their housing revenue accounts in a proper state, and that is what I have said.
We have the assurance of the Minister's predecessor that he is discussing this with the local authority associations, and hopes then to discuss it with the local authorities themselves. I prefer to await that before being dogmatic, but I am sure that all hon. Gentlemen opposite recognise, as their Ministers have recognised, that something must be done to see that these large sums of money go where they are most needed. The way in which local authorities do this may vary from place to place, because the needs of areas are different, their housing pools are different, and so on, and if hon. Members read Corfield and Rippon on "Target for Homes", they will see it all very carefully set out.
We would like to know what thought is being given to the suggestion, which is also canvassed in the report of the Royal Institution of Chartered Surveyors, that what are sometimes called "portable subsidies" should be paid direct to impoverished families. Will the right hon. Gentleman provide the requested investigation at Government level into the possibility of paying rent allowances direct to tenants on the lines adopted in a number of other countries? We would be grateful to hear from the 687 Parliamentary Secretary whether this is under consideration.
We receive the Bill, as I think the House does, with the minimum of enthusiasm. It is a typical Socialist sellout. It is a sell-out of the home owner. It is a sell-out of the ratepayer. It is a sell-out of the taxpayer. It is a sellout of the public, and, above all, it is a sell-out of the voter. The electorate is in the position of the poor innocent boy who is offered 1s., but has 6d. taken away from him instead and is then offered back 2d. If we decide not to vote against the Bill, it will be only because we believe that we must now try to cut our losses and get another ld. back in Committee.
§ 4.36 p.m.
§ Mr. Frank Allaun (Salford, East)
The right hon. and learned Member for Hex ham (Mr. Rippon) has ignored the key question, which is this: will the Bill help to provide ordinary people with more houses at rents and mortgages which they can afford? That is the criterion. It is an old but true saying that one half of the world does not know how the other half lives. It is also true to say that one half of a city does not know how the other half lives.
Recently, the nation has been helped to find out, and I believe that the conscience of the nation has been jolted, by a television play. I am referring to "Cathy Come Home". I am informed by the B.B.C. that on that night 12 million people watched the play, almost half as many again as the normal Wednesday evening audience. This was due largely to the fact that it had been publicised in advance in the Midlands, because it was in the Midlands that it was produced. I am asking the B.B.C. to put on a special showing of this television play for M.P.s in the cinema in Westminster Hall. I also understand that there is to be a repeat performance on B.B.C. television.
The play dealt with a happily married couple who were separated from their children because of the housing shortage. It lead to an immediate response. The B.B.C. was inundated with 'phone calls and letters. A new organisation called "Shelter" was established to try to help homeless people. In an old people's home in the Home Counties the old folk sub- 688 scribed in small amounts, £5 which they sent to help homeless people.
Perhaps I might give the House one or two examples of what the housing shortage means to the citizens of a typical northern industrial city. If it has been a wet week, I know that my advice bureau will be crowded at the weekend with the tenants of slum houses. They come because the rain has been streaming through the rotten roofs of their houses, and they have had to sleep downstairs in the parlour or in the kitchen. I am frequently visited by constituents who have been on the waiting list for 19 years or more, having applied in some cases immediately after the war. During that time their children have grown up and missed the childhood to which they were entitled, in a decent home with such minimum amenities as hot water, a bath and an inside lavatory.
Then there is the overcrowding and the unhappiness that this creates. In most cities working-class families live in "two-up and two-down"—accommodation with two tiny bedrooms, which are really only box rooms. Take the case where three or more children—probably teenagers—are living in the house. What happens? The father sleeps with the sons and the mother sleeps with the daughters. It is not right or proper that happy family life should be interfered with in this way. It is intolerable in this age.
Will the Bill help these people? The answer is, "Yes, it will". I say this as a not altogether uncritical Labour Member. Ever since 1956—and that date should be remembered—interest rates have risen and, in consequence, the number of council houses built was reduced by half within a very few years. Ever since then, some of us have been urging cheap loans for council house building and for owner-occupiers with low incomes, because of this enormous burden of interest, and the land price racket—
§ Mr. Allaun
I am glad that the right hon. Gentleman agrees. I am glad that he appreciates the truth of the situation, because these are the greatest obstacles to the building of more houses.
I do not wish to say anything about land prices—that question is being tackled under the Land Commission Bill—except to remark that the House of Lords is 689 being dangerously obstructive. It is carrying Amendments which will frustrate the will of the House of Commons and delay reforms put through this House.
§ Mr. Rippon
In that case, why did not the hon. Member object to the Lords Amendments to the Local Government Bill, which raised exactly the same constitutional issues?
§ Mr. Allaun
The Amendments to which I am referring have not been raised in any other place or at any other time. The House of Lords, with its permanent inbuilt majority of Conservatives and landowners, should watch its step.
In my view, it is vital to bring down interest rates, and not just on housing loans. The people are paying a growing toll to the moneylenders. That is beyond the scope of the Bill, but the Bill will at least relieve tenants and owner-occupiers and balance the effect of the dead weight of finance on housing.
A typical council flat initially costing £3,700—£700 being the amount paid for the land—will, by the time interest has been paid for the usual period of 60 years, at the current rate of 6¾ per cent., ultimately cost no less than £15,300. The difference between these two figures is due entirely to the interest charged. I hope that tenants will note that out of every £1 they pay in rent 15s. goes to the financier.
After allowing for the existing subsidy, the amount of rent plus rates works out at nearly £6 a week, which is simply "out of this world" for most working-class fathers. When the present basic subsidy, which will work out at about £1 12s. a week for such a house, has been applied, the rent will still be far too high for most families. Councils are consequently spreading the extra cost of new houses over all thir council houses, some of which were built a generation ago. This means constant and almost annual increases, some of which are alarmingly high. My hon. Friend the Member for Southampton, Test (Mr. R. C. Mitchell) can tell the House of increases up to 31s. a week which are now being imposed, after a big rent increase not long ago.
In Harrow, the council is raising rents by 50 per cent., and in my City of Salford the rents are being raised by up to 690 17s. a week. In many cases the only alternative is to stop building council houses altogether, which would be criminal, when the need is so great. It will be obvious to the House that the constant raising of council rents is a highly unpopular business. It is the biggest disincentive to extending the housing programme in the way that the country needs. Therefore, I warmly welcome the Bill.
Unlike Conservative Members of Parliament who claim that the subsidy is too great, in my opinion it is still not great enough. There will be no dramatic rent reductions as a result of the Bill. At best, it will help to stabilise the position. Despite the big subsidy to council housing that Salford makes out of its rates, I was informed by the city treasurer, some months ago, that it will be years before the new subsidy can make any significant impact on the accumulating deficiency in the housing revenue account. That is why the council has had to raise its rents.
In some London boroughs, where land costs are exorbitant, the situation is even more serious. Including land, an average three-bedroom house is costing £4,500 in one borough. My hon. Friend the Parliamentary Secretary probably knows these facts better than I do. Even with the present subsidy rents will be so high that the people who need these houses most would be unable to afford them. The council pays a subsidy of £4 a week per house, out of the rates. Under the Bill the Government's subsidy will rise, and so the amount paid by the council can be reduced to £2 10s. a week, for which it is truly grateful. Nevertheless, it means paying out of the rate the sum of £7,500, over the next 60 years, for every new flat built in this borough. Moreover, it will be understood that this rates burden will be increased with every new house built. I therefore urge the Government to remove this discouragement to an increase in council house building.
If I am fortunate, or unfortunate, enough to be selected as a member of the Standing Committee which will deal with the Bill, I intend to propose that if the market rate of interest falls by 1 per cent., then the 4 per cent. interest rate should be further reduced to 3 per cent.
A study of council rates shows that they tend to rise or fall in sympathy with 691 the Bank Rate. This now stands at the unusually high figure of 7 per cent. Sooner or later, we hope that it will fall. This should, therefore, lead to some reduction in the market rate of interest, which, in turn, will reduce the contribution required from the Exchequer.
A drop of 1 per cent. in general borrowing rates would reduce the extra cost of the subsidy laid down in the Bill by almost two-thirds. A drop of 2 per cent. in borrowing rates, would result in the Government granting less subsidy than prior to the introduction of the Bill The virtue of my proposition is that if general borrowing rates fall, councils can be given 3 per cent. loans without its costing the Government a penny more than they are prepared to award by way of subsidy in the Bill. Councils should not pay more than 3 per cent. in any case. I am not asking for the moon. In the Labour Government of 1945–51, interest rates under Hugh Dalton were never more than 3⅛ per cent.—
§ Mr. Mellish
In view of the theme which my hon. Friend is adopting, it is important to get it on the record, that, at the moment, councils are borrowing for building houses. At the moment, therefore, they would get this subsidy and, whether interest rates drop or not, this is absolutely certain for the whole period of the loan, which is 60 years. They will benefit from the subsidy which we are now giving.
§ Mr. Allaun
I assure my hon. Friend that I do not under-estimate the value of the new subsidy. However, if market interest rates fall, without costing the Exchequer an additional penny he could reduce the borrowing rate from 4 per cent., let us say, to 3 per cent.—
§ Mr. Allaun
Yes, on all new houses. Not on existing stock, obviously. Hugh Dalton never increased interest rates above 3⅛ per cent. They varied between that and 2½ per cent., which is considerably lower than the rates operating under hon. and right hon. Gentlemen opposite.
What attitude will the Conservative Party adopt towards the Bill? I am ready to bet that hon. Members opposite will 692 not vote against the Second Reading of the Bill, because it is too popular. I am ready to make a further bet that they will do the same as they did with the Rent Act: not oppose a Second Reading, but do everything possible in Committee to whittle down the advantage to the tenants—
§ Mr. Allaun
Yes—or try to get the House of Lords to do the dirty work for them. After all, the Lords are not subject to electoral control.
There are important vested interests at stake here—the financial investors, the land owners and the property owners. I must recall to the House one enlightening incident in Committee on the Rent Act. I drew attention to the fact that five out of the six Conservative Members at that moment on the Opposition Front Bench were all landlords or directors of property companies. Up jumped the sixth Member. He protested indignantly that he, too. was a property owner—
§ Mr. Oscar Murton (Poole)
May I also draw attention to the fact—the hon. Member did not declare this at the time, but passed it off jovially, and we let him off—that the right hon. Gentleman the then Minister of Housing also was a landowner?
§ Mr. Allaun
I thanked the sixth Member for strengthening my case. Leading for the Opposition on housing on that occasion was the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), personally a most amiable man—
§ Mr. Allaun
—who both was and is a director of the £27 million London County Freehold and Leasehold Properties Ltd. Today, we have had a Front Bench speech by the right hon. and learned Member for Hexham who is chairman of a big building firm and a director of three others.
Then, I expect that we will hear from another amiable Member, the hon. Member for Crosby (Mr. Graham Page), who is a director of five property companies 693 and legal adviser to the Property Owners Building Society—
§ Mr. Graham Page (Crosby)
I am a director of one property company, which holds no residential property at all, I am a director of a building society and that is all. I wish that he would get his facts right and not indulge in these smears.
§ Mr. Allaun
I will tell the hon. Member why I am doing it. Hon. Members tend to represent certain classes or sections or interests. That is only right. I believe that, on this side of the House, we represent the people who work by hand and brain and largely the tenants and poorer people, and that, on the other side of the House, there are representatives of property interests. It is right that those interests should be known. I say nothing more than that and I think that I am perfectly entitled to say it.
It is significant—this is why I mention it—that the Financial Times devoted a leading article to the Bill recently under the headline, "Housing Subsidies. Getting Out of Hand". Although it recognised the mortgage option scheme as reasonable and modest, the paper claimed that the housing proposals were neither. The extra cost will be £12 million a year in 1968–69. This is "chicken feed" compared with the £190 million a year being wasted on the maintenance of British Forces in Germany or on much bigger items which right hon. and hon. Gentlemen opposite support.
I hope that the public will not let the Conservatives and their Press drive a wedge between the owner occupiers and the council house tenants. They are both suffering from the same burden, which is high interest rates. For instance, a wealthy man obtaining a mortgage from a building society for £3,500 for 25 years at 7⅛ per cent. enjoys no less than £53 a year relief in Income Tax. Over the 25 years that amounts to £1,325. I am not objecting to that, but simply pointing out that this is far higher than the amount received by the average council house tenant, who, up to now, has been getting £24 a year in some areas or £8 a year 694 subsidy in others. So let us have no more howls about "pampering the council tenants".
I warmly welcome the fact that the poorer house buyers will in future enjoy the same subsidy as that enjoyed for years by their richer brethren. I fear that the delay in introducing this measure until April, 1968, and the 100 per cent. mortgage guarantee scheme until later, is mainly due to the squeeze, which, in turn, is due to our overseas military expenditure. I hope that, in future, mortgagors will be given preference over military expenditure.
I wish the Minister good luck with the Bill, and hope that he will be prepared to strengthen it during its progress through the House.
§ 4.58 p.m.
§ Mr. Walter Clegg (North Fylde)
The first part of the speech of the hon. Member for Salford, East (Mr. Frank Allaun) was admirable, in that it was deeply felt. He had seen the conditions in which tenants were living and wanted to do something about them. He has consistently waged war in the House on behalf of those tenants, not only on this side of the House but against his own Government. However, I could not see the motive for the latter part of his speech, when he talked about property owners on this side.
To put the record straight, while it seems that this should be done, I had better try to inform the hon. Member of my position. I own one house, in which I live, I own another, in which my mother lives, and I have an interest in some property which my firm has. I had better add that I am a solicitor and act for people who buy and sell land—for tenants and for landlords. It works both ways sometimes.
The hon. Member's speech highlighted something which is a problem not only in this sector of welfare, but in all parts. That is, are the people who need the most help getting it? I am sure that the hon. Member was mainly speaking for many of his constituents who need that special help; this was something to which my right hon. and learned Friend the Member for Hexham (Mr. Rippon) also referred. I know that many hon. Members opposite are concerned about this, 695 which we see in the Health Service, in education and so many other aspects.
The great difficulty with housing, as with all the other forms of welfare, is that it is competing for limited funds. The Government, any Government of any party, have only a limited amount to spend. The right hon. Gentleman has to fight in the Cabinet against the Treasury for his share of the cake for housing, as the Secretary of State for Education and Science has to fight for his.
The true question is whether the present structure of the subsidy system, as outlined in the Bill, will fully solve the housing problem, as I thought the hon. Member for Salford, East hoped that it would. I do not think that it will, on its own, because of the amount of public funds which are available. The limitation is partly political. Any Government in power must pay concern to the taxes which they impose to run the Welfare State, and this, in itself, is a limitation.
There is also the limitation of overseas balance of payments. The hon. Member for Salford, East has an acute realisation of this, because he constantly urges the House to change the balance between defence and welfare. He comes down honourably—he feels that this is right—on the side of welfare, housing and many other interests which he has at heart. I cannot help wondering, however, whether or not the Bill will achieve its true aims and whether or not the most important thing mentioned today is the review of the whole structure promised by the Minister's predecessor.
There is one way in which to get more money into housing, which is what we all basically want to do, and that is to have a subsidy which is personal to the family. This would mean that private landlords or private capital could provide housing for letting. This is just not happening at the moment. It is not attractive. Hon. Gentlemen opposite may say, "In that case, we would be giving an indirect subsidy to a private landlord." But if he is providing houses at a fair rent, this would not be a bad thing—
§ Mr. Freeson
I am particularly interested in this matter, although I am uncommitted at this stage. Would the hon. Gentleman state, even if only briefly, the 696 grounds on which he has come to the apparent conclusion that, if we adopt a rent contribution or rent grant system, this will encourage money to flow into rented housing, from the point of view of capital investment?
§ Mr. Freeson
Where has this happened? I have been in the United States, where I discussed and studied this matter in some detail. There is little evidence to show the results suggested by the hon. Member.
§ Mr. Clegg
I am interested in what the hon. Gentleman says. This is something which, I believe, should be considered in the light of the present review. The way in which I think that it would work is that the landlord would get a fair rent. The difficulty at the moment, without the subsidy, is that landlords are not always able to let the properties at the economically high rent which is demanded by them, certainly for the smaller families. I am sure that, if the landlord were given a fair return, funds would flow in from outside.
The burden of tenanted housing is being thrown on to State resources. I will give an example of some of the reasons why rented properties are diminishing on the market, not only in my constituency but throughout the country. I know something of this problem because, in my capacity as a solicitor, I am frequently asked to advise people on their affairs. In my constituency, there is nothing like the shortage that exists in London. However, there are many houses owned not by groups of landlords, using them as an investment, but by people who have saved up and have bought one or two houses. There are three prices to be realised, under the operation of the Rent Act, on these houses. There is the pure investment price, which is the lowest of all; the sitting tenant price, when the tenant buys the house, which is the intermediate 697 price; and then the vacant possession price, when the house can be sold with vacant possession.
Under the Rent Act, what is the position when one of these small houses becomes available? Consider, for example, the case where one of these small property owners comes to me and says that the sitting tenant has died and the property is available. He asks, "Should I let it or sell it?" As a solicitor, because of the different price ranges that I have described, I must reply that if he wishes to protect his capital it would be better for him to sell the house with vacant possession. Once he lets it to a protected tenant the capital value of the house for a considerable period—which might be two generations—would be lowered and he could suffer a capital loss.
I mention this to point out the need to consider the position outside London. I often feel, looking at the problem from the provincial point of view, that we discuss these matters in Parliament after our thoughts have been coloured by what has been happening in the metropolis, instead of thinking of the country as a whole. The problems resulting from the Rent Act vary widely.
§ Mr. Eric Lubbock (Orpington)
Does the hon. Gentleman not think that a great many landlords who own one or two properties and who are not in the business in a big way would sell their properties to local authorities if there was a greater willingness to buy them? Could not the Government encourage authorities to accept properties offered to them by small landlords?
§ Mr. Clegg
It is an idea that could be considered.
I pursued a matter in my maiden speech—and I shall go on pursuing it—about the present set-up of council housing. It is a rigid set-up and this rigidity arises from one main factor; the tenure on which a council tenant holds his property. It is basically a monthly tenancy and that, in law, is all the protection a council tenant ever gets. It is probably comparable with being a grace and favour 698 tenant in St. James's Palace or Hampton Court. In law, a monthly tenant has little more protection than that.
This is a fundamental defect in that once people are in a council house they find it difficult to change houses and particularly difficult if they wish to move to another part of the country. I have been thinking of ways to achieve greater mobility among council tenants and I suggest that, to achieve this, they must be given a greater sense of protection. It is partly psychological that if one has an interest in one's property and one knows that one is likely to be there for a number of years, one is more inclined to spend money on the property. That outlook cannot be prevalent if one is merely on a monthly tenancy.
§ Mr. Julius Silverman
Would the hon. Gentleman not agree that in fact, if not in law, the great majority of council tenants have a tenure similar to a protected tenancy?
§ Mr. Clegg
It depends on the local council. I agree that few council tenants are turned out, Other than for arrears—although the courts deal with a number of those cases and they sometimes deal with them more harshly than they deal with private tenants.
I was saying that the psychological effect of having a term of years as a tenant would enable council tenants to spend more money on their houses for their own comfort. Like my hon. Friends, hon. Gentlemen opposite are anxious to instil a sense of ownership into people and I suggest, therefore, that in certain circumstances local authorities should grant long-term leases, providing for rent reviews to take place at periods during the lease. People could then say, "My family will live in this house for the next 21 years. We can bring up our children and spend our own money to make the house more comfortable because we know for sure that we will be here for a long time". I would also grant a right to assign, subject to the approval of the local authority.
I am convinced that these changes would make the structure of council house tenancies better and would encourage more movement because people would have an interest to assign. We should 699 import this form of protection into council housing, for it would instil not only a sense of ownership but a sense of flexibility. We need this flexibility and a dynamic community, and only if we achieve it will people in, say, the Midlands be prepared to move when there is a shortage of work in the area.
If one has a private house to sell somewhere in the North it is not difficult to sell it—although I have never been able to understand why anyone would, from choice, wish to leave that part of the country and move to London; except, that is, for the purpose of coming to Parliament. The Co-operative Permanent Building Society has shown the amazing difference that exists between the prices of houses in, say, the North-West and in London. To move from a council house in Salford to one in Ealing is almost impossible. However, if there was the sort of interest I have suggested, tenants at both ends would feel that they could transfer their interests, and this would create a healthier situation. A sense of personal ownership in council houses would, I suggest, be of inestimable value.
§ 5.13 p.m.
§ Mr. Robert Davies (Cambridge)
As a member of a local authority—the local authority for the area which I have the honour to represent in this House—I am glad of this opportunity to speak, particularly since my authority recently decided to increase the standard rents of its 9,000 council houses by 25 per cent. from 1st April next. This will, of course, be a considerable blow to the council tenants in my constituency.
I will not comment in detail on every point raised by the hon. Member for North Fylde (Mr. Clegg), although I was particularly interested in his comments about the problem of privately-owned tenanted houses. As for the tenure of council tenants, I understand that, in practice, my local authority, of which I have been a member for nearly 15 years, recognises that its tenants do, in practice, have security and my recollection is that the housing management committee has thought it necessary to obtain a court order before any tenant was evicted. It is fair to say, therefore, that council tenants in my area enjoy considerable security of tenure. To give flexibility, it 700 would seem necessary to secure easier transferability of tenants between different towns and better arrangements for exchanges of tenancies.
I have no doubt that Part I of the Bill, which provides for percentage subsidies, will be of considerable benefit to local authorities, at any rate at existing borrowing rates. This will certainly be the case in the City of Cambridge. Assuming a borrowing rate of 6½ per cent., with a building programme of 500 houses and flats a year—it is a relatively small town with only 9,000 council houses—the subsidies provided in Part I will be £20,000 a year higher than the existing subsidies, and for a relatively small authority this will be of considerable assistance.
