HC Deb 08 March 1967 vol 742 cc1670-94

Amendment made: No. 50, in page 12, line 3, leave out from 'either' to 'as' in line 5 and insert: 'in all cases or only in cases where they are payable by reference to dwellings of such description or in such area'.—[Mr. Mellish.]

Mr. Mellish

I beg to move Amendment No. 51, in page 12, line 8, to leave out from first 'to' to 'dwellings' in line 9 and to insert: 'subsidies or contributions payable by reference to". With your permission and that of the House, Mr. Speaker, may we discuss also Amendment No. 52? These Amendments are linked. The hon. Member for Hemel Hempstead (Mr. Allason) has tabled an Amendment to Amendment No. 51, in line 2, to leave out 'or' and insert 'and', so it would be convenient to the House, if it was convenient to you, to discuss these together.

Mr. Speaker

I have no objection, if the Opposition have none.

Mr. Mellish

These Amendments are related Amendments to the earlier Government "site" Amendments.

As part of the "site" drafting operations the words subsidies or contributions payable by reference to dwellings have been introduced in subsection (2) which provides that, except for Orders made more than 10 years after enactment, no Orders reducing or abolishing subsidies or contributions can be applied so as to reduce subsidies already being paid. The "contributions" are those which the sending authorities are required to make under Clause 9 to town development authorities for certain dwellings attracting the Exchequer town development subsidy under Clause 8.

I have moved the Amendment because the Opposition have tabled an Amendment to it, and perhaps they would like to discuss that.

Mr. Allason

Subsection (1) refers to subsidies or contributions, subsection (4) refers to subsidies and contributions while under subsection (2) there is to be reference to subsidies or contributions. Considering the use of the word "or" in two of the subsections, I opt for the use of the word "and" in subsection (4). Under subsection (1) the Minister is given power to exercise his judgment in relation to subsidies or contributions or both. Once he has exercised his judgment under that provision, the remainder of the Clause simply deals with the machinery. It is, therefore, not an alternative, but both. That being so, it seems more logical to follow the precedent in subsection (4), and to use the word "and", than to suggest that the Minister has further discretion, which he is liable to operate under subsection (2).

Mr. Mellish

The proposed Amendment to the Government Amendment says much to the credit of the hon. Member for Hemel Hempstead (Mr. Allason), because it shows the degree of study which he has given the Bill. I know that he was an active member of the Standing Committee. Indeed, his proposed Amendment is typical of one which alerted my Department to the problem.

The hon. Gentleman's proposed Amendment would substitute "and" for "or" in the phrase "subsidies or contributions". It might be intended to prevent the Minister from reducing or abolishing the Exchequer town development subsidy under Clause 8, while leaving the sending authority contribution under Clause 9. In fact, however, the Clause 9 contribution would ipso facto cease to be payable if the Clause 8 subsidy were stopped; and it is surely not suggested that the Minister would reduce the Clause 8 subsidy without, at the same time, making a comparable reduction in the Clause 9 contribution.

The Amendment would also have the no doubt unintended effect of enabling the Minister to make an Order, at any time after enactment, abolishing or reducing subsidies already being paid, provided that the Order was confined to subsidies only and did not encompass contributions under Clause 9. Thus, recipient authorities would lose a valuable safeguard as regards the continuing payment of subsidies in the first 10 years after enactment. The hon. Gentleman pointed to the fact that there is a reference to "subsidies and contributions" in subsection (4), but the context in which this reference appears does not limit the Minister's power to make Orders concerning subsidies or contributions. I hope that I have explained the position satisfactorily to the hon. Gentleman.

Amendment agreed to.

Further Amendment made: No. 52, in line 16, leave out from 'to' to 'dwellings' in line 17 and insert: 'subsidies or contributions payable by reference to'.—[Mr. Mellish.]

Mr. Mellish

I beg to move Amendment No. 53, in line 21, at the end to insert: 'and (c) so far as it relates to subsidies under section (Subsidies for conversions or improvements by housing associations) of this Act, shall apply only in relation to such arrangements as are mentioned in that section made on or after that date'. The purpose of this Amendment is to include the subsidy for housing associations, introduced by the Government's earlier new Clause, with all the other subsidies in Part I of the Bill as subject to the Minister's general power of reduction or abolition. It will, of course, also be subject to the same limitation against retrospective action during the first 10 years. There seems no reason to single out this particular subsidy for exclusion in this respect and the Amendment puts the new subsidy in line with the others.