Unfortunately, it takes some time for an authority's housing programme to be completed and although this new arrangement will operate on houses on which tenders were accepted in November, 1965, it will not be of great benefit in my area at the moment and will not enable us to meet the considerable deficit of £125,000 in our revenue account, as a result of which the authority has decided to increase the standard rents by a quarter.
On this basis of interest charges, we will get an additional subsidy—these figures are based on the calculations of the city treasurer and myself—of between £20 and £30 a year for a housing unit with a capital cost of between £2,000 and £2,500; a subsidy of between £40 and £50 a year for a housing unit costing, all in, between £3,000 and £3,500; and an additional £65 to £75 a year for a unit costing between £4,000 and £4,500. The Bill will, therefore, be of considerable benefit to my housing authority.
It is evident, however, that the benefit, while very real and substantial when there is a high borrowing rate, as is the case unfortunately today, will fall off and finally disappear entirely if the borrowing rate is reduced. It is important to be honest about this point. If the rate of interest on loans were to fall to 4 per cent., the subsidy would be nil—although to the extent that it does fall towards 4 per cent., that will be a welcome trend indeed.
For that reason, I warmly support the remarks of my hon. Friend the Member for Salford, East (Mr. Frank Allaun). At 701 some stage not only might the benefit of the Bill decline, but become less than the value of the existing 1961 Act subsidy of £8 or £24 a year; and in respect of my local authority, for reasons connected with its revenue account, it would be £29 a year.
I find some difficulty in calculating the subsidy that would be due according to the formula in Clause 2, but it is quite possible to get a clear, if crude, picture of the value of the new subsidy at varying rates if one compares the loan charges that would be payable on units of various capital cost, less the subsidy that would be available under the new Measure, with that available under the 1961 Act.
If one compares the value of the proposed new subsidies for a unit of capital cost of about £3,000 with the benefits now obtainable under the 1961 Act—and they are very considerable at the existing rate of interest—one finds a very considerable fall. With a 6½ per cent. borrowing rate on a unit of all-in capital cost of £3,000, the additional benefit is about £50 a year, but it declines very rapidly to not more than, perhaps, an additional £5 a year when the borrowing rate is 5 per cent.—and below that there is no benefit at all.
Indeed, the value of the new subsidies, taking into account loan charges, when the borrowing rate is reduced below 5 per cent.—and the faster it is reduced below that rate the better—falls away completely, so that at 4½ per cent. the value is about £10 less than the present 1961 Act subsidy and at 4 per cent. it is the full £29 less, because we get at present a subsidy of £29 per house.
If we compare the proposed new subsidy with the Exchequer and compulsory rate subsidies of £35 12s. which were available between 1952 and 1955, then, if the borrowing rate fell below 5½ per cent.—which is not a very low rate—council tenants would benefit less with the new subsidy than they did between 1952 and 1955. I find that in October, 1953, the Public Works Loan Board rate was 4 per cent., so that any house built at that time would have been assisted to the extent of £35 12s. a year more than would be the case if we went back to 4 per cent. with the Bill. We should face that fact, and from it I draw the consequences that 702 are also drawn by my hon. Friend the Member for Salford. East.
I support my hon. Friend also in his reference to the inadequate value of council house subsidies as compared with the value of subsidies, direct and indirect, available to owner-occupiers. This includes the tax relief and the remission of Schedule A because, although justifiable, that is a real subsidy. Table 49 of the National Income and Expenditure Blue Book for 1966, estimates that Exchequer housing subsidies in 1955 amounted to £103 million and that the local authority subsidy amounted to £46 million, making a total of £149 million.
My right hon. Friend's predecessor, the present Leader of the House, answering a Question on 6th July, 1965, said that in 1964–65 the value of tax relief on mortgage interest amounted to £125 million. It would doubtless be more now. In an article in Local Government Finance, the journal of the Institute of Municipal Treasurers and Accountants, in March, 1964, it was estimated that the value to owner-occupiers of the remission of the Schedule A liability for 1962—and doubtless it is considerably higher now—amounted to £85 million.
Those two figures total £210 million, as compared with the Blue Book estimate of £149 million for council house subsidies. Those figures show that the subsidies already being received by owner-occupiers are 40 per cent. more than the housing subsidies made available to council tenants. I therefore agree with my hon. Friend the Member for Salford, East when he said that the existing subsidies for council building are by no means generous.
I have taken no account of Income Tax relief on life endowment policies, which is considerable, and which is enjoyed by owner-occupiers like myself who have financed house purchase in this way. I have checked what subsidies, direct and indirect, I receive from the State. I do not know whether my arithmetic is right—it often is not, which is why I get the help of my friends in the mathematical laboratory at Cambridge—but I believe that with the inclusion of Schedule A remission I enjoy a subsidy of £80 or £90 a year in respect of my purchase of a comparatively small house, which some people understandably mistake for a council house. This is a very considerable 703 subsidy, and much more than that enjoyed by council tenants.
It should be recognised that council tenants receive an additional concealed, but necessary and unavoidable subsidy—and if it were not made local authorities would inevitably make a profit on housing which I would consider highly undesirable—to the extent that the open market rents of council houses would certainly significantly exceed their economic rents when fixed on a historic cost basis.
The right hon. and learned Member for Hexham (Mr. Rippon), when speaking of rent policies, referred to Cmnd. 2838, Housing Programme 1965–70, from which he quoted that the whole question of housing finance needs much deeper study than this or any other Government have yet had time to give it. That is perhaps not true of hon. Members opposite, because they had plenty of time but failed to give it the deeper study it requires.
It is important to direct attention to this. I get the impression that the philosophy underlying the new subsidies, as set out in the White Paper, is that the subsidies should be used, at any rate largely, to make it possible for council tenants who would not otherwise be able to afford to do so to live in a reasonable house without spending an unreasonable proportion of their income on rent—that is, to make it possible for local authorities to provide generous rebates for tenants who cannot afford the standard rents of their council houses.
I do not know whether this should be mandatory, but I believe that it is essential that the rent policies of local authorities should be so designed that the aggregate standard rents of their houses equals the aggregate economic rent. I am not referring to market rents. I mean the historic economic rents. The aggregate standard rents of the houses should cover the cost of providing and managing them. Some people cannot possibly afford the standard rent of a house just because, particularly with past high interest charges and other high costs, it would necessitate their paying an unreasonable proportion of their income on standard rent.
I believe—this is hinted at, if not clearly stated, in the White Paper; it either does or should underlie the new 704 Subsidies—that the Government subsidy ought to be used to meet the cost of rebates for poorer tenants—that is, to enable those who could not otherwise afford to do so to live in reasonable modern houses. In so far as it is not sufficient, it should be topped up by a local rate contribution.
In addition, there should be a rate contribution to offset the cost to housing revenue accounts of the deficit resulting from undertaking housing operations which are not properly the business of a housing authority and which, although legally and properly charged to housing revenue account, result from the actions of councils as public health authorities. This is so with regard to slum clearance. Every time a housing authority must rehouse somebody from a slum house, because of the operations of that authority, not as a housing authority, but as a public health authority, it throws a burden on the revenue account and imposes a burden on other council house tenants which they should not have to meet. It should be a charge on the community at large.
§ Mr. Julius Silverman
This also applies to the ratings of what are called 1954 houses. This matter is quite distinct from the ordinary housing revenue account, but yet it is a burden upon it.
§ Mr. Davies
I agree. There are many other fields in which at the moment housing revenue accounts have to bear costs which properly are chargeable to the community at large. There should always be a rate contribution from a local authority to offset these charges, which unfortunately are, legally, quite properly chargeable to revenue accounts.
A great deal more work needs to be done on housing finance. The present basis of the Government subsidy, beneficial as it is at existing and high rates of interest, is very largely arbitrary. If and to the extent to which the Exchequer subsidy should be used to reduce the standard rents of council houses for poorer tenants to make it possible for them to live in a reasonable house without having to pay an unreasonable proportion of their income in rent, it should be directly related to the cost of doing so.
It is not so at the moment. It is purely coincidental if it works out that way. 705 If and to the extent to which some part of the Exchequer subsidy should be used to reduce the general level of standard rents, to that extent and for that part it should again be directly related to the cost of doing so and should be calculated on that basis.
While greatly welcoming the Bill, because I think that it will be of great assistance to local authorities—it will certainly be so to my own—I hope that the Minister and his colleagues will give housing finance the deeper study which I am sure that it needs and to which reference is made in the Housing White Paper.
§ 5.35 p.m.
§ Mr. Oscar Murton (Poole)
I congratulate the hon. Member for Cambridge (Mr. Robert Davies) on his statistical erudition. I will not pretend that I was able to follow it line by line. I only hope that the Official Reporters were, because it was very interesting. I notice that the Minister was trying to think how the hon. Gentleman's recommendations could be applied in practice, as I was.
I am sorry that the hon. Member for Salford, East (Mr. Frank Allaun) has left the Chamber, because it is always with particular pleasure that I see him rise, because he usually endeavours to submit an argument which causes a certain amount of trepidation on the Treasury Bench. I noticed today particularly that the hon. Gentleman got dangerously near to the very well known but dangerous figure of 3 per cent. which the right hon. Member for Belper (Mr. George Brown) will go down through the ages in the annals of fame as having pronounced.
§ Mr. John Fraser (Norwood)
My right hon. Friend the Member for Belper (Mr. George Brown) was talking about something which he hoped for and which we all hope for. If that is to be quoted, perhaps fie hon. Gentleman would quote fully and accurately and not merely reproduce what was said in the Daily Express.
§ Mr. Murton
I am obliged. I will:What we propose to do is to have immediate discussions with building societies, local authorities and other interested parties for reducing the mortgage rate. We shall try to get it down immediately for new mortgages. We have something in mind to the order of 3 per cent., though we are not committed to that figure.706 The date was 26th September, anno 1964.
I am sorry that the heavenly twins, if I may so disrespectfully refer to them—the two Parliamentary Secretaries who accompany the right hon. Gentleman on these occasions—have left. If I am not out of order in referring to them as Castor and Pollux, one was a horseman and the other was a boxer. The hon. Member for Bermondsey (Mr. Mellish) was probably the boxer, because he turned in some alarm when 3 per cent. was mentioned. He consulted his right lion. Friend and then said, or inferred, to the hon. Member for Salford, East that the argument which was being advanced was not one which he wished to pursue.
Both Parliamentary Secretaries, if I am to carry mythology a little further, were argonauts and, therefore, both were fighters and were also involved in another piece of mythology, in something called the Calydonian boar hunt. It is a pity that the Under-Secretary of State for Scotland was not present at that point on the Treasury Bench to take an interest in this discussion, because the Scottish side of this matter does arise and it is a matter of some importance.
By a strange coincidence, it is exactly one year since the Second Reading of the previous Housing Subsidies Bill. I do not know whether this is intentional, but that Bill received its Second Reading on 15th December, 1965. It makes one think that, even allowing for the supervention of a General Election, there has been a considerable, indeed inordinate, delay on the part of the Government in getting round to this subject again, especially as there are in Part I of the Bill very few alterations to its predecessor.
It is relevant here to quote something which the Joint Parliamentary Secretary, the hon. Member for Bermondsey, said on that occasion about the need for increased council house building:For years, uncertainty about interest rates likely to be payable on houses yet to be built has put a curse on long-term planning.—[OFFICIAL REPORT, 15th December, 1965; Vol. 722, c. 1285.]In my view, in their new proposed basic study the Government have gone very much to the other extreme. Not only will local authorities be insulated from what I would call the realistic costs of borrowing, but they will also be cushioned in certain respects against the effects 707 of expensive sites and of tall buildings by the grant of supplementary subsidies. This is certainly a venturesome policy.
Is it not verging on the foolhardy? It has always been the accepted commercial practice to borrow short-term in times of high interest rates in the hope—it is a hope, though not a pious one, I hope—that there will be lower interest rates some day. In commercial practice, it is best not to borrow for too long a period at excessively high rates.
We now have an odd situation. If local authorities build at a time when interest rates in the preceding year have been high, they are assured of that high rate of subsidy for no less than 60 years. Obviously, this will lead to a scramble to climb on to the bandwagon. The political life of the Chancellor of the Exchequer has so far been dominated by thoughts of the need to keep the economy in balance by the use of the well tried fiscal weapon of the interest rate. One wonders whether he will be very happy to know that that can go on indefinitely.
Conversely—and this is surprising—if interest rates fall, the basic subsidy will be of considerably less value to the local authorities, which will no doubt prefer to sacrifice that subsidy for a lower interest rate which they may be able to obtain on the open market. Meanwhile, when this has taken place, those who have accepted the basic subsidy, as, of course, they will, will find that it cannot be reduced, and neither can the contributions by local authorities be altered until 10 years after the Royal Assent has been given to the Bill. The local authority associations are somewhat worried that there can be no alteration in this arrangement, once it is agreed, for that period of 10 years.
The worst mistakes of the system are, first, that at times of high interest rates, with the automatic increase in expenditure on housing subsidies, there will, obviously, be an increasing move from house-building in the private sector to the public sector. [HON. MEMBERS: "Hear, hear."] I expected hon. Members opposite to say "Hear, hear" to that, but the Government must not get their views on this matter out of balance. We all appreciate that there is a crying need for council houses, but one must realise also that there is a crying need 708 for the building of houses for owner-occupiers. Even the Government admit that in Part II of the Bill.
The statistics show that those who desire to live in a home of their own are a higher proportion of the population than those who wish to live in rented accommodation. It should be our ultimate aim, when the slums which, unfortunately, still exist are swept away, that those who can afford to do so should be encouraged to live in houses of their own, in something which is their own property which they can live in or sell when they want to move to another house as free men not tied down to a system under which they live without certainty as tenants of rented accommodation, where the problem of redeployment of labour can cause difficulty by making them wonder whether they can afford to take a job somewhere else because they do not know whether they can have another rented house at the other end.
The situation is grim indeed as regards building for private ownership. The figures already show that completions are falling off, and the forecasts for next year are even graver. Although the Government's housing target may grow on the rented accommodation side, the council building side, the private enterprise building target will shrink. This is a very serious matter.
Another objection is that a policy which couples increased public sector building at high interest rates with an exhortation to keep council rents down can mean only that there must be larger subsidies from somewhere to balance the housing revenue accounts, and those larger subsidies will have to come from the taxpayer. If the policy upon which the Government are now embarking fails, if the housing revenue accounts are not balanced and there is a deficit, only one body of people can meet the deficit, the poor old ratepayers.
It is important, therefore, that the Government should encourage those local authorities which have not yet instituted adequate differential rent schemes to heed the exhortation of the Minister's predecessor and, literally, put their houses in order.
§ Mr. Lubbock
I intervened in the speech of the right hon. and learned Member for Hexham (Mr. Rippon) and 709 asked whether it was his opinion that such schemes should be made mandatory. He replied, "No." Why are we all arguing that we should have differential rent schemes when no one is prepared to take the bull by the horns and impose them on local authorities?
§ Mr. Rippon
May I add to that intervention and remind the hon. Gentleman that what I said was that I was not in favour of them, but they may be necessary.
§ Mr. Murton
I put it to the Government. They must make the decision. As my right hon. and learned Friend has said he is not in favour of them. We do not want them to be mandatory. But the Government have expressed certain opinions and, if a Government express opinions, I expect those opinions to be carried out. That is the point of governing. I was drawing to the attention of the present Minister what was said by his predecessor, in the hope that he would reinforce it, if that is the Government's view, and see that something is done.
Even if he would not be prepared to admit it, the Minister must be worried about the possible cost of this scheme when it is applied to actual building. I do not want to weary the House, but there are some detailed points which I must bring to the Minister's attention. Clause 3 points the way to a much greater degree of ministerial direction or, perhaps one could say, interference with the practical application of the subsidy by local authorities. The key to the Bill from the local authorities' point of view lies in the meaning of Clause 3(1) where the reference is tothe cost incurred … in providing the dwelling".In the original 1965 Bill the words were "aggregate cost", but the word "aggregate" has now been dropped. The basic subsidy will depend on what the Minister interprets as being included in the cost.
It is, therefore, most important that the Ministry should provide a list of those items connected with the provision of dwellings which will rank for subsidy—I hope that this will be regarded as a constructive suggestion on a matter of 710 importance—and, what is more, provide another list showing the items which will not rank for subsidy.
Further difficulty may arise under the formula which ties the yardstick to a tolerance of 10 per cent, excess beyond which subsidy will be refused. Not only will the subsidy be refused if the yardstick shows more than 10 per cent. excess in building but, what is more, there will be danger of the loan sanction also being refused, If either higher standards than the Parker-Morris minima produce a tender 10 per cent. more than the cost calculated by reference to the yardstick or, alternatively, the standards exceed the Parker-Morris minima by 10 per cent. although the tender comes within the 10 per cent. tolerance allowed for loan sanction purposes, the basic subsidy and loan sanction as well could easily be lost.
This is an important point which has been made by the Association of Municipal Corporations. It is our duty as back benchers to draw attention to points which are raised by these expert bodies. It is not suggested that these proposals should he revised so as to allow local authorities to embark on extravagant designs, but, on the other hand, the Government should bear in mind that many local authorities have already advanced beyond the Parker Morris standards.
Indeed, I think that the right hon. Gentleman himself hinted that he would shortly review them. I hope I am right in thinking that. He will agree that the Parker-Morris standards have been improved on in recent years and they are widely regarded now as barely adequate. Let us not be inhibited by those standards in our building. If a local authority feels that it can do better, let it do so. It would be a very good investment for the future.
What the A.M.C. would wish to see is the subsidy allowed if those higher standards can be achieved within the yardstick limits, and also that authorities should not be prevented from building to better standards if they are prepared—this is the important point—to carry the increased cost themselves without an Exchequer grant.
I come now to another important point on Part I. As I understand it, the subsidy is payable not on final costs but on the 711 amount of the original tender, the actual land costs and the estimates where costs are not known at the time when the resolution accepting the tender is passed by the local authority. As final costs are not to be the determining factor, a heavy burden will be put on the architect of the local authority and his staff if they run into difficulties.
One knows about hidden work. Difficulties may be encountered on the site. With a high building, subsidence could easily be encountered. If an architect is faced with such difficulties and he has not foreseen that they might arise—in certain circumstances, it would be difficult even for an expert to know that they might arise—and the entire tender has been put in on the premise of a certain figure, could it not happen that, because of the miscalculation, caused not by human error but by nature, the Exchequer subsidy would be lost? That needs very careful consideration by the Government, because one can well see that this sort of thing could happen.
I have tried to be constructive so far, but the Government have given a dismal performance with Part II of the Bill and the option scheme. There was a tremendous fanfare at this year's General Election about what was to happen and it was said that the annuity rate was to be 2½ per cent. lower than the full rate chargeable on a mortgage. I know that there are technical reasons for it and I know that the building societies were unable to work the system which the Government proposed, but we are down to a bare 2 per cent., and not 2½ per cent.
§ Mr. Blenkinsop
Will not the hon. Gentleman accept that the benefit to the tenant is the same as the proposed 2½ per cent.?
§ Mr. Murton
Yes, but it will be rather difficult to get that across to people who happen to remember. It is not strictly the same, but to be honest—and I hope that I always am—it is not all that important. What is of some importance is that this scheme will not start to work until 1st April, 1968, and that is the crux of the matter.Hope deferred maketh the heart sick".That is very much what is now happening. I remind the hon. Member for South Shields (Mr. Blenkinsop) that in his 712 party's election manifesto of 1964 it was said:This policy of specially favourable rates will apply both to intending owner-occupiers and to local authorities building houses to let".That sounds very fine and encouraging, but that is two years ago and we are not very much more forward. The owner-occupier has to wait 16 months for any relief and his heart will be even more sick about these proposed 100 per cent. mortgages under the guarantee scheme, because there appears to be no hope at all of anything being done in the immediate future to implement that promise.
I look upon this as a sad and cynical story, and it is especially sad for hon. Members opposite whose Government have made a good score of promises which have been broken. The 100 per cent. mortgage was a vote-catcher, something to which many young people looked forward and which might well have influenced the way in which they voted at the General Election, but such a scheme will not operate in the foreseeable future, and one wonders whether it ever will.
On the other hand, my party was perhaps a little more honest about this and suggested a scheme of capital grants by which a sum of money would be given to match what the couple had been able to save. That was a very sound scheme. I do not want to labour this point of the 100 per cent. mortgage, but I hope that it will be achieved by some party some day. I know and understand the difficulties which young people have to face. They want to live in a house of their own, but in the meantime, if they are unfortunate—and I do not mean that unkindly—they have to share the home of the parents of one or the other. If they are a little more fortunate, they may live in rented accommodation. In either event, they have to pay rent for the rented accommodation, or make some form of contribution to the expenses of the parents concerned.
The difficulty for these young people is saving the money to obtain a deposit when they already have to pay as much as £5 a week from their combined earnings to keep a roof over their heads. This is a difficulty about which the whole House sympathises. I end on that note, because it is a hobby horse of mine that 713 I would like to see the day when these young people get assistance from a capital grant scheme so that they are able to manage to put down the money for a deposit for a house as well as being able to pay rent and rates which they have to pay in the meantime.
§ 6.0 p.m.
§ Mr. Julius Silverman (Birmingham, Aston)
The hon. Member for Poole (Mr. Murton) referred to the balance between local authority and owner-occupied houses and thought that it was going the wrong way. Hon. Members on this side of the House will not agree with him. We believe that the balance has been the wrong way for a long time and that it is now being corrected. I do not think that it will go far enough until we are building 250,000 council houses a year, and we are glad that the Bill gives considerable assistance in this direction.
The nub of the housing problem is the long list of people on the registers in our large cities. There are 40,000 in Birmingham, and there are similar figures in all the large cities, lists of people who cannot think in terms of owner-occupation and who cannot afford to rent private houses which have not previously been in control and whose only hope is local authority housing. I welcome the Bill, because without it it would not be possible to maintain, still less extend, the number of local authority houses needed.
In Birmingham, for instance, more than 18 months ago the council commenced an expanded housing programme. It has been doubled and is now likely to be trebled. Without the assistance of the Bill, which, of course, the council anticipated in its financial policy and in its rents policy, the measures taken by Birmingham would have been completely impracticable. The money would not have been available without totally impossible burdens for the ratepayers or existing council tenants.
I agree with my hon. Friend the Member for Salford, East (Mr. Frank Allaun) that the Bill does not go far enough, and I hope that in Committee my right hon. Friend will consider the sort of suggestion which he and my hon. Friend the Member for Cambridge (Mr. Robert Davies) made.
For many years, not just since 1944 or 1945, or 1946, there has been a crisis 714 in housing finance. All local authorities have made massive increases in rents. To some extent, the crisis has been due to increased rates of interest and increased costs, but those have not been the major factor. The major factor, as I have said a number of times, is that every time a new house is built it is more expensive—probably now costing about £4,000; it has been rising steadily since the war—a burden which simply cannot be financed out of the rents of the property. The consequence has been that as more houses have been built there has been an ever-increasing burden on the housing revenue accounts, a problem which has not been completely obviated even by the Bill.
For instance, Birmingham has incurred a debt of about £10 million on which interest has to be paid simply on the capital cost of houses in the pipeline. If that burden is not paid by the ratepayers, it must be borne by the existing tenants. Although new houses are let at realistic rents, there is still a burden on the housing revenue account for each new house of about £40 a year, even after the new subsidy is taken into consideration, and that burden has to be borne by someone. With flats the burden is still greater, because the cost of flats per dwelling is greater and the services for the flats probably add an additional cost of £30 or £40 a year. Yet many local authorities have to build high because land in their areas is so scarce.
All this burden has to be borne by the existing rent structure, and this is a burden which has been piling up year by year. It has not been popular to put the additional cost on the rates, and so existing council house tenants, perhaps people who have lived in council houses for 25 years, or since before the war, have to bear the burden of the enormous increase in rents which has been described today in more than one speech.
The Bill goes a good way towards relieving this burden, but it does not entirely relieve it. I know that in the present economic situation it is unrealistic to ask for more, but I hope that when the economic situation allows for a reduction in interest rates, the same amount of subsidy will be allowed on new houses as within the present structure, and I hope that the Minister will consider including a provision to that effect.
715 Something has been said about spreading the burden of costs, but I notice that no direct reference has been made to the sort of differential rent and means test scheme which is so dear to the hearts of Tory Members. The hon. Member for Poole spoke of the terrific cost of subsidies. It has already been pointed out that the owner-occupier already gets a subsidy substantially higher than that of the council tenant, even under the new scheme of things.
When the Bill is completely effective, Part II will apply to all mortgages whether they come into operation before the Bill or not. But Part I, which refers to council houses and the new subsidies, will apply only to debts incurred if the houses were completed after 25th November, 1965. For the rest, a huge burden of debt will be placed on local authorities, a debt on which most will pay an average rate of interest close to 6 per cent. Even today council house tenants will not be pari passu with owner-occupiers.
I believe that both council tenants and owner-occupiers should get this relief on interest payments. This is not a matter of means. I do not think that this is a form of subsidy. If the nation decides as a matter of policy, as it does, that interest rates should be at a certain level because of the economic situation, then it is only fair and proper that it should insulate both the council tenant and the owner-occupier against these increased charges. Therefore, I think that what is happening in both cases is socially just.
However, it must be pointed out that those who ask for a means test for council tenants, those who ask, for instance, that there should be a personal payment instead of the present subsidy, would not propose that the personal payment should apply to the owner-occupier also, or that he should have to prove hardship before getting it. We have the situation today that the wealthier the owner-occupier the greater the relief he gets. One writer has said that nobody gets more relief than the millionaire owner-occupier. Until this Bill came into operation, the only means test that existed was a means test in reverse, because the people who had the income and paid Income Tax got it, and the people who 716 were not up to the level of the higher standards of Income Tax did not get it. Now, at any rate, this situation will be altered. However, we have to bear in mind that there is still no means test for the owner-occupier, and I cannot see why there should be a means test for a council tenant.
I listened with interest to some of the suggestions made by my hon. Friend the Member for Cambridge in a very thoughtful speech. He referred to the present structure of local government finance and mentioned the various burdens which were borne by existing housing revenue accounts. Quite obviously, this matter has to be considered afresh. I understand that the last Minister was already considering issuing a new circular on the subject of housing revenue accounts. At present, the situation is completely unsatisfactory. The hon. Gentleman mentioned, for instance, that slum clearance is in the housing revenue account, that the patching and maintenance of 1,954 houses, until they are finally demolished, is also in the housing revenue account. Council tenants, as I have already mentioned, have to bear not merely the cost of their own houses—the historic and economic costs—but also the whole of the development which is taking place and the development which is still to come.
That is an enormous burden, and there are all sorts of other additional expenses, such as various items of hostels and welfare services, which have nothing to do with council tenants. These are all in the housing revenue accounts. The subsidy which we have given today is not given to the individual tenant but to the housing revenue account which spends its money in many ways.
A rebate scheme was mentioned today. Why should a rebate scheme, which is a welfare scheme, a scheme of assistance, given to tenants who are poorer off, fall on the shoulders of council tenants only? Is it not obvious, on the face of it, simply that the tenant, having paid a fair rent himself, should be in the position of all other ratepayers in meeting that expense? Let us take the question of keeping the housing register. Here is another matter which is not one of the ordinary expenses of what I would call estate management—the question of interest, repairs and 717 administration are part of estate management. This item again is all in the housing revenue account.
Out of the housing revenue account comes also debt redemption. Council tenants in Birmingham are paying off £1 million a year for debt redemption for an asset which will accrue to the whole of the citizens of Birmingham. All this is coming out of their rents. I venture to suggest—and I would mention Birmingham in particular—that if the existing council houses in Birmingham had been kept entirely separate from fresh development, supposing the Birmingham Corporation were an ordinary form of estate management, they would have been making not a loss but substantial profits on existing houses, apart from the matters which I have described.
Therefore, the time has come for a radical review of rent policies and of the whole basis on which these accounts are kept. Tenants cannot go on bearing these additional and massive increases year by year for the sake of posterity. It is right that they should be asked to pay a fair rent for the houses they occupy, and in most cases they are already paying an economic rent, and very often substantially more than an economic rent in view of what the house costs. I agree that they should pay a fair rent, but not with-standing this Bill, local authorities will still get into trouble with their housing revenue accounts unless there is a radical alternation in the way they are kept and in the allocation of the burdens which they have to bear. I hope we shall hear something from the Minister about the matter.
I have one further question to ask him regarding Part II of the Bill. Reference has already been made to an organisation called "Shelter". This organisation, starting from small beginnings, is endeavouring to do a good job, and hon. Members on both sides of the House will agree that it is desirable to have other housing agencies apart from the council. It is not desirable that all the eggs should be in one basket. This is a voluntary organisation which is commencing to do quite good work. Apparently it does not benefit from the provisions of Part II of the Bill, which refers to owner-occupiers or to co-ownership housing societies, which are in the same position as occupiers.
718 I should like the Minister to say why this benefit should not be extended to bona fide housing associations approved by the Minister, which would help in rehousing the people. I hope we shall have some assurance from the Minister, otherwise, if by good fortune I am on the Committee, I shall raise the matter on Committee.
In conclusion, I welcome the Bill. It is a useful Bill. It will not only save the finance of local housing authorities from disaster, but it can result in an expansion of houses for the most needy sections of the population.
§ 6.17 p.m.
§ Mr. Gordon Campbell (Moray and Nairn)
I wish to speak on Part II of the Bill, which applies to the United Kingdom and therefore, to Scotland as well as to England and Wales. It introduces a system of option mortgages.
I should like to say, in passing, that Part I of the Bill is very similar to the Scottish Housing Bill, the Committee stage of which was completed last Tuesday. In principle, Part II of this Bill, which introduces a system of option mortgages, is not an issue between the parties, as has already been made clear. The Conservative Party first put forward proposals and the Labour Party put forward a plan as recently as 1st March this year.
The present position has arisen, as I understand it, because the taxpayer who pays the standard rate of Income Tax benefits from special relief. This is a measure, which successive Chancellors have approved of, to encourage savings. This has, therefore, grown up, understandably, in the same way as relief, for those who take out life insurance policies, on their interest payments.
There have been these inducements to saving for those engaging in mortgages but, with the increasing demand for home ownership, there has been a welcome spread of a wish to take more personal responsibility for housing oneself and one's family. Under the Conservative Government, there was an increase in real income and steadily diminishing taxation. Together, these produced a situation in which there was an increasing potential of mortgage applicants coming forward.
The situation arose that more and more of those becoming interested in homeownership were not paying the standard 719 rate of Income Tax. There are clearly economic and social requirements why the Government should encourage and help such persons to become home owners. I have mentioned the Labour Party scheme put forward on 1st March for mortgage options. It has been considerably transformed since then. We have only seen it again in recent days with the emergence of the Bill, when we find that it is considerably different from the original proposals. I note that the 2 per cent. only operates above 4 per cent. interest rates. We are a long way from getting down to 4 per cent. interest rates at the moment but, in future, when interest rates come down below 6 per cent., this will matter more.
It was clear after 1st March that the Government's scheme was considered unworkable by the building societies, which had to help them with the present scheme. Indeed, the Minister today described the original scheme as unacceptable to the building societies because of the administrative burden it would have imposed. In the months following 1st March and before this scheme was published, the Government presumably have had to have long discussions with the building societies about amending the proposals and producing a workable scheme.
The present position, for a potential mortgage applicant, however, is considerably different from what it was two years ago. First, this scheme is not to come into effect until 1st April, 1968. That is still a long way off. Secondly, Government policy has pushed interest rates extremely high and the 2 per cent. help towards interest rates now means much less than it would have been earlier or if interest rates were not so high.
The Chancellor of the Exchequer on Monday pointed out that higher rates of interest were required to attract deposits to the building societies. This was why building societies had to raise mortgage interest rates. Another difference is that the prices of houses have risen greatly in the last two years. It has been estimated that the average rise is about 16 per cent. since October, 1964. All this makes the financial burden for the potential mortgage applicant more onerous and it raises the threshhold of income which can prudently qualify for a mort- 720 gage and thus enable a person to become a home owner.
Then again, there is no help with the deposit. The scheme we heard so much about—of lending up to 100 per cent. of valuation—has been indefinitely postponed. That is confirmed on page 6 of the White Paper. So this is another pre-election proposal which has apparently come to nothing. What worries me is that a person who, in 1964, might have been considering becoming a home owner and may have been approaching the threshhold of home ownership will now need to produce considerably more money, and even with this scheme he may not now feel that he is able to afford it. He may feel that, even if he put it to the test he may be unable to afford the high prices, high interest rates and requirements of the building societies even under this scheme.
The encouragement of private building is essential, particularly in Scotland. Private building normally adds to the total of houses which can be built and completed and is complementary to public authority building. In England and Wales, there was, up to 1964, a welcome expansion of home ownership and private building and this greatly assisted the record figures for building in England and Wales in the early 1960s. But in Scotland the private sector has regrettably not expanded in the same way.
There are two reasons. First, there has been a certain tradition in Scotland for living in rented houses. This is clearly a traditional matter. Secondly and more important, some local authorities, particularly certain large ones covering populous areas, have subsidised artificially low rents. This is not a matter of argument. It was reported on succinctly by the Allen Committee in its inquiry about the impact of rates on the housing programme. But besides being a burden on the ratepayers, this practice distorts the situation and has inevitably restricted the amount of building in the private sector which could be carried out.
I am not raising this in a controversial way, because the Secretary of State for Scotland has made it clear, in White Papers and in other ways, that his aim is what we have urged for a long time in Scotland—to encourage local authorities to charge reasonable rents and operate sensible rebate schemes. Unless this 721 happens, very little use can be made of this new option mortgage scheme in Scotland and this would be unfortunate.
There is now therefore, I believe, a real chance in Scotland of getting some agreement about this and getting the local authority rent structure altered where necessary. The Opposition's views on this are clear. Most of these large local authorities in Scotland covering the populous areas have Labour majorities and therefore the Secretary of State has a real opportunity to use his influence. The Under-Secretary of State has claimed already that the Government are persuading more local authorities in Scotland to adopt sensible rebate schemes and he knows that we will support him in anything more he can do on this.
Economic and social progress in Scotland is bound up with the encouragement of a new attitude to housing and with the encouragement of home ownership and the private sector of building. I hope for an increasing demand for and expansion in home ownership in Scotland because that is part of the growth and development of a thriving modern society, with individuals taking more responsibility for their own affairs as their prosperity increases. But it would also help to relieve the long housing lists which, unfortunately, confront far too many local authorities in Scotland.
In far too many places in Scotland, the local authority house is now the only kind of house obtainable or available even though the person wanting a house could afford to own one. I note that Part II of the Bill extends to housing associations. These are housing associations which are engaged in co-ownership schemes but I should be interested to hear about the position of other housing associations which are carrying out other schemes in response to the question put by the hon. Member for Birmingham, Aston (Mr. Julius Silverman).
In Scotland, the most recent Report of the Housing Corporation gives a clear picture. After stating that there is little opportunity for cost rent housing associations in Scotland because of the artificially low subsidised rents in many areas, it goes on:… co-ownership seems to be better able to make an impact because of its tax advantages and the element of ownership involved. Even so, the promotion of co-ownership housing 722 is not immune from the climate created by the general level of rents and the scale of Local Authority building.The Government must do a great deal to help alter the climate and the attitude towards housing in Scotland in order that housing associations with co-ownership of this kind can really get off the ground and benefit under Part II of the Bill. To the extent that Part II will promote home ownership in Scotland, limited as it must be to start with, because of the background to which I have referred, I support it. It can only be used in Scotland to any large extent if the whole climate is changed, and the other factors which I have mentioned, and which limit expansion of the private sector, are tackled resolutely by the Government, in view of their conversion over the last two years, assisted by hon. Members on this side of the House.
The private sector can help to transform the whole house-building situation in Scotland by adding to the local authority programmes already in operation. The Government must be disappointed with the figures that they have had this year from the house-building programme in Scotland. I have a statement here, which is an election document and must therefore be read in that light, but it shows that in March the Government's expectation was that they would reach their target. This was presumably so otherwise they would not have put it in their Scottish manifesto, known as "Election Special". In this they said that 40,000 houses would be completed this year.
We are nearly at the end of the year and I am afraid that it is clear—unless whoever is to wind up announces something very spectacular—that the Government will be nowhere near their 40,000 target for housing in Scotland this year. The document also said:This is going to be a record year for house-building in Scotland".Again, since there are only 15 days left to the end of the year, unless something very unusual happens, this statement is pretty wide of the mark.
This is a situation which we want changed, and if the Government adopt the right policies and make a serious effort to change the distorted Scottish situation, we will do our best to help. Part II will be of little use to Scotland 723 unless the Government take the necessary action needed to encourage private house-building and home ownership, as well as encouraging the public authorities in their house-building. This is the way in which record figures can be achieved in Scotland.
§ 6.34 p.m.
§ Mr. Ernest G. Perry (Battersea, South)
I would like to take up a point made by the hon. Gentleman the Member for Moray and Nairn (Mr. G. Campbell) relating to 100 per cent. mortgages and an increase in the amount that borrowers can expect. If the hon. Gentleman would look at Clause 29 of Part II, he will see that, while we do not go to the extent of 100 per cent., we do say that the Government are prepared to guarantee excess amounts over the normal advance to the borrower and also to pay half the insurance premium for that excess amount.
In the past, a borrower from an insurance company or building society who could not quite raise the amount of money needed could sometimes borrow the excess amount by paying a premium of £7 10s. per cent. If this can be done it would be a great help to would-be borrowers. This is a very sound investment for the insurance company, and the premium of £7 10s. per cent. should be good, because it is one of the few insurance risks that shows very little loss indeed. From my experience in selling insurance with house purchase, very few people who enter into an obligation to borrow money to buy a house ever fail to meet that obligation.
In the area of London that I operated we found that the valuation of the house was far smaller than the price, with the result that if a person failed on his mortgage and the house was sold there was usually something like £1,000 difference between what had been advanced for it and what it was sold for. Any loss to the Treasury or the insurance company concerned would be minute. We should grant more money on this basis to would-be house purchasers.
What I have not enjoyed during this debate is the division that has arisen between potential owner-occupiers and council flat occupiers. We have had discussions about subsidies given to one and 724 not so much to the other. It has been proven that the higher an income a person has, say £2,000, £3,000 or £10,000, then it is better for him to buy a house through the endowment mortgage scheme over 15 years or more. One does very handsomely out of it from the point of view of income tax relief.
However, if one has a wage of about £15 a week, then the amount of money to be claimed back in income tax relief is very small indeed. The person who requires the relief does not get it and, to some extent, the borrower who can do without it gets even more. Part II tries to remedy this. I appreciate the efforts which have gone into attempting to find the solution and to help would-be purchasers who are of modest means.
This Bill is one of great social significance, because it recognises and sets out to remove the present unfairness of our tax system with regard to house purchase and owner-occupiers. For that reason it is welcomed on this side of the House. Here I would like to convey to my right hon. Friend the Minister of Housing and Local Government and to his two Ministerial colleagues our appreciation and thanks for introducing this long-overdue reform for our consideration.
It has been talked about for a long time, and people have tried to introduce legislation to help with tax relief, but nothing has been done until now. I should like to thank them for their prompt and speedy action with regard to railway land and the recent Parliamentary statement about Kidbrooke. This is relevant to many Members representing London constituencies. Railway land ranks first in many London boroughs, such as Wandsworth. If the Minister could see his way clear in the near future to releasing some railway land in Wandsworth we would do more than we are doing at present. My right hon. Friend will know that the London Borough of Wandsworth has a very high output of houses. If he would release more land we would help him to achieve his target of 500,000 houses by 1970.
My hon. Friend the Member for Bermondsey (Mr. Mellish) deserves the thanks of all those overcrowded families in London. I want to deal particularly with London, because it has been hit harder than any other place by overcrowded 725 conditions, and all of the other things that we have experienced. We thank him for his efforts which he has put in, and which he is putting in through this Bill, to try to remedy these things. I and my hon. Friends from Wandsworth would like to see the release of more railway land so that by that means he could be helped.
Quite frankly, so much has been written and said by so many people about London's housing problems in the last 15 years that one is appalled by the indifference shown by the party opposite during its 13 years of power. I say this quite determinedly. As a matter of fact that party was responsible for the worsening conditions in London during that time. In 1957 it obtained its Rent Act which aided and abetted those absentee owners who exploited every loophole in that Act and who exploited, evicted and harassed tenants in the good old Rachman style.
The infamous 1957 Act led to so much movement of population in London, due mainly to the decontrol of hereditaments over rateable value of £40, which in turn led to an enormous increase in rents, that there was an actual reduction in the number of houses or flats to let in London. This was what happened in London because of the introduction of the 1957 Act. Less accommodation became available for letting in London, and that made the position far worse. This was in spite, of course, of the claim of the party opposite that that Act would lead to more places being available for rent. Such movements of population, of course, accentuated the housing shortages, and the promise that the Act would reduce or prevent shortages has been obstructed, not only because accommodation is so scarce, but also because the supply which is available, in terms of size, price and location does not meet the real needs of the situation.
This statement I am making is borne out by the party opposite in the White Paper, "Housing in England and Wales", Cmnd. 1290 of 1961. In paragraph 55, under the heading, "Attack on Squalid Living Conditions", it says:One of the most acute housing problems still left is the multi-occupation by families or lodgers of many large houses designed originally for use by single families. There has been no proper conversion, and the houses are without adequate cooking or sanitary facilities for the numbers now living in them. Often as a result the houses are decaying and the living conditions are disgusting.726 This is the situation we are faced with in many parts of London, particularly in areas like my own, Battersea and Wandsworth. The Tories were in power from 1951 to 1964. It took them 10 years to learn this lesson, to realise that multi-occupation was a living abscess on the face of London.
These living conditions also led people into delinquency. Paragraph 58 of that White Paper said:The Government want to see an attack on the squalid living conditions to be found in these houses which are not only bad in themselves but may also breed delinquency and crime.This is what happened in London in 13 years of Tory rule. While, of course, I do not say that these conditions are the sole cause of delinquency and crime, there is no doubt that children and adults suffering under these conditions do not enjoy the same opportunities of other members of the society. The opposite party's record in housing, and on the provision of housing for these families, was negligible through its long period of 13 years in power. If one looks at the graph in the White Paper, that enables one to see that it was the deliberate intention of the party opposite to reduce the number of places to let and to increasee the number of places for sale. If we examine this graph we see that the Tory Party was responsible for these conditions in London. The average number of houses built by the Tories during the whole of its period in office—
§ Mr. Perry
What I am trying to point out, Mr. Speaker, is that these conditions which exist in London today are the result of neglect in the past. Only by trying to examine the past can we hope to deal effectively with the problem in future. If I have overstepped the bounds of order, I do apologise, Mr. Speaker, and shall continue my remarks I was going to make.
The average number of houses the Tories built in their years in power was less than 300,000. In the two years we have been in power it has been nearly 400,000, and I think, Mr. Speaker, this just shows the vigour and the effort which are being put in by the Minister in trying to solve this problem.
727 Local authorities have to cope with sordid conditions which exist in housing, particularly the larger conurbations. In Wandsworth the housing revenue account has to stand an enormous cost for housing inquiries. We have literally tens of thousands of people visiting the housing office every year to ask questions and to find out information, and we have to keep an enormous staff to deal with all those queries, and the result, of course, is that an enormous amount of money has to be paid out which is passed on to the housing revenue account which the tenants have to pay. If we want to build a house or a flat, we find it costs us, before we start the structure, before we lay a brick, say, £3,000 for a two-bed roomed flat—or if the industrialised builders come in to build, £2,000 for a two-bedroomed flat—because of the high price of land in London.
I suggest to the Minister that this Bill will go a long way to solve this problem of multi-occupation and Rachmanism and the bad conditions in London. This may not apply in many of the smaller towns, but it is a fact that in London this situation has been acentuated by these happenings. The Bill will help, and, on behalf of all my hon. Friends from Wansdworth, I welcome this Bill, which will not only help the tenants of the local authorities but also the ratepayers. I say to the Minister that he has the support of the hon. Members from Wandsworth, and of all the tenants and ratepayers of Wandsworth.
§ 6.47 p.m.
§ Mr. Paul Hawkins (Norfolk, South-West)
I had a note at the top of my papers to congratulate the hon. Member for Battersea, South (Mr. Ernest Perry) on some sensible remarks about the 100 per cent. mortgages, because as an auctioneer, and as somebody who does valuing for building societies, I do know that 100 per cent, mortgages would help more people to buy houses and that the building societies would not be let down because the buildings are generally well below selling value a few years later. On the other hand, I cannot follow him in the rest of his arguments, because, although, at every election, we shall accuse the party opposite of not building so well, or of generally not doing so well, nevertheless I believe that the hous- 728 ing problem must be looked at as impartially as possible, because his home and his job are the most important things in a man's life.
I should, after the speech of the hon. Member for Salford, East (Mr. Frank Allaun), declare an interest in property matters. In fact, I own one house and a smaller house adjoining. I say that I own it. I hope that my bank manager thinks I do, but it is, of course, like many other people's owned by the building society. However, I do not think that this matter should be used to stir up trouble between landlord and tenant, or between the parties, because housing is far too big a matter to be considered entirely as a party matter, and I believe that all the landlords and the private developers and the people who are prepared to put money into houses, whoever they are, be they the State, or, as I say, private developers and those who buy houses, wish that more and more houses can be made available for letting.
I want, for a short time, to draw attention to housing in the countryside, which has not been mentioned to date. I realise that the big conurbations have very special problems. On the other hand, in my constituency there are about 115 villages, and in every one of them there are slums and appalling housing conditions. I feel that very often housing in the countryside is neglected and I hope that we shall not forget about it in this debate. The rents of council houses in the countryside are far too high for the average agricultural worker, and if the Bill does anything to reduce rents, which I hope it will, I shall be prepared to support it.
A short time ago I had an Adjournment debate, and I am glad to see present the Joint Parliamentary Secretary who replied to it. On that occasion, I stressed the extent to which improvement grants can help to overcome housing problems both in the towns and in the countryside. It is appalling that councils pull down a large number of structurally sound houses which, by the expenditure of a certain amount of money to provide amenities which are essential today—hot water systems, bathrooms, and lavatories—could be used for another 20 or 25 years.
I believe that we must increase improvement grants. I think that they have 729 remained the same for the last 15 years, while building costs have risen tremendously. I should like to see improvement grants stepped up by 50 per cent., from £400 to £600, because I believe that this would enable many more houses to be brought into use, and would provide decent homes, with the right kind of amenities. I know that the Ministry has circularised local councils to try to persuade them to do this. I hope that this will not be forgotten, and that the drive to increase improvement grants, and thus improve houses, will continue.
Another matter which I raised during my Adjournment debate was the question of improving older council houses. In my area, there are far too many council houses which were built before the war. They are without bathrooms, or lavatories, or hot a water supply. I believe that this state of affairs is to be found in other parts of the country, and I am glad that during the last 12 months improvements have started on a number of houses in my area.
We all know that the country is up against it financially. Nevertheless, I believe that housing is priority No. 1, and should receive a far larger share of the available money than it does. I say this because I believe not only that crime can be prevented by having better housing conditions, but that many other social services would not be needed if our houses were in a better state than they are today. I am afraid that because of the shortage of money, many councils are skimping on the quality of the houses. If houses are to last for 30 or 40 years at least, they should be well designed, well laid out, and give privacy to the tenants.
I do not like the name "council houses", but I do not have any other special name for them. Despite what hon. Gentlemen opposite may say, the fact is that today a large number of what are termed working-class people want to own their own homes. I believe that, possibly by changing the name, as we have done for certain welfare services, and by ensuring that council estates are properly laid out, and are provided with amenities, that trees are planted to make them attractive, and so on, we can make these estates places where people will desire to live and bring up their children. We 730 must ensure that open spaces are provided near by to make these areas as attractive as possible.
Is the Minister providing any help to councils over the design of houses? If we could co-ordinate all the best modern ideas and circulate them to councils, I believe that it would be a great help to many of them. We have an exceptionally fine council in my area. It has the strange and rather old-fashioned name of Mitford and Launditch Rural District Council. It has sent representatives all over Norfolk and other parts of the country to collect designs for grouped homes for old people. It has built 20 or 30 connected bungalows, with a communal room in the centre, and all the bungalows are linked to the warden's house by means of a bell. This has been a tremendous help to the older people in my constituency, and I am glad to see that other councils are copying the idea. We ought to encourage this kind of scheme.
I think that I have said all that I wanted to say because, quite frankly, I came into the Chamber only to listen. I do, however, feel strongly about the housing situation. I know from personal experience—I lived in what was termed a slum for five years, admittedly compulsorily, under German rule—how terrible it is to live in bad housing conditions, with no water supply, no bath, and no proper accommodation. The housing situation is desperate. It is, perhaps, a matter which should be considered by a select committee of the type to which we referred yesterday. I believe that hon. Members on both sides could contribute to solving this problem, and if this Measure, small though it is, helps to provide lower-paid workers with cheaper accommodation, I shall do everything that I can to support it.
§ 6.58 p.m.
§ Mr. Roy Hattersley (Birmingham, Sparkbrook)
I welcome the Bill principally and primarily because I think that its immediate and undoubted effect will be to increase the percentage of the national income spent on the provision of new houses. I appreciate, of course, that an increase in subsidy for a service does not necessarily increase the expenditure on that service. It may amount to no more than a change in the source 731 from which the money comes, but I think that in the foreseeable future, in a period of comparatively high interest rates and increasing building costs, and a growing, rather than a falling, demand for houses, the net effect of the provisions of the Bill will be a greater proportion of our gross national product being devoted each year to the provision of new houses, and this seems to me to be an altogether desirable and admirable state of affairs.
It is a simple fact—but it is one which escaped the notice of the Tory Government—that the amount of national resources spent on housing in any year is directly related to the number of houses built by the country in any one year. If one compares the house building record of this country with that of any other country in Western Europe over the last 15 years, it becomes clear that we have built too few houses because we have spent too little on house building. Our proportion, on both graphs, is invariably lower than that of any other developed country in Western Europe.
The Bill goes some way towards meeting that gap and filling the deficit that has been allowed to arise. To my mind there is no doubt that for 14 years we had an abysmal—by European standards—house building record. We failed to provide enough of our national resources for house building. The reason was the philosophy of the Government which controlled this country from 1951 to 1964—the belief that the money could and would be provided by private initiative and private effort. The experience of Western European countries shows that if we are to have a high level of investment in new housing it must be public investment. It must be provided publicly in some form or another. I very much welcome the Bill, because it is moving towards that happy state of affairs when an adequate proportion of our gross national product is spent each year on this primary requirement of the British nation.
I accept all the qualifications about the Bill's limitations when interest rates fall by 1 per cent. or 1½ per cent., but while they are at today's rates it reverses the trend of the last 14 years in housing subsidies for local authority and municipal houses. The right hon. and learned 732 Member for Hexham (Mr. Rippon), who was kind enough to give way to me in order that I might remind him that during the term of office of the Government that he supported housing subsidies fell four times, answered blandly, in a cavalier and not very thoughtful manner, that they had fallen because things had gone so well, and that in a situation as happy as that which existed between 1951 and 1964 we could afford to reduce the amount of Government subsidy for housing.
But what were the facts, in terms of municipal housing in those years? Not only did the level of council house building fall—which in itself might not have been a disastrous thing—but the number slums increased rather than fell. Council housing waiting lists in the great towns were growing longer rather than shorter. These facts do not suggest that the housing situation between 1951 and 1964 was such an admirable one that the Government of the day could afford four times to reduce the amount of subsidy paid to local authorities. I very much welcome the fact that we are now getting into the situation in which the subsidy level is sufficiently large to promote and stimulate added council house development, rather than do what it did in the first years when I was associated with local government building, when we often felt that with the subsidy at the level that it was in 1962–63 and with building costs at their then level, our programmes had to be cut and pared, and aspirations, in terms of numbers built, strictly limited.
I also welcome the Bill because it totally changes the method by which local authority subsidies are paid. I see no virtue in a flat rate subsidy except that of simplicity and the appearance of equity—especially a flat rate subsidy which is spread too thinly throughout the country, and one which did not discriminate in favour of cities with special problems, or in favour of towns where specially high prices have to be paid. I hope that the flat rate subsidy has gone for ever. It is a good thing that it has gone.
The first step away from the flate rate subsidy, to the distinction between areas of high cost and areas of low cost—the first tentative step towards the establishment of a subsidy pattern which was 733 sensitive to special conditions in respect of individual areas, was equally unsatisfactory. The division between high-cost and low-cost areas was arbitrary and crude, and was based on a set of misconceptions about the way in which housing finances should be organised. Ever since 25th November last year we have had a subsidy scheme with a pattern which responds to the small and sensitive demands—the sophisticated demands—of local authorities. We have had a subsidy pattern which pays more to local authorities who choose to build well than to local authorities who choose to build cheaply. We have had a subsidy pattern which pays more to those authorities in areas of high building cost, where the standard dwelling is above the average price. We have had a subsidy pattern which encourages the best local authority development, by providing the extra subsidy warranted if Parker-Morris standards are being met—based on designs and taste which must be met it the British public are to be properly catered for.
We do not have a subsidy pattern which will encourage waste, and the sort of overspending which has been suggested on several occasions in this debate and which was the main burden of the Opposition's objection to this part of the Bill when we debated it a year ago today. I have never believed that a variable rate of subsidy would encourage the over-ambitious architect or the under-prudent treasurer to allow too much to be spent on individual dwellings. First, the overambitious plan has to get loan sanction from the Government before it can go ahead, and one assumes that a cautious Government will make sure that the overelaborate dwelling is not approved for contract.
Secondly, and more important, the subsidy does not meet every penny of the additional number of £s spent on the overelaborate dwelling and, in consequence, a local councillor or housing committee member knows that if he builds a very expensive dwelling, over-elaborate in many ways, some of the price must be met by his tenants and ratepayers—and those tenants and ratepayers are also the municipal voters. He is therefore very sensitive of the need to balance the design of a house against its price in a way which does not cause the sort of trouble 734 which is caused in new housing estates and towns where the houses have been splendid but the rents have been too high.
I hope that that the Opposition have abandoned their argument that this sort of housing subsidy will prejudice the national economy by vitiating the policies of the Chancellor. House building will be insulated against economic vicissitudes, and will no longer be the tool of economic policy. It will exist independently of it, and will go on prospering irrespective of economic stringencies and the immediate situation.
The fact that the notional interest rate to which the subsidy paid is geared is the previous year rather than to the present year means that in a period when interests rates are falling and in a period of economic relaxation, subsidies will be high, whereas in a period where interest rates are rising and there is a period of economic contraction, housing subsidies will be low. The Government subsidy to local authorities will complement the Chancellor's general proposals for economic action. The scheme has the great virtue of at last insulating housing and its problems from becoming the instrument of economic policy, while not working against those economic objectives which the Chancellor is trying to achieve.
I was glad to hear many hon. Members on both sides argue that, of necessity, these proposals cannot be considered in-isolation from the White Paper which preceded the presentation of the Bill a year ago today. Hon. Members on both sides of the House will remember that the White Paper had hard things to say, and positive things to say, about the need and the obligation to provide extra houses for the people who needed them most. I am sorry that my hon. Friend the Member for Battersea, South (Mr. Perry) has left the Chamber, because I must take issue with his complaint that some Members on both sides of the House sought to make a division between the interests of owner-occupiers and council tenants. I suspect that he is not used to accusing me of being the protagonist in a class war. But I must tell him and others who hoped that no distinction would be met between the interests of owner-occupiers and council tenants, that I cannot agree with them.
Everyone in this debate who has said that many lower income group families 735 aspire to house ownership is absolutely right; they do. But I am not interested in the theological argument about which form of tenancy is the best—whether it is better to live in rented accommodation or to own one's own house. I can see many virtues in favour of owner-occupation. The great thing about owner-occupation and what every reasonable person must have reservations about is the simple fact that it is not within the power of the people who need houses most to become owner-occupiers. The simple criticism which I have made for 15 years and will go on making on the imbalance between the numbers of houses built of councils and those for owner-occupation is that too many houses are built for people who need them least. The slums will never be cleared or the housing lists ended until a greater part of our resources is devoted to council building.
This is not a matter of class antagonism or theological dispute about two things which cannot be analysed—the preferability of one form of tenancy or another—but a simple fact. Those who need houses most are potentially council tenants, because they have no hope, because of their wage levels, the nature of their employment, the certainty of continuation of that employment and many other things, of becoming owner-occupiers. It is those people who should have our greatest concern when we debate housing. It is those people for whom most provision should be made and for whom a Bill of this sort could provide special assistance and care.
The White Paper of 1964 went further than talking in general terms about where the greatest hardship lay. It implied that, even in the ranks of corporation tenants or prospective ones, need would vary from family to family and from category to category. It urged local authorities to think in terms of housing allocations and rent schemes and said that systems should be operated which ensured that corporations houses were available for the people the potential tenants who needed them most.
Hon. Gentlemen on both sides have challenged each other to say clearly whether, if given the opportunity, they would insist that local authorities should implement house allocation schemes and organise rent schemes which were totally 736 fair. We have had the old chestnut about local autonomy and the question of who would insist which local authorities did what. I nail my colours firmly to the mast. I would insist that local atuhorities organise acceptable allocation and rent schemes.
I have said many times in Birmingham that I could give no assurance that the most necessitous family in Birmingham will be the one which gets a house. I have said in this House and outside that I can give no assurance that the family which finds it most difficult to pay for its council accommodation will be paying the least. These two things should be rectified and it is the obligation of the Government—local autonomy or not—to tell local authorities this.
After all, in this Bill, the Minister is taking some very severe and precise powers. If one considers what he has said about standards of property, the fact that it must be at least up to Parker-Morris standards, and that, at some notional level, some yardstick above that level, property will be too expensive, too generally elaborate, to be acceptable for loan sanction, one sees that he is diagnosing within precise limits the quality and type of property which he will permit.
If he is prepared to define precise limits for that purpose, I can see a good deal more social justice in imposing equally precise and stringent limits in other fields—on the questions of who gets the houses and how much they pay. Local authorities will complain about local autonomy, but many sins are committed in its name and we have the obligation to minimise the frequencey of their commission.
Knowing that the processes of selection for a Committee are even more mysterious than the process of selection of speakers in a debate, I want to deal with two clauses and two basic Committee points. I welcome the Clause which provides additional subsidy to high blocks only up to the sixth storeys. In past years, until the Bill which was presented a year ago today, the emphasis on high building was altogether exaggerated.
In my days of association with local authorities, I used to say cynically that the Ministry confused height with high density and, very often, in its subsidies promoted height for height's sake, encouraging what tenants do not want 737 and appearing to suggest that what they did want was of no social importance. The 15-storey block on the corner of a generally traditional estate has no sort of social value, but until the new Bill was presented it was receiving special subsidy to encourage this undesirable form of development.
The second Clause is that which talks about expensive sites and continues to do so only in terms of the cost of acquisition. If that Clause is to make any sense, it should relate not only to the cost of acquiring the site but to everything which makes it ready for building on.
I spent my local authority years in Sheffield, where houses were built on inclines and gradients which many cities would have found totally formidable. Sheffield built on those slopes because it had to, but at an extraordinary extra cost. To draw an arbitrary line between the expense of acquiring a site in one city and the expense of preparing it to build upon in another is totally unreasonable. If I am fortunate enough to be a member of the Committee, I shall do what I can to extend that Clause. I understand that these are marginal criticisms of a Bill which, in general, I applaud and which, in total, I welcome, for the basic simple reason above all others—that it is increasing the amount of the gross national product which we spend on housing every year.
This is the sort of thing which a socially democratic Government must be doing. This is the kind of thing which I believe I was elected to do, and it therefore gives me great pleasure to say that this Bill will do it.
§ 7.16 p.m.
§ Mr. Eric Lubbock (Orpington)
I think that the whole House will agree with much of what was said by the hon. Member for Birmingham, Sparkbrook (Mr. Hattersley)—not only the social democrats among us, but those who believe in good housing for all the people of Britain. It would not be disputed, even by right hon. and hon. Gentlemen who were in power from 1951 to 1964, that we spent too little a proportion of our gross national product on housing in those years and are only now beginning to correct the balance. We still have some way to go, despite the Bill, which I welcome. The Bill will lead to an increase in the total of houses built over 738 the next few years and particularly of local authority houses, where the need is greatest.
The hon. Member misunderstood something said by the hon. Member for Battersea, South (Mr. Perry) about the division between council tenants and owner-occupiers. I thought that he was trying to say that we should avoid creating an antagonism between the two groups by talking about whether one or the other was better treated by the Government of the day. I hope that we all agree that that should be avoided. No one, for political reasons, should attempt to stir up these antagonisms.
In this respect, the Bill is an improvement on its predecessors, in that both groups are considered. Therefore, no one can say that the Government favour one or the other, but are trying to do something for both. This is why I think that the Bill will go through without a Division this evening, whereas, on the last occasion that we had a Housing Subsidies Bill, in 1965, the Opposition, for reasons which seemed good to them at the time, put down a reasoned Amendment.
One of the factors which cropped up considerably in that debate was the belief that housing could be largely provided by private enterprise. It has not been mentioned by hon. Gentlemen on this side nearly as much tonight as the Conservatives did in 1965. As time goes by, even the Tories are coming to recognise that the private sector can make very little contribution to the provision of houses to rent. I am not saying that because I am antagonistic to landlords, but because it is a fact of life.
The Milner Holland Report referred to calculations of the rents which a private landlord has to charge to recover his money over a period which he thinks economically reasonable and also to pay the interest charges, which are higher for him than for a local authority, and then adding his profit margin. These show that the economic rent for a house or flat provided by a private landlord must be considerably larger than for an equivalent property provided by a council.
This is a straightforward matter of financial arithmetic and nothing to do with prejudices in favour of local authorities or private landlordism. If anyone disputes this, I would refer him to the table in the Milner Holland Report, which 739 stated that during the 40 months between 1960 and 1963, surveys of private rented accommodation in Greater London showed a decrease of 169,000 properties in the pool—a substantial decrease, at a time when the Conservatives were in office and could have done something, if they thought it necessary, to increase the amount of privately-rented accommodation in the big conurbations, where the demand is greatest.
During their whole period of office—I make no political point, but simply state a fact—the only rented accommodation provided in the large cities was in the luxury class of £1,000 a year and above, where it is still possible for private developers to build to rents which people in that class can afford. It has never been pretended that these private developers could produce accommodation within the means of a person earning around £18 or £19 a week, which is the national average income—
§ Sir Douglas Glover (Ormskirk)
The hon. Gentleman is a little unfair to say that all the building was for rent at £1,000 a year. I have a flat, built during the last 10 years, which is only half a mile from the House, and I am paying £325 a year.
§ Mr. Lubbock
I could produce a queue of 500 people from my constituency who would be delighted to move in if a vacancy occurred in the hon. Gentleman's block. Although I live 16 miles from the centre of Greater London, there is no accommodation available there at that sort of price. I wish that we had privately rented accommodation to supplement what is provided by the local authority.
No private developers, in my experience, are putting up houses to rent in the area I represent, and that has been so for some time. With the rôle of the private landlord inevitably diminishing, as it has been over the last few years, we must do what we can to help local authorities to replace the private landlord almost entirely over the next few years. I think that we shall find that they will be assisted to do so by the Bill 740 to provide enough accommodation not only to meet their own needs over a period, but to replace the stock of privately-rented accommodation which is slowly being sold off to sitting tenants or put on the market when it becomes vacant.
There are some problems with which the Bill does not attempt to deal. First, there is the question of the homeless. I have been very distressed by the callousness of some local authorities' provision for the homeless in the past. I recall that there were some distressing cases some time ago in the King Hill Hostel, when some justified criticism was made of Kent County Council. We still have these inhuman rules whereby local authorities separate husbands from the rest of their families when mothers and children need the support of their menfolk the most. I hope that the Government will consider this problem, because it remains a serious one, despite the figures given by the Minister.
I was delighted to hear that there has been a decrease in the number of people becoming homeless in Greater London since the passage of the Prevention from Eviction Act and the Rent Act, both which I supported wholeheartedly. Nevertheless, a substantial problem remains. I trust that this will be borne in mind and that it will not be thought that because permanent accommodation is being provided by local authorities on an increasing scale, as a result of this and other Measures, the problem of Britain's homeless can be forgotten.
The hon. Member for Birmingham, Aston (Mr. Julius Silverman) referred to an organisation called "Shelter", which is attempting to do what it can to house Britain's homeless. The Rev. Bruce Kenrick, the founder of "Shelter", is extremely ambitious because he is hoping to house 3 million families, 10 million people, largely through the formation of housing associations. He is obtaining money for this purpose from charitable organisations, but a lot of his work will be financed by loans.
Cost-rent housing societies, which renovate older properties in twilight areas, will not receive the same advantages from this Bill as will co-ownership societies and owner occupiers. I had some correspondence with the present Leader of the 741 House and the Joint Parliamentary Secretary, the hon. Member for Widnes (Mr. MacColl) on this issue, and on 23rd June last the Leader of the House wrote to me saying:Provisions for rehabilitating old dwellings that can still have a useful life do need reviewing. I am considering what ought to be done.I wrote suggesting that cost-rent housing societies should be on on the same footing as co-ownership housing associations, and the Joint Parliamentary Secretary replied on 15th August stating:However, we will bear in mind the idea behind your suggestion when we are considering what should be done about the rehabilitation of older property.I am disappointed, because nothing on this subject appears in the Bill. I realise that this may be a Committee point. I mention it in connection with the Rev. Bruce Kenrick's work because he is attempting to help a large number of people and because if it can be shown that, through the rehabilitation of older properties in twilight areas, much can be done to house people, "Shelter" and other organisations which are attempting to do similar work should have at least the same financial assistance from the Bill as will be given to other types of housing agency.
Much has been said about rent rebate schemes and differential rent schemes. I indicated in an intervention that these should be made mandatory—
§ Mr. Lubbock
—and I am delighted to see the hon. Member agreeing with me. It could be done without imposing a uniform pattern on local authorities. One need not be too sensitive about local autonomy if local authorities were left to design such schemes for themselves and submit them for the Minister's approval.
The policy of the Government on this matter is definite. They state, in the White Paper, after making it clear thatRent policies are also for local decision",that… these policies should reflect the fact that the financial circumstances of council tenants vary widely".They go on to recommend the provision of 742… rebates for tenants whose means are small".If the Government would request local authorities to submit schemes for rebates for tenants with low incomes there would be no objection on the grounds of local autonomy. An analogy here is that the Secretary of State for Education and Science is asking local authorities to submit to him schemes for the reorganisation of secondary education, and nobody, as far as I know, is objecting to that. Without in any way limiting their freedom of action, local authorities are being invited to make their suggestions on that issue. Similarly, the Minister of Housing and Local Government could invite local authorities to submit schemes on this matter, and we might even be able to do it without legislation. The right hon. Gentleman might find local authorities only too ready to co-operate, once they had been given the necessary lead.
Council house rents have been going up steeply, as we are aware in my part of the country. My constituency has suffered from these increases as much as any other and something must be done to arrest this trend. In the past, the more new houses the local authority provided, the heavier the burden on the council house tenants. With a pooled rent scheme, people placed in older properties found that they were being asked to pay substantially more for their houses, which were built long before the war, than the local authority should have been justified in asking. If we want local authorities to build more houses, we must make it financially possible for them to do so.
We had quite a lot of prefabricated houses left over from the old days in my constituency and I am glad to say that we are busily demolishing them. This policy has always had my encouragement because in modern conditions these houses are not suitable and certainly not nearly up to the Parker Morris standards, about which we hear so much.
However, in a period of severe housing shortage each prefabricated housing site should be dismantled in turn, with new accommodation being built on that site before proceeding to the next one. The London Borough of Bromley has for the past year or so been gradually emptying its prefabs and using whatever vacancies appear in the rented accommodation pool 743 to house the tenants leaving those prefabs. I would not object to that if one could say that one site at a time was being cleared and built upon before the next one was touched. The trouble with moving tenants to vacancies in the rented accommodation pool is that the existing housing waiting list becomes no shorter. It is difficult to explain to people with housing problems, on the advice of one's housing manager, that one cannot hold out any hope of providing accommodation in the near future. What advice will the Minister give to local authorities, in view of the provisions in this Measure, about the development of these sites?
I agree that home owners also need assistance and I have always thought it unfair that the home owner who is not paying Income Tax at the standard rate should be given less assistance by the Treasury than the home owner who is paying the full 8s. 3d. This was brought home clearly in the figures given by the Minister. I hope that extensive publicity will be given to the new scheme. This is particularly important since matters of importance often do not come to the notice of one's constituents. I hope, therefore, that the maximum television and newspaper publicity will be given to the new scheme and that those who can benefit from it will be aware of their rights.
There is only one difficulty I detect in the scheme, It is that if a person's income changes during the period of his mortgage, it may have been to his advantage to have chosen one or other method at the beginning of the scheme. In other words, he might choose the option scheme at the outset and find, after a number of years, that his wages have improved and that it would have been to his advantage to have claimed the Income Tax rebate. Or the reverse situation could apply; he might have to retire earlier than he anticipated, perhaps for health reasons, and find that, as he is receiving only a pension it would have been to his advantage to have chosen the lower rate.
I would have preferred a more flexible scheme than the present one, something based on Income Tax credits, so that one gained the best advantage according to one's income in any given year. Nevertheless, I am sure that the Bill, both for 744 local authorities and owner occupiers, is not the last word.
The hon. Member for Aston pointed out that many anomalies still exist in housing finance. I hope that the Government will give continued thought to this matter, until we have a solution which satisfies everyone, council tenants and owner occupiers.
§ 7.36 p.m.
§ Mr. David Winnick (Croydon, South)
I have spoken before in this House about the great housing hardship and the misery that is caused to so many people as the result of the shortage of rented accommodation. I have also spoken about the difficulties faced by people who wish to buy their own homes.
The right hon. and learned Member for Hexham (Mr. Rippon) belittled what has been achieved by the Government in the last two years. Although I consider it extremely important that we should try to reach the target of 500,000 units of accommodation a year, it is not just the total number of units that matters. When the Conservatives were in power the total number of houses and flats built did little to solve the country's housing problem. Great numbers of luxury priced flats were built in seaside resorts and they all went to make up the grand total. When we refer to the total number of units of accommodation built in any year, we should be concerned not just with the total figure but with what we are doing to help those most in need. I was not. I was not impressed by the emphasis which the right hon. and learned Member for Hexham placed on the total number of houses built in a given year when the Conservative Party was in office.
I welcome the Bill because it is a step in the right direction. It will go some way towards fulfilling the Labour Party's pledges in 1964 and 1966. On those occasions we placed great emphasis on housing and, by the security of tenure which has been achieved as a result of the Rent Act and the rebate scheme—and now, as we make it easier for local authorities to build; not forgetting the benefits for owner occupiers—we are going a long way towards fulfilling our election pledges.
Considering Part II of the Bill, I have always found it difficult to understand or 745 justify why people who paid less than the standard rate of Income Tax should receive less subsidy from the Exchequer than those whose paid the standard rate. I asked the right hon. and learned Member for Hexham earlier whether the Conservatives would repeal the option mortgage scheme, and he said "No."
§ Mr. Rippon
Perhaps the hon. Gentleman did not understand me—we suggested it, and the Government have taken it up.
§ Mr. Winnick
The obvious reply is to ask why the Conservative Government did not introduce it during their 13 years of office. However, I do not particularly want to make a party point. This is a very just Measure and will be welcomed, if not by the majority, at least by a large minority of owner occupiers who will benefit.
The hon. Member for Orpington (Mr. Lubbock) made a valid point about publicity. We found in Croydon that many people who were entitled under the rate rebate scheme did not claim, not because they did not want the rebate, but because of lack of publicity. The Government have a heavy responsibility to see that this Measure receives maximum publicity. On the other hand, I hope that owner occupiers who learn of the Bill's advantages through national and local publicity will go out of their way to find out whether they benefit under the scheme and, if they do, will apply as soon as possible.
I should have liked the Bill to have embodied what I believe was the original intention, which was that a person would be able to change over once. Circumstances can greatly change. A married schoolteacher in his early twenties may buy a house and find his financial life rather difficult. He therefore opts for the mortgage option scheme. Later, with promotion, he finds that he would have been better off under the tax relief scheme. This may be a Committee point—and if I am selected I shall certainly pursue it—but I should have liked more flexibility—
The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James McColl)
I am sure that my hon. Friend will understand that this fine young man, whose career we are 746 following, may move, in which case he gets a new house and can start again. The circumstance mentioned applies only when he is staying in the house all his life.
§ Mr. Winnick
I appreciate that, but quite a number of people who do not move will not claim and might find themselves in some difficulty. On the other hand, the person at present doing reasonably well may not consider it necessary to claim, as an existing owner occupier, the mortgage option. He may later find that illness cuts his income in half, and he is then in great difficulty. If a person is not able to change round, it may cause great hardship once this scheme is in operation. I am well aware of the difficulties, such as building society opposition, but I hope that we can see whether there is any possibility of introducing flexibility into the scheme.
I deplore the building societies' recommended increase in mortgage interest rates, which I understand is to come about early next year. I had hoped that this increase could have been delayed further. I know that this point was made during Question Time on Monday, but I repeat that I deplore the recommended increases.
For a long time it has seemed to me that there are private tenants who have had tremendous difficulties in finding accommodation. They cannot get council accommodation, and find themselves in furnished rooms. If such people want to become owner occupiers, they should be given every possible encouragement. Some people may say that the husband does not earn enough—and that is the usual difficulty when a man applies for a building society mortgage—but it is rather remarkable that when the London County Council initiated a 100 per cent. mortgage scheme a very long queue formed, a large number of people were helped whom the building societies or their own local councils could not help, and very few of those people with 100 per cent. mortgages have defaulted.
That is the reply to those who say that a person not earning a relatively high income should not have a mortgage. The London County Council scheme proved that there is a great deal of potential owner occupation. I listened carefully to the Minister when he spoke of some of the difficulties of 100 per cent. mortgages. 747 There are obvious difficulties, but I hope that every effort will be made to help those people who at present find it extremely difficult to become owner occupiers.
It is sometimes said by the party opposite that we Socialists do not want to encourage owner occupation. The very reverse is true. We want to go out of our way in that respect—hence our support of the L.C.C. scheme to make it easier for people to become owner occupiers. The Government by this Measure are taking the first step nationally towards making it easier for a large number of people to gain owner occupation.
Earlier this year the Croydon Council was faced with a financial problem that faces many local authorities. Many council tenants had rent increases of, in some cases, more than 25s. a week. Socialists have always made the point—and it is a fair point, but one that it is sometimes difficult to get across to our political opponents—that when a community goes out of the way to provide flats and houses it should not be penalised. The fact is that, particularly in the last few years, local authorities—and, certainly, council tenants—have been faced with great financial burdens whenever they have wanted to build. No-one can deny that the subsidies outlined in Part I will make it much easier for local authorities to provide accommodation. This step will be welcomed by many council tenants, and by many local councillors of all shades of political opinion.
This Bill does not solve the housing shortage, but it is a Measure we promised in the 1966 General Election campaign. It goes some way towards making it easier for people to own their own houses, and much easier for many local authorities to provide such essential accommodation. I welcome this Bill. When we look back on it in a few years' time it will be said that it was one of the great pieces of social legislation introduced by a Labour Government. I therefore hope that it will be given a Second Reading without a Division.
§ 7.48 p.m.
§ Mr. Arthur Jones (Northants, South)
Those taking part in a housing debate such as this always make very clear the almost infinite variety of place and cir- 748 cumstance there is in housing. We hear from London Members of their tremendous problems of land prices, multiple occupation, and so on, while from those representing the other great cities we hear of circumstances which are, perhaps, not quite so intense, but are similarly difficult in many ways.
My experience in housing has been gained in a county town and I find myself in circumstances rather similar to those of my hon. Friend the Member for Norfolk, South-West (Mr. Hawkins), who dealt with the rural areas. I have been active in housing in a municipal borough with a population of about 60,000, and it is in that context that I have gained much of the experience on which I draw when speaking in this type of debate.
The emphasis I have always found so desirable is on the joining together of both council and private development. It has been unfortunate in many post-war housing schemes that council schemes have been developed independently of private ones. Often in certain parts of a town there seems to have been a concentration of council development, whereas elsewhere most of the development has been in the private sector. I have often heard it said that it is impossible to marry two schemes of this character. In my experience, that is not so. We have schemes in Bedford, for example, where in one location there are both public and private schemes of development. In this way, we do not have the fragmentation that there tends to be in towns and cities where the circumstances are otherwise.
It is in the context of trying to marry together the private and public sectors that I welcome the Bill, because of the contribution that it will make to both sides of the housing problem as a result of Parts I and II. This is a great contribution which the Government are making to solving the housing problem. I know of the difficulties that housing authorities have had with their revenue accounts and of the great debits which have been built up, mainly because of the high level of interest rates which have ruled for such long periods in recent years. However, this is an aggravation of circumstances which existed before. The policy of the Government in trying to keep rents down is naturally exacerbating the position.
749 It is not right to say, as the hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said, that housing can be isolated from the country's general financial environment. Nor was he correct in stating that it is only public money which is involved in council development. A great deal of public money has been found by means of mortgages to house purchasers. The hon. Member for Croydon, South (Mr. Winnick) will recognise this in relation to the G.L.C. It applies to most authorities throughout England and Wales. In this way a great deal of public finance has been found for the private sector.
This has been a good thing, because my advocacy is for owner-occupation, for expansion in the private sector. I regret that there often seems to be a division between the two sides of the House on this question. Perhaps not individually, but collectively, this is so. It does not need a national opinion poll to tell us that most people want to own their own houses. Perhaps 60 per cent. or 70 per cent. would wish to do so.
House ownership is an excellent means of saving spread over a long period of years. People are insulated against inflation by owner-occupation. They are not vulnerable as tenants are, where the tendency in recent years has been for rents to keep rising. House purchase is much less inflationary than a continuing enlarging expenditure in the public sector. This Measure in itself, where it puts money in the hands of people in either the public sector or the private sector, cannot be other than inflationary, but I support the view that we must face additions to inflationary tendencies in housing.
Another great advantage to the owner-occupier is that of mobility. I know that the Government have tried, and sensibly tried, to persuade local authorities to accept tenants from other areas who are changing their jobs because of the shakeout or who are trying to improve their circumstances. Something is done by some authorities. However, there is a general resistance to this move. During recent years it has been acknowledged that it is house ownership that enables a person to buy and sell in the same market and thereby ensure a family's mobility.
750 Above everything else, it is socially desirable that people should have their own houses and take pride in the ownership of them. This is evident as one drives round the countryside. I am very unhappy when I drive past a council estate and am able to recognise it as such, either by the architecture or from the way in which the properties are maintained. It is a most unfortunate example of my earlier point that we have allowed housing in the public and private sectors to be divorced to a great extent. I hope that the Bill will do something towards securing the removal of this unfortunate social distinction.
§ Sir Stephen McAdden (Southend, East)
My hon. Friend's speech is very interesting. It is a great pity that I have to draw Mr. Deputy Speaker's attention to the fact that there are not 40 Members present to listen to it.
§ Mr. Deputy Speaker
I cannot accept that. It is the closed time of the evening. A count cannot be allowed at this time.
§ Mr. Jones
I do not think my hon. Friend raised that point really to praise my speech. I feel sure that he did it to keep the House in order, but I thank him for his kind remarks.
Building in the public sector is the only solution for slum clearance and residential redevelopment. Beyond that I am confident that an expansion of building in the private sector is a better contribution to solving the housing problem than an expansion in the public sector.
§ Mr. Freeson
The hon. Gentleman should think again on the question of what has been traditionally the method of public authority building—that is, wholesale council estates—as the technique solely to be used in redevelopment areas. I ask him to visualise what will happen over the next 20 or 30 years in the main city centres—the twilight areas—if only one type of development is to be permitted or encouraged, as he seems to be implying.
§ Mr. Jones
The first point is the difficulty of acquisition. In the main, it is only local authorities that can make the necessary acquisitions. If the development is of a varied type and of multistorey and low-rise development, the 751 latter could be so, but it has a limited application in town centres where a high density development is desired, as is the convenience which flat development brings to those who want to live near to the centre of activity. I am talking from my own local experience.
I hope that there will be an extension of town development schemes and new town development on the basis of a substantial contribution in the private sector. It is a disadvantage that this has not been the case hitherto both under the present and under previous Governments. There has been a factor, but it has not been large enough.
I come to a point of current interest, namely, the efforts which some local authorities are taking to offer their council houses for sale to tenants who are in occupation. This policy is in line with my thinking about housing. I therefore welcome it. It has the advantages I outlined earlier. There is no disadvantage to the existing housing arrangements in the local authority undertaking the sale of council houses. I do not wish to deal with the prices at which local authorities might agree to offer properties for sale.
This activity increases the private sector of housing, with all the advantages I have detailed. As long as a local authority can retain a sufficient pool of housing to cater for those in need, financial and otherwise, it fulfils its statutory undertaking. The difficulty in housing which has been built up in the whole post-war period is that people have been housed regardless of their ability to pay. There are many examples now of people in subsidised council houses, irrespective of whether there is a rate rebate scheme.
In effect, this keeps out the needy people on whose circumstances so much emphasis has rightly been placed during the debate today. There is that in-built difficulty, and I think that it could be eliminated, though only gradually over a long time, by the sale of council houses, by the mobility which this would give, and by the freeing in many cases of lower-rented council properties so that they could be offered to people in need.
Now, a final point on Part I of the Bill. I welcome the assurance which I have had from the Joint Parliamentary 752 Secretary, the hon. Member for Bermondsey (Mr. Mellish), on a point which I raised with him recently with regard to the back-dating of housing subsidies prior to the date in November which has been fixed. We have substantial building development at Daventry, in my constituency, as part of an overspill scheme from Birmingham. I am very much obliged for the hon. Gentleman's note to the effect that a group of dwellings there will, in the circumstances of an overspill scheme, have the benefit of the new subsidy rates. I understand that there will be a brief reference to this point in his winding-up speech tonight.
My plea is for a widening of development in the private sector. I am confident that great advantages would flow therefrom. This is why I hesitate to accept the criticisms on this point of hon. Members opposite who, in the main, I think, pin their hopes, wrongly in my view, to a substantial expansion in the public sector.
§ 8.2 p.m.
§ Mr. Arthur Blenkinsop (South Shields)
It is a bit depressing that when we are debating one of the most important subjects we should have such a poor attendance in the Chamber. We have not had more than 10 hon. Members present on the Opposition benches at any time during the debate. I accept that at the moment we are doing no better on this side, although during the greater part of the debate we have had a proper attendance. The attendance is depressing because of the importance of the subject and because, as my hon. Friend the Member for Salford, East (Mr. Frank Allaun) pointed out, we are discussing what is basically a human problem which affects nearly every other home affairs issue which one cares to mention, not least, for example, the prospects of advance in education.
What hope is there of our moving ahead with projects to improve educational facilities if the housing facilities for very large sections of our population in the towns are still so inadequate? What kind of study can young people do in their own homes when there is no space to do it? The effect of this in holding back educational advance is very real, as everyone who is concerned with these matters knows.
Although I welcome the Bill, I regard it still as second best to the reduction in 753 interest rates which must remain our aim. We must continue to press for a reduction in interest rates at the earliest possible moment, for this would bring the major advantages which we want for local authority housing and other developments. It is for this reason that I am myself a strong supporter of the Government's efforts to restore our economic position, so that such a change can come about, accepting the necessity for the incomes and prices policy and the rest which are inevitably involved in an attempt to put the country on a sound economic basis.
Undoubtedly, the present high interest rates create a heavy burden. Although we greatly welcome the Bill, which fulfils the pledges which many of us made at the time of the election, we recognise that most of our big industrial cities have to bear a great burden of past debt which they have to service, a debt in some cases running into many millions of £s. This is still the main determining factor in the rents which authorities have to charge. In spite of the many valuable provisions in the Bill, many cities—probably all our major cities—will have to introduce rent increases, never mind restrictions of all kinds, because of the mounting burden of interest rates upon existing debt. There is no getting away from that unhappy fact.
Hon. and right hon. Members opposite should be the last to comment on this state of affairs. We suffered high interest rates under their Administration in the past and, most shocking of all, we had at the same time the severe cut-backs in local authority building which increased the difficulties which we face today.
The major pressure today is still for houses to rent in all our major towns. Although I am entirely at one with the Government's desire to increase the provision of accommodation for sale, I am convinced that, as between the two demands, there is no doubt where the main pressure should lie in most parts of the country.
We are concerned to see that house building standards are raised, and we welcome, therefore, the Government's insistence upon the adoption of Parker Morris standards. As the hon. Member for Northants, South (Mr. Arthur Jones) said, it is depressing that council estates 754 are all too obvious as council estates, for the simple reason that many of them, alas, after all our efforts, are still built to relatively poor architectural standards. It is still the unhappy truth that too many housing authorities have no adequate architectural advice in the work which they do. I wish that it were possible to ensure that architectural advice in the preparation of plans was more fully and readily available on a regional basis if each housing authority is not able to provide its own.
I come now to a matter which we shall, no doubt, have to examine more fully in Committee. I am delighted that the Ministry will insist upon Parker-Morris standards, but I am a little sorry about the proviso that, if an authority were to go more than 10 per cent. beyond the limit, it would not even have loan sanction, never mind the actual subsidy. So great is the need for building to reasonable architectural standards in this country that, wherever local authorities are willing to spend some of their own rate money to try to improve standards of design and layout, they should be given opportunity and reasonable flexibility to do so, understanding, of course, that the amount of the subsidy must be limited, understanding that there cannot be an open-ended subsidy, and understanding also that there are proper limitations upon the resources which can be made available to particular local authorities.
This matter is of real importance. There have been references to the care of local authority estates. I believe that there is a fairly close correlation between the standard of building and design and the care which people take of their properties. Some of the least satisfactory estates from an architectural point of view are also cared for least well. It would not be a waste to do all we reasonably can to raise the standard of design.
I am pleased that the Ministry is moving away from the assumption that it is impossible to provide an adequate density of housing except by very high-rise building. I accept that there are many instances in our biggest cities where it is inevitable, but, taking into account all the necessary provisions and reservations when one builds very high, the provision needed for traffic, for amenity, for light 755 and all the rest, the advantages even from the standpoint of availability of land are considerably less than is at first thought. There can be no doubt about the enormously increased cost and the added burden which this puts upon the taxpayer in helping to finance high-rise schemes. There can be not much doubt, also, that there are precious few people who would prefer to live in high flats rather than other accommodation where reasonable facilities for children can be offered.
I urge my right hon. and hon. Friends at the Ministry not only to apply the new provisions for subsidy but also to look with care at proposals which are made so that unnecesssary high-rise schemes are rejected or properly modified. I very much hope that that can be done.
I am one of those who have advocated rent rebates consistently since the 1930s, the days when a very famous reverend gentlemen, the Rev. Jenkinson, advocated extreme examples in Leeds and, perhaps, got himself chucked out of the council and the Labour Party majority overthrown on account of the extreme form of the scheme which he then advocated. We felt it to be a rational form of Socialism. Because of the effect of means tests and so on, the whole attitude was different, but now one can appreciate that there is real danger of the people who most need the houses not getting them if we do not take a sensible view about the proper use of the subsidies which are made available, particularly now that they are increased to the new level.
I have some doubt about the idea that such schemes should be made mandatory advanced by my hon. Friend the Member for Birmingham. Sparkbrook (Mr. Hattersley). I taunted right hon. Members opposite that they did not seem to be able to make up their minds and they were not, therefore, offering any contrast to the position taken by my hon. Friends. There are occasions when a rent rebate scheme would not make much difference. One can quote cases where the variety of incomes is, on the whole, so limited that it would not be worth while going to the administrative expense of introducing a scheme. To that extent, therefore, there ought to be some local option left. Nevertheless, I think that 756 local authorities should be expected to produce rent rebate schemes, and I should not object if the Minister went a little further than he has already and invited local authorities to submit schemes for their own areas.
I should much prefer what I would call a rough-and-ready rent rebate scheme to the state of affairs in some towns where the authority says that anyone with an income over a certain amount shall automatically not have a council house. I regard this as quite unacceptable. It would be a very bad day if we did anything to make our council housing estates even more sectionalised than they are already.
I remember that in earlier days, when I was involved in introducing housing legislation, it was always our effort to try to get a reasonable mixture of people on housing estates. Nothing was worse than the kind of estate which developed between the wars and which was well known as the slum clearance estate. It was well known because of the kind of house there and because the people living there could not develop their own kind of life, because they were always classified as the slum clearance tenants. I hope that we are getting completely away from that kind of attitude and that mentality.
If I argue for the rights of people with larger incomes to enjoy the advantages of living on a council estate, then I certainly think that they should be expected to make a full contribution towards the rent. I see no reason why they should not pay the economic rent of the house and I am therefore in favour of the encouragement of a rent rebate scheme, although I still have doubts about whether it would be sensible to impose it on a mandatory basis.
As for mortgage options, we are all agreed that it is highly unfair that mortgages should fall most heavily on the lower income earners, that is to say, there are few opportunities for the lower income earner to take out a mortgage. I welcome something which has not been mentioned yet—the fact that it is proposed that this facility should be extended to the improvement of properties as well as to actual purchase. Many of us are concerned that we have not got as far as many of us would have 757 liked with improvement grants. There is still a large volume of older property which can and must be used more effectively, and with the introduction of this further facility more people may take advantage of the improvement grants which should be available.
Like many of my hon. Friends, I hope that organisations like the new one called "Shelter" will be able to enjoy some of the benefits of the Bill. It would be something of a tragedy if bodies of this sort were not able to do so.
I welcome the Bill and regard it as second best against the reduction of interest rates. The right hon. and learned Member for Hexham (Mr. Rippon) has been the only contributor from either side of the House with no positive contribution to make and no fresh ideas to give, whereas, to the credit of other Opposition hon. Members and hon. Members from other parts of the House, there has been an attempt to offer useful and positive ideas. I hope that the Bill will be rapidly translated into law and that it will not be long before we can so improve the country's economic position that we can tackle the basic problem of interest rates which lies at the root of so many of our present housing difficulties.
§ 8.18 p.m.
§ Mr. Graham Page (Crosby)
The hon. Member for South Shields (Mr. Blenkinsop) has a real and sincere appreciation of the human problems in housing and of the problems of administration of housing policy both in Government and local government. I am sure that the House is always grateful to him for the constructive proposals which he puts forward in his speeches on this subject.
However, I doubt whether he has appreciated, or at least expressed his appreciation, of the background to the debate. We are debating the Bill at a time when there have been more than two years of Socialist Government during which that Government have fallen short of the target for house building at a rate of nearly 20,000 houses a year. During the year 1965, 400,000 houses were promised, increasing in 1966, and the Government have fallen short by nearly 20,000 a year.
In fact, each year they have let down 20,000 families who were seeking homes. Now they introduce this salvage opera- 758 tion and launch the Bill as a sort of salvage vessel for their policy, and a very leaky salvage vessel it is. Struggling against the rough seas of the Government's general economic policies, this vessel will not reach the owner-occupier mortgagor for 15 months. This relief for mortgage interest will not take effect until April, 1968. Nobody knows when the leaky vessel will reach prospective purchases to help them with their deposit. That is not stated in the Bill. This may be one of the several promises in which the Government have frequently failed—this promise that they would give help to assist in the granting of mortgages of 100 per cent. of valuation.
Let me make perfectly clear what that offer by the Government is and how very different it is from the proposal which we made to assist the owner-occupier with his deposit, a proposal put forward firmly in the last Parliament and during the last election as part of Conservative policy. [An HON. MEMBER: "Why was it not done before?"] Before the present Government came to office, owner-occupation during the 12 years of Conservative government had gone up from 31 per cent. of the houses in the country to 47 per cent. There was a steady increase in owner-occupation, that is to say, a man living in and owning his own house and being able to call it his home. Now we see that since the present Government have been in office such people have been unable to purchase their houses because of the difficulties with mortgages. We have, therefore, put forward this firm policy of a grant to help the prospective purchaser.
What is put forward in the White Paper is only a sort of forecast as something for the far future. It is not a grant to the prospective purchaser. It merely says that he will be able to borrow more money, up to 100 per cent., and that the Government plus the insurance companies will guarantee the excess over what a building society would have lent. The proposal is so vague that we are not even given that figure. We do not know whether the Government and the insurance companies will guarantee 25, or 15, or 10 per cent. At present, the mortgage indemnity policies, whereby insurance companies assist building societies to make advances, cover 20 per cent., the difference between a 75 and a 95 per cent. advance.
759 It is details of that sort which we might have expected to be put forward in the White Paper, or at least by the Minister. It is perfectly clear, however, that there is no generosity about this proposal. It merely tells the prospective purchaser, "You can borrow more money, but you will have to pay it back in due course and satisfy the building society that you have the income status to pay the instalments". Our proposal was that if a prospective borrower was prepared to make some savings, we would double them up so that he might pay his deposit—and this would be not by way of loan, but by way of grants, not repayable.
I am not sure from the speeches of the Minister himself and of his hon. Friends that hon. Members opposite appreciate the present housing position and how inadequate the Bill is to meet it. I quote what Mr. Harrington, President of the Federation of Registered House Builders, said at the Federation's annual dinner on 16th November:… speaking personally and from a housing experience going back over more than 30 years, never have I felt the outlook to be so poor. Not even in the Depression years of the 'thirties was confidence of both the public and the industry at such low ebb, thereby stifling demand for what is still a public need.Many house builders are, to varying degrees, being forced by the hard economic facts of life to reduce their land stocks, curtail their building programmes and disperse their organisations. If this continues to any marked degree, I need hardly emphasise the difficulties there will be when a change in the economic climate encourages us to increase our production.This was from a practical man, in business as a householder and respected by his colleagues sufficiently to be appointed President of their Federation.
That is the background to the debate. Hon. Members opposite seem to think that all this problem can be solved by concentrating on local authority building. They seem to think that it is quite right to run down private enterprise building in order to direct materials and resources into council house building. Apparently, everything is right if the landlord is an individual in his capacity as a councillor, but everything is wrong if the landlord is an individual in his private capacity.
We had it expressed quite forcefully by the hon. Member for Salford, East 760 (Mr. Frank Allaun). Judging by the noises of satisfaction which came from his hon. Friends, I think that he expressed the feelings of other hon. Members opposite. He obviously thinks that anyone who owns property is an enemy of all tenants. He has deliberately failed to grasp, as other hon. Members opposite have, that when we on this side of the House ask for a fair deal for landlords, we are asking for the conditions in which good rented houses will be provided and maintained.
The hon. Member for Salford, East and others do great harm to the people whom they profess to champion, the tenants, by their attacks on the persons upon whom those tenants rely for the soundness of their homes. The sneers and smears of the hon. Member at those of us, who have spent the whole of our careers in the House in working for the improvement of housing conditions and for the increase in the number of homes for the people, were quite unworthy of a debate of this sort.
I agreed with the way in which the hon. Member began his speech when he said that our objective should be to enable ordinary people to obtain more houses at mortgage rates and rents which they could afford, but that is just what the Government's policy has not done in the past and will not do by the Bill in the future. It is accepted that council house building is slower than private enterprise building, and so if substantially greater resources are being switched from private enterprise to council house building, then the obvious result is that the rate of building of new homes will slow down.
I notice in the Bill that not even housing associations producing rented accommodation are considered as being favourable for any subsidy. As I understand it, the subsidy to which some housing associations will be entitled will go only to those which are co-ownership. Of course, the great proportion of housing associations are those which are providing property to let, which are providing accommodation for tenants—in other words, cost-rent housing associations.
When intervening in the speech of the hon. Gentleman the Member for Salford, East I omitted to mention that I am a director of a housing association. Perhaps I should declare my interest at once. I 761 do not know why the Parliamentary Secretaries are grinning at that. Housing associations are non-profit making concerns, and I would hope that almost every hon. Member would belong to a housing association, which encourages the provision of housing for rented accommodation.
Why is the subsidy not to be given to cost-rent housing associations? I see the Parliamentary Secretary nodding. I take it that he will explain it to me when he replies, so I will not press the point further.
We have waited many months for this second Housing Subsidies Bill. Part I is the same, or is practically the same, as the provisions in the previous Bill, so apparently we have been waiting for Part II to be drafted. Why? Part II includes just the proposals which we put forward in the debate on the previous Bill. The Government realised that the points put forward by this side of the House during the Second Reading debate on the last Bill were very strong and have included them in this Bill.
I am no less conceited, as a Member of the House, than any other hon. Member. Therefore, I shall quote my own words from the Second Reading of the previous Housing Subsidies Bill on 15th December, 1965. Before the paragraph I propose to quote, I had set out the scheme, which I have mentioned this evening, for assisting the prospective purchaser with a grant in making his deposit on his purchase. I had also touched upon relief in respect of mortgage interest. I then said:Has the Minister considered helping prospective home owners by some such grant in aid of the deposit to purchase? A person with a low income, helped to purchase a house in this way—being in all probability a non-tax-payer—could be granted without great expense to the Exchequer, an allowance of a percentage of his mortgage interest, similar to the tax concession to the mortgagor who is a taxpayer. Has the Minister considered that sort of assistance to the home owners?"—[OFFICIAL REPORT, 15th December, 1965; Vol. 722, c. 1385.]I asked whether there was to be assistance over the deposit and whether there was to be assistance over the mortgage interest. Neither of these were included in that Bill, and I am now gratified to find that the principles have been accepted.
§ Mr. Graham Page
The hon. Gentleman should come over here if he accepts my principles. But, as is usual from the benches opposite, for the owner-occupier this is too little and it will come too late.
Too extravagant words have been used in the course of the debate about the importance of the Bill. It is important only in the heavy burden which it will place on future generations by subsidies of up to £120 a year per housing unit for 60 years. It is important in that it places that burden on this generation and on our children. But it is of no importance whatsoever as a salvage operation for the Government's badly-holed and rapidly sinking housing target and housing policy.
§ 8.30 p.m.
§ Mr. Roy Roebuck (Harrow, East)
I know that a number of my hon. Friends have been in the Chamber as long as I have and hope to catch your eye, Mr. Deputy Speaker, so I hope that the hon. Member for Crosby (Mr. Graham Page) will forgive me if I do not follow his argument in detail. It is my intention to truncate my remarks, and I hope that my hon. Friends will take this in lieu of a Christmas card.
The almost universal note that we have heard from the Opposition about the Bill has been one of considerable sourness, with, perhaps, the notable exception of the speech of the hon. Member for Norfolk, South-West (Mr. Hawkins), who made some interesting observations about the design of council houses and council developments. I am sure that many of us on this side will go along with him on that.
I share the view of my hon. Friend the Member for South Shields (Mr. Blenkinsop) that perhaps the most sour speech came from the right hon. and learned Member for Hexham (Mr. Rippon). The right hon. and learned Gentleman's speech was a dog-in-the-manger affair, if ever I heard one. Many of us on this side, when we look at the Opposition Front Bench, often think that we see there the sort of advertisements one sees for "Bob Martin's". If anyone were to run a competition about who should get the powder, I am sure that the right hon. and learned Gentleman would win. I hope that when my hon. 763 Friend the Joint Parliamentary Secretary replies he will administer this sort of tonic.
My hon. Friend the Member for Salford, East (Mr. Frank Allaun) gave a most moving impression of the difficulties prevalent in his constituency. Harrow, East is about 200 miles from Salford and one does not normally think of the two places together. But many of the conditions that he described in Salford, East are equally present in Harrow. I have in my pending file now two cases in which women have written to me to say that their marital life is in danger because of over-crowding in the home. A council house tenant has written complaining about outside water closets on a council estate and the fact that there is not a wash basin in the bathroom of a council house. So these conditions do not only apply to the industrial North. They are also very much a problem in what is generally regarded as the affluent South-East.
I warmly welcome the Bill. During the past two and a half years, I have fought three General Election campaigns and I know from that experience that housing is a dominant theme when people consider our way of life. It gives me particular satisfaction to see many of the election promises I gave being fulfilled—and this despite the economic difficulties that the Government inherited from the party opposite. It could have been quite easy for my right hon. Friend to have stated that, because of the stepmother's legacy left to him by the party opposite, it was impossible to bring the Bill in; but he did not do so. He will earn the heartfelt thanks of many people throughout the country whose only wish is the simple one of having a roof over their heads and a front door to call their own.
I am glad to see in the Bill—although I naturally share the disappointment that no date is fixed—the provision for guaranteeing 100 per cent. mortgages. We have all come across cases of young people paying the sort of rent which would be enough to meet a mortgage payment if only they had the capital to put down in the first place. I know that many of them scrape hard to try to cover the deposit. They forgo elementary pleasures. Even the cat's milk is 764 rationed. But, as they gather the money together, they find the price of the house they want soaring and they are back at the bottom of the hill again. I do not want to follow the hon. Member for Poole (Mr. Murton) into Greek mythology, but this is the sort of position for so many people. They try hard to gather the deposit and then find the house has gone beyond their reach again. Many local authorities notably the Labour-controlled G.L.C., have led the way in this and I welcome the fact that my right hon. Friend is seeking to extend the system of 100 per cent. mortgages to the building societies.
It is inevitable that in considering the Bill we should think of our own constituencies. I am sure that in my constituency Part II of the Bill relating to the option mortgage scheme, will be very warmly welcomed, for we are not so much high society and not so much low society—we are mostly building society. Many of my constituents have been forced into the position of crippling themselves financially to buy a house because the local council has not built enough council houses to rent. This Measure will bring social justice to those people who are of such modest means that they have not been able to get the benefit of income tax relief.
One point raised by the hon. Gentleman the Member for Orpington (Mr. Lubbock) dealt with the difficulty that might arise once a person has got himself fixed up with a particular sort of mortgage and finds that his circumstances have changed considerably. I can see that there are great difficulties in the way of making this scheme as flexible as the hon. Member wanted, but I hope that my right hon. Friend will consider that where a person with a mortgage suffers a very real hardship, perhaps as the result of some accident or sickness, there should be some provision made to take care of him. I hope that in Committee my right hon. Friend will consider this suggestion sympathetically.
Part II of the Bill nails very firmly the lie which one has often heard from the Conservatives that the Labour Party does not believe in owner-occupation. That is quite wrong. Anyone who studies the history of the Labour movement, and I offer a free course to hon. Gentlement opposite in this subject if they wish 765 to take me up on it, would know that one of the first things which the early trade unions did was to introduce a scheme whereby their members were assisted to buy their own houses. The Bill marches along the same road as those early pioneers.
I support the view of the hon. Gentleman the Member for Orpington about publicity, and I hope that my hon. Friend the Joint Parliamentary Secretary when he comes to wind up, will have a word or two to say about it. Hon. Members can also do a great deal to make this Measure known in their constituencies, and I pledge myself to do my bit in Harrow, East. I hope that my hon. Friends will join me in their constituencies.
Part I of the Bill deals with the most urgent need facing the nation, as my hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) said. Certainly, the Conservative Party have offered far too little encouragement in the past. My right hon. Friend's Bill makes the effective borrowing rate for local authorities 4 per cent. That means that assuming that 6½ per cent. is being paid at the moment, the basic subsidy on a £5,000 council dwelling will be £112 a year, that is about five times more than the 1961 grant, brought forward by the party opposite. My right hon. Friend has gone nap on the Conservatives and there will be no excuse whatever for laggard local authorities such as the London Borough of Harrow. It has needed a great deal of prodding and my hon. Friend the Joint Parliamentary Secretary has recently been instrumental in getting it to increase its housing programme by about 450 per cent. to catch up on the past neglect of this Conservative authority. The fact that so much has to be caught up is one of the reasons for the extraordinary increase in council rents which this Conservative-dominated council has just announced—an increase of about 50 per cent., in some cases meaning an increase of 30s. a week. I hope that when my hon. Friend comes to wind up he will deal with this problem and say whether this Bill will do anything to assist the council in the future so that increases of this magnitude are not brought about.
§ Mr. Anthony Grant (Harrow, Central)
I would like the hon. Gentleman also to tell the House, if he is complaining about 766 Harrow Borough Council, that it has acted entirely in accordance with the prices and incomes policy of the Government, and that the reason for this increase in the rents is Government policy on prices and incomes, and it is in the interests of the ratepayers that that council put the rents up.
§ Mr. Roebuck
I am delighted to see the hon. Gentleman the Member for Harrow, Central (Mr. Grant) here. I am glad that he has managed to pop in to the debate for a few minutes.—[HON. MEMBERS: "He has been here before."] Well, I am glad he has managed to pop in and out. I can tell him this, that if he spent as much time in the borough as I do, and a little less time in the City of London, he would be better informed on what is going on in the borough.
Everyone, I think—certainly, everyone I have met—in Harrow is absolutely disgusted at the way the local council has so managed its affairs that it has to have an increase of this magnitude. If it is the case that this is due purely to Government action, why is it that the surrounding boroughs do not have to put up rents by 30s. a week? Perhaps the hon. Gentleman the Member for Harrow, Central will go back to his friends on the Borough Council of Harrow and ask them that question.
I am rather surprised by the hon. Gentleman's intervention, because, having read the Harrow Observer this morning, I thought that he would have got up to correct the most inaccurate statement which he made in the House the last time he addressed us; a statement which has been repudiated by the leader of the Conservatives on Harrow Council. No doubt the hon. Gentleman will seek some other opportunity to come before the House and make his apologies for that outrageous statement. But not now.
My hon. Friend the Member for Cambridge (Mr. Robert Davies) has tackled the general question of the housing revenue account, and I was greatly obliged to him for the erudite manner in which he spelled this issue out. It is the fact that housing accounts must be non-profit-making, but there are many ways in which this provision can be circumvented by councils such as that of the London Borough of Harrow, which is lacking in all sense of social duty. 767 All sorts of impositions can be put on the housing revenue account. Council tenants can be made to pay for looking after the old, for looking after the disabled, for looking after the poverty stricken. It is outrageous to suggest that this should be a burden which resides in one section of the community. It is a burden which must be borne by everybody in the community.
There are other points, of course, which I have not time now to deal with. For instance, I cannot believe that it is proper that the burden of loan charges for land which has been bought by a local authority and awaits development should be a charge on existing council tenants. That cannot possibly be fair. I hope that the Joint Parliamentary Secretary will deal with this point when he winds up the debate. People in my constituency are extremely worried about this issue. My hon. Friend is, of course, aware of the difficulty because he very courteously, with my hon. Friend the other Joint Parliamentary Secretary, received a deputation from my constituency. Anything my hon. Friend can do to induce the fuddy-duddies on the Conservative-controlled London Borough of Harrow to join in the chorus of this progressive song he has been singing tonight will be very welcome indeed.
I would state, without hyperbole, that this Measure which has been introduced today is certainly the most generous housing Measure in our history, and I warmly congratulate my right hon. and hon. Friends on the Treasury Bench; and I hope that my hon. Friend the Joint Parliamentary Secretary will deliver a very strong dose of power to those hangdog right hon. Gentlemen on the Front Bench opposite.
§ 8.49 p.m.
§ Mr. Anthony Grant (Harrow, Central)
I had not at all intended to speak in this debate, but I have been stimulated to do so not only by the very feeble nature of this Bill, which I regard as being one step forward after two steps back by the Government, but also by the extraordinary speech which we have just heard from the hon. Gentleman the Member for Harrow, East (Mr. Roebuck). It is obvious that the hon. Gentleman is piqued by the fact that he has been 768 badly caught out in the campaign which he has joined. Some council tenants have suggested that he has jumped on the band wagon of the council tenants' discontent.
§ Mr. Roebuck
Will the hon. Gentleman tell the House the political affiliations of the person who made that slanderous statement, and would he also perhaps care to tell the House why it was only last week that he ventured to give his opinion on this question to the people of Harrow, when the decision to increase rents was announced several months ago?
§ Mr. Grant
I am not aware of the political affiliation of the writer of the letter, but I believe that he is a council tenant.
The facts—and I think it is right that this should be said—are that the local authority in Harrow has reluctantly, and somewhat belatedly, had to increase the rents of its tenants. It is doing so with effect from January, at a time when we move from the freeze into the period of severe restraint. Its policy is entirely in accordance with the Government's White Paper on prices and incomes, as is borne out by the Question and Answer in this House between none other than the hon. Member for Harrow, East and the Minister of Housing and Local Government. The hon. Gentleman was ill-advised enough to ask the right hon. Gentlemanif he was aware that the success of the Prices and Incomes Policy is being jeopardised by the London Borough of Harrow …to which the Joint Parliamentary Secretary, the hon. Member for Bermondsey (Mr. Mellish) replied, "No". I am glad that the hon. Gentleman is here. He went on to say, as we would expect of a Minister who is an honourable and truthful man:I would refer my hon. Friend to paragraph 20 of the White Paper 'Prices and Incomes Standstill: Period of Severe Restraint' … which gives the Government's view on council house rents and recognises that some increases may be inevitable."—[OFFICIAL REPORT, 6th December, 1966; Vol. 737, c. 257.]Councils have to obtain their money from the Government, from the taxpayer, or from the ratepayer, and it is the duty of councils to balance their policy as between their council house tenants and ratepayers, and this the local council of Harrow has attempted to do.
§ Mr. Roebuck
The hon. Gentleman is doing exactly what the hon. Member for Orpington (Mr. Lubbock) urged him not to do. He is trying to cause some sort of conflict between council house tenants and owner-occupiers. Does he not know that council house dwellers in Harrow pay the same sort of rents as occupiers?
§ Mr. Grant
I do not take advice from the hon. Member for Orpington. The bare fact is that, as is said in the White paper, councils have to balance the needs of council tenants with the needs of ratepayers, and this is precisely what has been done. If the hon. Gentleman thinks that the ratepayers are getting away with it, I advise him to consult the ratepayers' associations, of which there are many, in Harrow. They take the opposite view from that taken by the hon. Gentleman. They feel that since the Government took office the burden of rates has become intolerable, and I agree. It is outrageous, and they feel that it is high time that some of the effects of Government policy were felt by council tenants, rather than that the burden should be increased on the already oppressed ratepayers.
There is a difference between council tenants and ratepayers, because the council can subsidise its council rents only by means of the burden it imposes on the ratepayers. This is as clear as anything could possibly be, and in Harrow they have found that the main reason for the increase is that the interest to be paid on money borrowed to build their dwellings has increased out of all proportion, in addition to which, apart from the interest charges which are the direct responsibility of the Government, the costs of land and buildings have also risen.
My right hon. and learned Friend the Member for Hexham (Mr. Rippon) spelt this out clearly in his speech, and it is fair to point out that an increase of 1 per cent. in the rate of interest can raise rents in Harrow by as much as 15s. a week, and increased building costs of £1,000 a dwelling can increase the rent by £1 10s. Faced with this situation, and bearing in mind the Government's policies as set out in their White Paper, the Harrow Council has effected this increase which I know only too well, because I have met many of the council tenants, 770 bears very heavily on them when they are at the same time having their wages frozen under the prices and incomes policy.
I sympathise with them, but they must realise where the money comes from, and the burden which is imposed upon ratepayers already. Even with the increases, the amount being paid by council tenants for a four-bedroomed house in a desirable area such as Harrow, which is near to London, is considerably less than many—and there are many more of them—private house owners in Harrow are paying by way of mortgages to building societies and other housing associations.
I urge the hon. Member to bear in mind the fact that not only are there increased numbers of tenants but there are ratepayers—and many more of them. I consider that the policy of the Harrow Borough Council is absolutely correct, and in line with Government policy. The reason for the increase in rents is primarily due to the policy of this Government on the question of interest rates and rising costs generally.
I have been stimulated to take up a little more time than I intended by the provocative speech of the hon. Member for Harrow, East. I venture to suggest that the time that I spend in the House, bearing in mind that I have another capacity here, is as much as if not considerably more than the time he spends here.
§ Mr. Grant
I, like my hon. Friends, believe that this is a necessary but belated and overdue Measure. We bitterly regret the fact that the new scheme, heralded with so much trumpeting and promise in the 1964 and 1966 elections, is not to come into effect for such a long time. Its operation will be very belated. Nevertheless, bearing in mind that it is one step forward, after the Government have taken two steps back, in my opinion the Bill should be given a Second Reading. I hope that some of the more undesirable and stupid Clauses will be dealt with in Committee.
§ 8.57 p.m.
§ Mr. Michael Barnes (Brentford and Chiswick)
One of the advantages of being called to speak at a late hour in the debate is that a Member finds that, having 771 listened to the other speeches which have been made during the debate, he has become more and more bored at the thought of what he is proposing to say. This persuades him to be ruthless with his own speech, and to be much more brief and come more quickly to the point.
I want to draw the attention of the House to a gap that still exists between those who stand a good chance of being housed by local authorities within a reasonable period and those who have home ownership within their grasp, and to examine the extent to which this gap is narrowed by the Bill—as it certainly is. My hon. Friend the Member for Harrow, East (Mr. Roebuck) spoke of the pleasure with which he viewed the way in which the Government's pledges on housing were being fulfilled all the time.
I share his pleasure. We have had the 1965 Rent Act, dealing with private rented accommodation, and the Leasehold Reform Bill will be coming after Christmas. The Bill gives a boost to local authority housing because of the new subsidy structure which it introduces and the help it gives to people who wish to become owner occupiers by bringing home ownership within the grasp of many more people.
Even so, many people are still slipping through the gaps in our housing policy, and still living in very difficult conditions. I need not go into detail about their circumstances; this question has been referred to by many hon. Members already. My hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) referred to it in some detail. The irony of the situation is that the people who slip through the gap are mainly people with modest or average incomes, who are the most dynamic members of the community—young, go-ahead families with young children; people who are prepared to move from area to area and to try their luck here and there.
They are definitely people who have something to contribute to the community in which they live, but they tend not to be able to build up the necessary residential qualifications which they need if they are to be housed by local authorities. They cannot afford to buy houses in the areas in which they have to live and work. They are not prepared to go on 772 living in very unsatisfactory conditions for years and years, and so they tend to move out.
This is certainly happening in London. People like this are tending to move 30 miles from London, to Buckinghamshire, for example, and they are lost to the communities from which they came. It then becomes that much harder to build up and maintain a balanced community in these London areas in the future.
When the Housing Corporation was set up, in 1964, the intention was that the cost-rent housing societies and the co-ownership housing societies—as defined by the 1964 Act, and distinct from the charitable housing associations—should be the "third arm" in the housing drive, between local authority housing and home ownership, to try to meet the needs of those for whom the other two are not the answer.
I welcome the fact that, under the Bill, co-ownership housing societies will be able to borrow the money they need at the option mortgage rate, but it is unfortunate that the cost-rent housing societies will not be able to do the same. It is true that these housing societies have only a few hundred or so houses or flats completed at the moment, but they have thousands of houses and fiats in the pipeline. We could be talking about a form of housing which could become very important in the future.
The economics are interesting. At the moment, the cost-rent housing societies estimate a cost per housing unit of £4,000 and can get their rents down only to a minimum of £6 5s. But if they could borrow money at the option mortgage rate, they could bring them down to about £5 a week. If they could do that, they could bring their schemes within the reach of many people living in poor housing conditions.
I underline the importance of maintaining a balanced community, certainly in parts of London. This is more important the nearer the area is to the centre. We need to think seriously about new housing developments which come between local authority schemes and the luxury houses and flats which are built for sale at prices which, in London at any rate, ordinary people cannot afford. I welcome the Bill, because it gives local authorities a boost to build more and better houses and widens the basis of home ownership. 773 I congratulate the Government on bringing it forward.
§ Sir D. Glover
I support what the hon. Gentleman said about cost-rent houses, as it takes a long time to get them off the ground. I am chairman of one such society in Liverpool. Whereas, at the moment, we have not a single unit in occupation, we shall, by the middle of next year, have 250 units under construction. This is important, if the Government give the support for which the hon. Gentleman asked.
§ 9.4 p.m.
§ Mr. H. P. G. Channon (Southend, West)
I entirely agree with the remarks of the hon. Member for Brentford and Chiswick (Mr. Barnes) and my hon. Friend the Member for Ormskirk (Sir D. Glover). I understand that the Parliamentary Secretary will deal with that point.
This should have been two Bills rather than one. It is divided into two parts, one dealing with the housing subsidies to local authorities and the other with the mortgage option scheme. Hon. Gentlemen opposite have made great play with the fact that Part I of the Bill was introduced in the Housing Subsidies Bill of December, 1965, a year ago today. Although the Government may have been keen on that Bill, they never got it into Committee. The second part of the Bill is the one which my right hon. and hon. Friends welcome very much more than the first, but we regret that it is not as valuable as it should have been.
There is no disagreement about the aims. The hon. Member for South Shields (Mr. Blenkinsop) pointed out that every hon. Member has difficult housing cases in his own constituency which he would like to solve. I am fortunate to represent a constituency which does not have some of the terrible slum clearance problems which others have spoken about with such feeling, but that does not make anyone less keen to solve the problems. My criticisms of some of the Government's proposals are not because of their aims, but because they are not tackling them most effectively.
It is fair to draw attention to the Government's handling of the housing programme since they came to office. We have heard these figures before, but they 774 must be given again. When they came in, there were 430,000 houses under construction, but only 384,000 were completed in 1965. This year, we are told, we will be lucky to get that far, while next year it will not be much, if any, more than that.
Although the Prime Minister confidently reaffirmed the 500,000 a year target by 1970, I should be grateful if the Parliamentary Secretary or the Minister could tell us how they think they will get this figure by that year—[An HON. MEMBER: "He has got to get it."] Exactly. He is pledged to get it and it is more than a pledge. We know roughly what the housing problem is. The Minister outlined it tonight—180,000 houses a year needed because of replacements, demolition and the formation of new families, a shortage of 700,000 houses, and the massively difficult problem of slum clearance. I agree completely with my hon. Friend the Member for Norfolk, South-West (Mr. Hawkins) and the hon. Member for South Shields about improvements, because I thought more help should be given to them.
Our main criticism of Part I of the Bill is that the subsidy system the Government propose is not nearly selective enough. Some authorities have a desperate housing need and others are not nearly so badly off. I readily concede that the special concessions scheme in Clause I, retrospective for houses completed after November, 1965, will be a great help to some local authorities. It is a very small number, although I understand that the Parliamentary Secretary will tell us more about it. I have checked the list, and as the Minister said, it is a very small number.
We must face the fact that the basic subsidy for all local authorities in future will be the same and the basic subsidy is not selective. It is not surprising, in view of the small element of selection in the Bill, that the Financial Times stated, in a cutting comment about the Bill on 6th December:The well-known fact is that the greater part of the housing subsidy bill goes to help people who stand on their own feet: and much of it also goes to local authorities which are already rich in rents and historic subsidies. Meanwhile the poorer tenants and, much worse, the homeless and slum-dwellers waiting for a council house—get inadequate help or none at all.775 That is the burden of our criticism of Part I of the Bill. We believe that if it were more selective, local authorities would welcome it.
§ Mr. Frank Allaun
Does the hon. Gentleman mean, for example, that a railwayman earning £14 per week in Bournemouth, which is a well-off place, should not get the same subsidy as a railwayman in Salford or anywhere else?
§ Mr. Channon
I will come to the question of council tenants and will answer that question.
My hon. Friends and I—and it is obvious from the speeches of hon. Gentlemen opposite that they feel the same—would like the Government to recognise that it is no longer satisfactory for council tenants to go on being subsidised, as happens in some areas, at such a high level when tenants in privately rented accommodation with broadly similar incomes have to pay very much higher rents. Council tenants are often subsidised for historic reasons. They pay much lower rents than those in private accommodation, and my right hon. and learned Friend the Member for Hexham (Mr. Rippon) gave the figures of county boroughs and non-county boroughs which have maximum rents for three-bed-roomed houses of less than 30s. a eek.
Other figures have been given to show that rents of houses built since March, 1964, vary widely; that for three-bed-room houses as little as 20s. 9d. a week is charged in one area while, at the other end of the scale, 139s. a week is charged in another. These are ridiculous figures one too high and the other too low. The term "reasonable rent", a term or art, is something which the Government should seek to achieve in practice as quickly as possible. We want rents that are fair to the tenant, the ratepayer and the taxpayer.
It is incredible to think that only a year ago the Government stated, in paragraph 41 of their White Paper, "The Housing Programme 1965 to 1970", that… if the extra subsidies now to be provided are to be used, as they should be, to relieve those with the greatest social need, these policies should reflect the fact that the financial circumstances of council tenants vary widely. This means that subsidies should not be used wholly or even mainly to keep general rent levels low.776 That is the Government's position. That is the position of my hon. Friends and of many hon. Gentlemen opposite.
It should be remembered that 60 per cent. of councils do not operate rent rebate or differential rent schemes. The Government stated a year ago that they would be entering into consultations with the local authorities on this issue, but as recently as 1st November, answering Questions in the House, the Minister of Housing and Local Government said that formal consultations with the local authority associations on rent rebate schemes would start shortly. The Government have had a year in which to have those consultations, but they have done absolutely nothing about them.
§ Mr. Channon
The hon. Gentleman will soon have an opportunity to say what he and his right hon. Friends have done. From reading his right hon. Friend's Answer on that occasion, it is fair to draw the conclusion that the Government have not begun the consultations with local authorities which they promised to have a year ago. It is about time that some hon. Gentlemen opposite began to press their right hon. Friends to get a move on, particularly since so many hon. Members are agreed about this matter.
My hon. Friend the Member for Poole (Mr. Murton) pointed out that one of the defects of this subsidy is that when local authorities borrow it will pay them to enter as many tenders as possible when interest rates are high because they will get the subsidy for 60 years based on those high rates. It is obvious that it will pay them to enter as many tenders as possible when interest rates are high rather than when they are low, although I agree that they must get the loan sanction.
We then come to the question of what the Minister of Housing and Local Government will consider to be a fair rate of interest in any one year. I hope that the Joint Parliamentary Secretary will make a clear statement on exactly how this system will work. As far as I understand the Bill, the rate will be fixed annually and will apply for the whole of the preceding year.
In view of the attack on Conservative Administrations by the hon. Member for 777 South Shields I have looked up the changes that have occurred in the Bank Rate. During the two years of office of the Labour Government we have had a Bank Rate of 7 per cent. for a longer period than at any time during the whole of the 13 years of Conservative Administration. Bearing that in mind, what will happen when interest rates fluctual e greatly in one year? For example, in 1958—and in giving these figures I do not intend to make a party point—there were five changes in Bank Rate and interest rate fluctuated by as much as 2 per cent. in that year.
How will the Minister fix a representative rate of interest that is fair to local authorities for the whole of the preceding year? Will it not all be a question of chance as to whether local authorities get an uncovenanted bonus or be penalised, depending on the time of year they borrowed their money? I hope that the Parliamentary Secretary will deal with this point.
I welcomed what the Minister said about dealing with extravagance in local authorities, but a good deal more still remains to be done. I expect that the Parliamentary Secretary has seen the report of what is going on in Peckham at the moment, where the Southwark Borough Council has submitted to the Minister of Housing only one tender for a £7½ million housing scheme. It is a direct labour tender. What makes this the more significant is that five years ago the Southwark Labour Group Whip announced that it had been decided that it would be impracticable and not possible to employ their own direct labour team. There are still many examples of local authority extravagance that the Government must look at if we are to have value for our money when the subsidies are given.
I hardly dare say so in the presence of the hon. Member for Salford, East (Mr. Frank Allaun), but in this respect there is an awful lesson to be learnt from his constituency. I read the other day a report in the Salford City Reporter of a speech he made in 1960—perhaps the hon. Member would like to forget it—at a lunch given by the Institute of Building Management:In a few weeks Salford will demonstrate to the whole country what public enterprise can do.
§ Mr. Frank Allaun
Yes, and it did. The hon. Gentleman refers to less successful ventures by the direct labour department, but he must admit that this very large scheme was also highly successful, saving the city thousands of pounds and completing the contract nine months ahead of schedule.
§ Mr. Channon
No doubt that scheme was very satisfactory, but we must watch for the difficulties and dangers that such schemes can encounter.
Curiously enough, the mortgage option scheme has not attracted as much attention tonight as I had expected—hon. Members have spent so much time dealing with Part I—but many hon. Members on both sides should recognise that the Government have not yet fulfilled their 1966 pledges to the electors on this issue. Even now, when local authority subsidies are back-dated to November, 1965, the mortgage option scheme does not come into effect until 1st April, 1966. The hon. Member for Battersea, South (Mr. Perry) was lyrical about the guarantee scheme, but perhaps he has not taken in the fact that we have not yet been promised a date for its introduction. Will the Parliamentary Secretary tell us what progress has been made with the guarantee scheme, and what conditions are Government waiting for before giving a date for its introduction?
I hope that there is no misunderstanding that unless two things are provided the mortgage option scheme will not be worth anything. To make it work we must get houses and we must get money. On its own, the scheme has one advantage which the House will welcome—it will help existing borrowers, and those who pay less than the standard rate—especially those who pay no tax at all—and new borrowers. That is admirable, but unless something else is done the scheme will not provide the drive for the new expansion of owner occupation for which the Government are anxious.
It does not tackle the fundamental fact that unless the building societies and the local authorities have more money to lend we will increase demand without increasing supply. It may be that as a result of the scheme more people will be able to afford mortgages, though that is not likely without the introduction of a guarantee scheme. Even assuming it 779 were, if there is to be no increase in the amount of money to be lent, how can there be any guarantee that the worst-off will be those who will get the benefit of the mortgage option scheme? The Government would have been better with a scheme such as that contained in the House Purchase and Housing Act of 1959, which made available £100 million of Exchequer assistance for building societies to lend on older houses. That would make a tremendous impact on the present problem.
Loans on pre-1919 houses would help the worst-off people who would want to make use of such facilities. It would start a chain reaction which would have a very important effect on the provision of new houses as well. It would be a stimulus to the provision of new houses. What I suspect and fear is that the Government have provided one half of a pair of scissors and that if they do not provide the other half the scissors will not cut and the scheme will not work.
If people are unable to raise a deposit, what help will they get from this scheme? My right hon. and learned Friend the Member for Hexham pointed out that we were pledged to have cash grants to help people to raise the deposit to obtain a loan. If the Government do not like our scheme, they must introduce their own schemes speedily, because I suspect that without it the Bill will not be successful. Time and again we have been told by the Government that the solution to their housing difficulties would be in the introduction of the mortgage scheme. Although the Government were poised to swing their plans into instant operation, although they were supposed to be ready to tackle housing like a wartime operation, we have not got this scheme in 1964, 1965, 1966 or 1967. We have to wait until April, 1968, before owner-occupiers get the benefit of the scheme.
The Parliamentary Secretary may argue that people will, nevertheless, rush in and borrow already, knowing that in April, 1968, they will get the benefits of the scheme. I do not think that there is much evidence that they did so when the Lord President of the Council, when he was Minister of Housing and Local Government, or the Chancellor of the Exchequer announced the scheme 780 in March of this year. There has not been much evidence that people have taken advantage of the fact that promises were made at that time. I do not think that they will rush in now.
Very little has been heard in the debate about the building societies. I thought, after the extreme excitement of last Monday and the Motions tabled by hon. Members opposite, that we should have heard much more about the building societies. I suppose those hon. Members who wished to come and talk about that were too ashamed to do so. They were ashamed because they remembered their own election pledges. They were probably ashamed to recall that after nearly four years of Labour Government their constituents will be paying until 1st April, 1968, 7⅛ per cent. for their mortgages, a higher rate than at any other time. Even then, when the great benefits of this scheme come in, they will still be paying the not insubstantial figure of 5⅛ per cent. No wonder the hon. Member for Westhoughton (Mr. J. T. Price) was cross on Monday. He was cross with his own Government, and he was quite right to be cross, because high interest rates and high taxation have brought about this state of affairs.
There is no doubt that the scheme the Government are introducing tonight does not live up at all to the hopes they raised, in particular at the 1964 General Election, in that great speech that the Foreign Secretary either did or did not make, according to which newspaper one reads. During their period of office the mortgage interest rate has risen from 6 per cent. to 7⅛ per cent. The price of new houses has risen by 16 per cent. The hon. Member for Willesden, East (Mr. Freeson) challenged that point earlier. Had he been here now, I should have referred him to the Ministry of Housing and Local Government Statistics No. 3 of 1966, which conclusively show that the figures given by my right hon. and learned Friend were accurate.
I asked the Parliamentary Secretary in a Question for Written Answer—I appreciate that there has been no time for an Answer yet—whether we could have a revised version of the White Paper. It is most misleading, not only to hon. Members, but also to the general public, that we should be given a White Paper "Help to Home Ownership" when all the rates 781 at the back are already out-of-date. Will the Government publish a revised version of the table showing the effect of it at the new borrowing rate?
We should also like the Parliamentary Secretary to tell us what would be the effect at 6 per cent., which was the rate when we left office. If that is too shocking a thing to ask him to do, I am confident that my right hon. and learned Friend and I will be able to compile a version which we shall circulate as widely as possible.
My right hon. and learned Friend showed conclusively that, as housing prices have risen by 16 per cent. and as, even when this benefit comes in, the interest rate will be down only⅞ per cent. from what it was in October, 1964, in 1968 borrowers will not he better off under this scheme but will be worse off than they were under Conservative administration. House prices have gone up, and the rate at which they will have to borrow will be only fractionally less in spite of the concession. What a shameful thing for a Government pledged to come in to help the building society borrower. After all that time, they have not produced a scheme which makes a man any better off than he was in October 1964.
The hon. Member for Harrow, East (Mr. Roebuck) asked for publicity, and he was quite right to do so. I hope that no one thinks that this scheme is clear-cut. Only the man who is on a small income and expects to remain so will know that he should take the option. If he thinks that his prospects for higher income are considerable, he will have to calculate what his expected future income will be, what the future course of tax allowances will be—
§ Mr. Channon
The hon. Gentleman may have asked for publicity for different reasons. I am pointing out that there will have to be publicity for this reason.
§ Mr. Roebuck
Is not the hon. Gentleman aware that most mortgages last for only 10 years? If an owner-occupier had reasonable expectations of a greater income, he would be likely to want to buy a bigger house, and he would, therefore, change his mortgage.
§ Mr. Channon
I quite appreciate that. That is one of the complications in the situation. For the man paying Income Tax at 6s. in the £ the calculation is very difficult. He will have to calculate the future course of tax allowances and consider what the future likely rate of interest will be. He will have to calculate, if he can—some people find it more difficult than others—how many children he will have. He will have to calculate how many years he thinks the loan will run. Many people will guess wrong unless there is publicity, and I hope that there will be widespread and accurate publicity about the effects of the scheme so that people will know what they are about.
Why should people have to opt at all? Would it not be far simpler to have an Inland Revenue allowance on the actual amount of mortgage interest? Would not that be equally fair to rich and poor? Are the Inland Revenue officials so overworked by the Capital Gains Tax and the Corporation Tax that they have not been able to work out a scheme of that kind which would be very much simpler for all concerned?
Why is the guarantee scheme which the Minister hopes to introduce restricted only to option borrowers? There may well be young couples with no capital, both of whom are earning and one of whom has expectations of higher income and a better job in due course. In these circumstances, it would be wrong to opt for the subsidy, but, at the same time, for people like that the guarantee would be of tremendous help in obtaining a house. Will the Minister consider this between now and Committee stage of the Bill to see whether there is any prospect of increasing the help to be given under the proposed guarantee so that these people also can be helped?
The debate has shown that hon. and right hon. Members opposite have different standards for local authorities and for owner-occupiers. There is little selectivity and there is wasteful expenditure in the subsidies provided for in Part I of the Bill, yet under Part II owner-occupiers are to have no benefit until April, 1968. Where is the help for all mortgage payers which the Prime Minister promised on television on 28th February? Will the Parliamentary Secretary 783 tell us that this is coming along in due course, after the guarantee scheme. Does the House recall the Chancellor of the Exchequer's scheme announced on 1st March, on the eve of the election, which was immediately withdrawn as unworkable once the election was over? No hon. Member can regard that as a particularly edifying piece of electioneering. The fact is that the Labour Government have defrauded the people who believed in them.
§ Mr. Channon
If the hon. Gentleman is proud of his Government's housing programme, he is about the only hon. Member who is.
Time and again, the Government's housing target has not been reached. No help has been given for deposits and will not be for another 18 months. We were told that housing was to be the first priority of the "reforming" Socialist Government. Instead of that, there has been bitter disappointment. While people have not been able to obtain houses, bricks have been lying in stacks throughout the country because the Government have mismanaged the housing situation and the building industry in unparalleled fashion.
I concede that the Bill gives a small ray of light to the owner-occupier, and for that reason we shall not vote against it. We welcome it to that extent, but we shall look forward eagerly to the chance to amend the Bill in Committee. We believe that under the present Government home owners, and especially those who wish to buy their own houses, have not had a fair deal. They will be worse off when the scheme comes in than they were in the last days of Conservative rule. Does any Minister say that this is a proud day for his Government? He may think it is, but it will not be a proud day for the people who now realise that they have been defrauded over the years by the false Socialist electioneering prospectus put before them last March.
§ 9.30 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish)
First, may I say how delighted I am that the hon. 784 Member for Southend, West (Mr. Channon) has been promoted to the Front Bench to speak on housing matters. He comes from a very great housing family. The Guinness Trust is very well known to me and to everyone concerned with housing. We know that that housing association has done a remarkable job, not just in the last few years, but for the last century. The hon. Gentleman has a right to come to the Front Bench to talk about housing.
Nevertheless, the hon. Gentleman made a mistake, as did his right hon. and learned Friend the Member for Hexham (Mr. Rippon), in thinking that the General Election is to come next week so that they ought to get ready now for the great election speeches which they will make. The right hon. and learned Gentleman tries so hard to prove to everybody that he is much better than the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). I do not think that he is. The right hon. Member for Kingston-upon-Thames is much better and does his homework better.
I agree with those of my hon. Friends who said that the speech of the right hon. and learned Member for Hexham in opening the debate was the least constructive of all speeches today. It was just a good old political knockabout, and, of course, that is what we get every time from the right hon. and learned Gentleman. The speech of the hon. Member for Southend, West, on the other hand, although that too was a good political knockabout, was constructive in parts. I look forward to his joining the Committee, and I hope that, in a more restrained way he will put some sensible suggestions forward. I assure him that we shall certainly consider them.
The hon. Gentleman began by saying there should have been not one but two Bills. What gratitude is that? Last time we produced one Bill and we were accused of not bringing in a Measure to help those who are buying their own homes. Now, when we are doing just that, we are told that we should have brought in two Bills. That only goes to show that the hon. Member for Southend, West has forgotten what happened this time last year when the Conservatives were in Opposition. They will remain so for a very long time and he had better get used to it.
785 Several hon. Members have mentioned improvement grants. There is much to be said for an improvement in the grant itself. I give the assurance that we hope in the not too distant future to be able to announce to the satisfaction of the House that improvement grants are to be improved. I should like to tell all those who have mentioned housing associations that Part I of the Bill will deal with housing associations building new houses, which get approval from and work in conjunction with local authorities.
A great deal has been said about cost-rent housing associations. It is the view of the Government that if we were to help cost-rent housing association in the same way as we are to help others, the whole character of cost-rent associations would be changed. I know that the hon. Member for Ormskirk (Sir D. Glover) has taken a personal interest in this subject. The fact is that if we give a subsidy by Statute to cost-rent associations, we destroy the very title "cost-rent". I ask hon. Members to believe that we gave this matter a great deal of thought and that while Part II of the Bill will help co-ownership associations and so on, for the reasons I have given cost-rent associations cannot be included. However, if this subject is raised in Committee, we shall certainly consider any suggestions, because we are anxious that associations should get all the help which we can give them, because, although their contribution is small, it is important. In this, too, I know that the hon. Member for Southend, West has a personal interest.
§ Mr. Graham Page
Does not this put housing associations at a disadvantage, compared with local authorities, in producing houses to let at reasonable rents?
§ Mr. Mellish
I see that the hon. Member for Crosby (Mr. Graham Page) has lost none of that Blackpool ozone which I was talking about the other day. He came back very refreshed for his speech today. We are prepared to consider in what way we can help housing associations, because we support any effort which they may make, but it must be clear that whatever their effort, alongside the national problem it can be only very small—that is generally agreed—although very important. I assure the House that we will help where we can.
786 The right hon. and learned Member for Hexham spoke about rising costs since 1964. Building costs have been rising about 10 per cent. every year since 1959.
§ Mr. Mellish
This is so. I must ask the right hon. and learned Gentleman to check this up in his own little book of words. The new subsidy will at least provide some cushion against these rising costs. One of the reasons for local authority costs rising is that the standards are rising. This is a good thing of which both sides of the House will approve. But if we improve standards, as we are doing all the time, and if we are trying to get some of the backward authorities to adopt the minimum of Parker Morris standards, then costs will inevitably rise.
The right hon. and learned Gentleman and the hon. Member for Southend, West referred to the Government's housing programme, and I accept that this is one of the main issues with which I have to deal. Is the Government's housing programme now in a state of tremendous disarray, as the right hon. and learned Gentleman said, or does it have the stability which we think it has and the prospects of great improvement which we think it has?
Hon. Members opposite have spoken of enormous figures of 350,000 and 360,000 and 380,000 houses a year as though such figures were regular features of Conservative rule for 13 years. The only time when the Conservatives achieved anything of that ilk was in 1964 when they were coming up to a General Election. Their other figures included 298,000, 305,000, 296,000 and 297,000—that was the sort of general pattern. Now they have this passionate desire for 400,000 houses a year to be built and they say what a great disaster it is that that figure has not been reached; this from a party which achieved 370,000 only once in thirteen years.
§ Mr. Rippon
Surely the hon. Gentleman remembers that just before the last General Election the then Minister of Housing and Local Government said that 400,000 houses would be built this year. Our complaint is that promises have been made and not fulfilled.
§ Mr. Mellish
I will deal with that. In 1965 the Government built 382,000 houses. In the first ten months of this year, 313,000 houses were completed, practically the same number as in the same period last year. Therefore, despite the economic difficulties which the Government have had to face, we have been able to sustain a record-breaking level of new house construction, and I do not believe that that is a bad achievement. It is proof, if proof be needed, that in spite of the economic difficulties, the Government continue to give housing the highest priority.
The right hon. and learned Gentleman is quite right to say that my right hon. Friend the then Minister of Housing and Local Government predicted 400,000 houses this year. He said that in March and he was right to say it then, because as trends were and on the figures of the number of starts, he was right to assume that 400,000 houses would be achieved. It is a fact that since July there has been a sag in the private sector, and I must say that I regret it very much. I would have thought that the party opposite would have regretted it, but I do not think they do. I think they are delighted—[HON. MEMBERS: "Oh."] I accept that some hon. Members opposite would be upset, but the right hon. and learned Gentleman the Member for Hexham wallowed in the thought that we might miss our target of 400,000, and he wanted to rub it in as hard as he could as a Tory political party effort.
While the local authority sector has been rising, it is true—and I do not deny it—the private sector is sagging, and is sagging badly. In 1967, the private sector will start 180,000 houses. That is on their present-day predictions. That would be a fall of about 15,000 houses compared with the figure for this year. It is clear, from the many talks we have had with the builders, that the main reason for the decline in starts is that sales of new houses are hanging fire. It is easy enough in most cases to get a mortgage on a new house, but it is far less easy to get one on an old house. The people who want to move from an old house to a new house have to stay put because the buyer of their house cannot raise a mortgage.
The irony in the situation is that building society lendings this year are an all-time record. It is expected to be 788 £1,300 million. The trouble is that, despite that figure, the demand for home ownership is so great. I do not deny this, and we must do as much as we can to help those who want to buy their own homes.
§ Mr. Mellish
That point was made by the hon. and learned Gentleman the Member for Hexham. When I suggested that the Government of the day should bring in a little one-Clause Bill in which we stopped prices of houses and land from rising, I did not get any ready response from the party opposite. No. hon. Member opposite is jumping to join us on legislation to stop this happening.
The truth is that we live in a private enterprise jungle in which the law of supply and demand has been the determining factor over the years. This has happened under both Labour and Tory Governments. Prices of houses have been rising rapidly for years and years and are becoming dearer. Housing is about the only commodity which gets dearer the older it gets. We can all quote instances from our own experiences of houses, 40 or 50 years old, being ten times dearer than when they were first bought. There is nothing new about this. To listen to Tory Members one would think that this has happened since 1964 onwards, whereas this has been the normal trend.
On Monday the House heard my right hon. Friend the Chancellor of the Exchequer comment on the decision of the Building Societies Association to recommend their members to raise their investment rate to 4¼ per cent. and their lending rate to 7⅛ per cent. He explained how,if other interest rates are more competitive, asking the building societies to keep their rates down may well mean that they would not get any extra inflow of funds and would not, therefore, be able to lend for house purchase."—[OFFICIAL REPORT, 12th December, 1966; Vol. 738, c. 42.]The building societies are a voluntary movement and they were guided in their decision by the paramount need to fulfil their traditional role—a role in which they have been strikingly successful over the years. But this House now has the right to expect and believe that, as a result of this decision, the flow of funds 789 for home ownership will increase, and this will help to stimulate private house building.
Although the figures for the private sector will be down by about 8 per cent. next year—while public authority house building will rise and take some of the slack—it is not unknown for private house building within a very short time to increase by as much as 50,000 in any one year. I ask the right hon. and learned Gentleman therefore not to be too smug about this and to stop believing and hoping that he can go on with his General Election speech—he makes it every time in housing debates—claiming that the Government will never hit the 400,000, 450,000 or 500,000 houses targets. When the argument on this comes it will be at the next General Election about what the Government have done, taking account of the economic problem.
The case for the Bill is the case for the local authorities' need to extend their housing programmes. A number of my hon. Friends have spelt this out but it is essential to remind both the House and the country that, when we are talking about slums, overcrowding, multi-occupation and redevelopment, the only people who can deal with these things are the local authorities—and I hope that that is generally agreed by both sides of the House. 13ut if we do agree on it, it really does not become the Opposition to sneer and jeer at the fact that we are giving these enormously increased subsidies to local authorities to do this job.
Every study that has been made of the problem—the latest is the Halliwell Report—has shown that, if the occupants of an area of outworn housing have to be rehoused, redevelopment cannot be carried out unless it is heavily subsidised. Private enterprise cannot do the job—and I do not say this with any party prejudice—simply because the job is uneconomic. This is why we have to subsidise such work and ensure that we give the local authorities the cash to do it.
§ Mr. Graham Page
But is it not true that, within the slum clearance and development schemes, there are a great number of owner-occupiers and others who wish to become owner-occupiers? One must provide for these as well as those who wish to go for rented houses.
§ Mr. Mellish
I do not deny that. I certainly do not suggest that the Government have turned their back on the idea that local authorities should be able to build for sale where this is practicable. But we must remember the type of area we are talking about. The hon. Member for North Fylde (Mr. Clegg) made a contribution which, if I may say so, without appearing to be patronising, was first-rate. His speech was really impressive. He talked about local authorities leasing their properties to their tenants. He saw in this a great deal of wisdom and I respect and understand his argument.
But I put it to him that, in the vast majority of our towns and cities, the need for local authority housing is so great—it speaks for itself—that the local authorities, concentrating as they are on slum clearance and redevelopment, must have the largest pool of housing that they can get for relets from their general waiting list.
In some of our towns and cities the general waiting lists will never move unless there are relets, and that is the tragedy. In London, and I am sure that this applies to Birmingham, Manchester, Liverpool and elsewhere, the general waiting list has become, for some people, just a period that is now of no consequence. Although I respect what the hon. Gentleman said about leasing or selling council houses—and it may be done in some areas—it cannot be done generally.
In giving these increased subsidies, the Government selected 130 priority local authorities with major slum and overcrowding problems. My right hon. Friend gave them virtually maximum targets, with the result that they will be the authorities which, in the main, will benefit from the new system because they will be building the most houses. We also gave them—and this is very important—four-year rolling programmes in the London area and three-year rolling programmes for the priority areas elsewhere. My right hon. Friend gave another 177 authorities three-year programmes and some priorities, although their needs were less pressing.
Thus, about 307 local authorities have been given special preference by the Government and are able to plan three or four years ahead instead of having to do this work on a yearly basis, waiting to 791 see the Government's view of the following year's programme. My right hon. Friend has given me the task of housing programming, and we shall ensure that a further year is added each year to the forward programmes so that the local authorities know at least four years ahead what they are able to do.
Before I leave Part I, I want to say that local authorities vary in character, irrespective of politics. They vary in ability, competence and know-how. It is essential, particularly if these 300 authorities are to achieve the targets that we have set, and we want the targets to be realistic, that we ensure that their progress is sent to us, and that they reach the target. We have therefore established progress chasers at a regional level. These people will be expert in advising authorities on procedures and helping them at all stages of the contracts. We hope that by the time the matter reaches Whitehall my right hon. Friend will be in a position to rubber-stamp these contracts, thus enabling the work to go ahead much faster.
We have to watch the period between the granting of loan sanction and the job starting. In some instances it is as much as six months. We want to know why and we want it to be shortened. When a job starts, we want to make sure that the houses are built that much quicker. For the benefit of those who do not know this, 91 per cent. of everything built by local authorities is built by private enterprise. The more work we give local authorities, the more work we give to private enterprise also. Let us not forget that. My hon. Friend the Member for Harrow, East (Mr. Roebuck), my hon. Friend the Member for Salford, East (Mr. Frank Allaun) and the hon. Gentleman the Member for Orpington (Mr. Lubbock) have raised the problem of local authority rents. The Government have taken the view that it is not right to introduce in the Bill any question of a rent rebate scheme.
The previous Administration did not do so and we do not think it is right that we should. The hon. Gentleman the Member for Southend, West was good enough to read out from paragraph 41, showing that we believe in the principle that a fair rent rebate scheme is essen- 792 tial if these subsidies are to go to those who really need them. Figures have already been given by the Ministry of Labour Family Expenditure Survey, that of something like 30 per cent. of council house tenants with household incomes of £500 a year or less, were paying more than one-fifth of their income in rent.
We know of rent rebate schemes today in which only one tenant in 8,000 is getting a rebate. Call that a rent rebate scheme? If one wrote into the Bill that these will only go to authorities operating rent rebate schemes it is meaningless. We have to have realistic schemes. We were challenged as to what we had done. We have established a working party with the local authorities, in order that they can prepare the sort of rebate scheme to be the pattern for the rest of the authorities to follow. The working party will meet very early in the New Year to discuss a detailed working paper. This is why we said that local authority discussions are starting. We have now something to talk about.
§ Mr. Lubbock
Will the hon. Gentleman consider the suggestion that I made, that housing authorities should be invited to submit proposals for rebate schemes to his right hon. Friend, rather on the lines of the local education authorities who were invited to submit secondary school reorganisation schemes?
§ Mr. Mellish
From the activities of my Department, I think that I can say that we have as much information about the schemes as one could possibly have. My hon. Friend the Member for Harrow, East in quoting his own constituency, mentioned what I thought was the classic instance of the problems we are facing today. Here is a local authority which has decided to increase rents from 1st January by something like 50 per cent.
This local authority does not believe in a rate subvention. The hon. Member for Harrow, Central (Mr. Grant) has explained why. We cannot and do not intend as a Government to take over the functions of local authorities and tell them how they have to apply rents. It is not for us to do that, any more than it is for us to allocate tenancies. This must be for the local people, but I share my hon. Friend's view that anyone with a 50 per cent. increase in rents, at a time 793 of severe restraint is entitled to complain to my right hon. Friend. I respect and understand that view. My right hon. Friend has now to be concerned with whether and in what form this Government can assist local authorities by looking at housing revenue accounts.
We must remember that whatever we introduce, someone has to pay for it somewhere, if not council tenants, then ratepayers generally. The fact is that there are some injustices among council house tenants, which I beg of hon. Members to understand. This debate has been notable for this. We have not heard so much of the idea that council tenants are a lot of peasants and everybody else is rather of the gentry. Today I think that we are getting away from that state of mind, and that all of us know that council tenants are paying very heavy rents, particularly in the great cities, and that they are also ratepayers, and that the vast majority have lived in appalling conditions for many years, and that it is the duty of this Government or of any other Government to ensure that local authorities are able to do a bigger and better job for that sort of person, and if we do that we shall have done a job of work
I come now to the option mortgage scheme and I see I have left myself only five minutes for it and I am sorry for that.. I think the fundamental question asked about it is this, why was the scheme delayed till April 1968? There were two factors which the Government had to take into account. The first was the present state of the national economy. During the coming year we must continue to restrain public expenditure wherever we can. Some interval after Royal Assent would have been necessary anyway to issue the explanatory literature, to give people who already have mortgages time in which to make up their minds whether or not to switch to the option mortgage scheme, and to deal with the accounting work that will be involved for both the lending agencies and the Inland Revenue in altering large numbers of individual accounts. Taking both those considerations into account, particularly the economic condition of the country, we decided as a Government to delay the date till 1st April, 1968.
The hon. Member for Orpington and others asked whether something could be done with regard to flexibility—to en- 794 able the option to be made more flexible. I say this to him and to others, that we shall have to consult the building societies on this matter. I will be quite frank about this. They will be the agency which will in fact operate the scheme on behalf of the Government. We make no apologies for the fact that we were convinced that our original scheme—I know I have a great job to convince anybody on the other side of the House about this, but we were and still are convinced—was a practicable scheme, but then the building societies threw up so many additional difficulties that we decided to make a compromise scheme, which we have brought forward, and which will cost the Government just as much as the other scheme, though we did not have any idea that we were going to save this money.
Another question I was asked was about the 100 per cent. guarantee scheme being delayed indefinitely. The answer is, because the necessary funds must be built up to finance it, and it would destroy the whole point if people were being given larger loans but because of shortage of finance the fewer people were getting them. The only sensible thing to do in the view of the Government was to proceed in stages. The mortgage option scheme itself can be expected to make substantial new demands for finance for house purchase. When that has been launched, when we are sure that finance becomes available, we can go to the next step, which is the guarantee scheme and larger advances.
I agree with those who have said that probably the key to ensuring home ownership is to make certain that we as Government introduce this, because to my own personal knowledge what most deters many young married couples is the difference there is between what the building society charges and what the seller of the house asks for. I accept, therefore, that the Government will do what they can to ensure that we bring this forward as quickly as possible.
There was a Scottish Member, the hon. Member for Moray and Nairn (Mr. G. Campbell) who asked a question to which I can only say that on the information I have I understand that one of the reasons is that in Scotland wage levels are lower and building societies do not 795 there give money to some people to whom they would, normally, if they were here in the South. If the hon. Gentleman gets on to the Standing Committee—I wish him luck—then he could ask that question of the Scottish Minister who will, I am sure, be a member of that Committee.
This has been a debate which to a large extent has been constructive. Though I except the speech of the right hon. and learned Gentleman the Member for Hexham there were constructive speeches on that side of the House, too. This is a Bill which I believe the whole House will support, as it will ensure that help will be given to those people who are in greatest need.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).