Amendment agreed to.

Further Amendment made: No. 54, in line 39, leave out from 'payable' to second 'dwellings' in line 40 and insert 'by reference to'.—[Mr. Mellish.]

Clause 13.—(POWER TO REDUCE, DISCONTINUE OR TRANSFER SUBSIDIES.)

Mr. Mellish

I beg to move Amendment No. 55, in page 13, line 12, after second 'of' insert: 'or of any works in connection with'. The purpose of this Amendment is to include the subsidy for housing associations—which was introduced by the Government's earlier new Clause—with all the other housing subsidies under this or previous housing Acts, as subject to reduction, suspension or transfer in particular cases, where the dwellings concerned are sold or cease to used for subsidisable purposes and the like. There seems to be no reason to single out this particular subsidy for exclusion in this respect.

10.45 p.m.

Mr. Allason

I beg to move, as an Amendment to the proposed Amendment, at the beginning to insert 'any dwellings'.

In lines 11 to 13 on page 13 of the Bill there are no fewer than four "or"s and the Minister is proposing to insert a fifth one. These all relate to what is inside the dwelling or hostel. He therefore already has four "or"s in the dwelling and he is proposing to put another "or" into the dwelling. My Amendment seeks to give this "or" a dwelling and so make an honest woman of her, so to speak.

There are, in fact, six alternatives in this short subsection dealing with a dwelling. They are not even six straight alternatives, but they have to be grouped by the three "in respect of"s. The third "in respect of" produces three alternatives, and the alternatives as they will appear, according to the Government Amendment, are first, "of"; second, "of any works in connection with any dwellings"; and third, "of the acquisition of any land, comprising it."

The subsection states that "the subsidised unit" means a dwelling in relation to which a subsidy is payable, whether payable (a) in respect of, first "it"; or second, "its site"; or (b) in respect of "any land, comprising it." We are happy about that. But then we get: or (c)—

in respect of the cost"— first "of"; or second, any works in connection with any dwellings or third, of the acquisition of any land, comprising it. Although there is a comma in the Bill after "land", I think that it must refer to land comprising it and not to dwellings comprising it.

It is appallingly difficult to construe this provision. I hope that the Parliamentary Secretary appreciates that my proposed Amendment does not involve any change in meaning. The addition of "any dwellings" will enable his Amendment to make a great deal more sense of the Clause. I hope, therefore, that he will allow this "or" to have its dwelling.

Mr. Mellish

Clause 13(2,b) defines the expression "subsidised unit" as used later in the Clause. In lay terms, it means any dwelling, hostel or land on which subsidy is payable, whatever the reason. The various ways it can come to be paid are set out. As a result of the new Clause giving subsidies to housing associations, the Government Amendment is to add to the list works in connection with conversion or improvement works by them.

I have an important statement to make to the House. I have to tell the hon. Gentleman that his Amendment to our Amendment spells out the position even more precisely than the original, and that I am asking the House to accept it.

Question, That those words be there inserted in the proposed Amendment, put and agreed to.

Proposed words there inserted in the Bill.

Mr. Mellish

I beg to move Amendment No. 56, in page 14, line 4, to leave out 'twelve months' and insert 'seven years'.

The Amendment will limit the Minister's power to suspend subsidy where a local authority grants a lease on a subsidised dwelling to those cases where the lease is of more than seven years instead of more than one year. The reason for the Amendment is that it is the Department's practice not to suspend subsidy where dwellings are leased individually for less than seven years. The Amendment fulfils an undertaking I gave in Committee on a point raised by the hon. Member for Poole (Mr. Murton).

Mr. Murton

I thank the Parliamentary Secretary for his kindness. It was an A.M.C. Amendment. As the night goes on he becomes more beneficient towards such Amendments. May that long continue.

Mr. Allason

Do development corporations continue under Section 19 of the Housing (Financial Provisions) Act, 1958, or does the Amendment alter their position so that in future they will operate on seven years instead of 12 months?

Mr. Mellish

I cannot answer that question now, "off the cuff". I shall inquire into it. I have a feeling that the answer is "No", but I shall double-check and write to the hon. Gentleman.

Amendment agreed to.

Clause 20.—(INTERPRETATION OF PART I.)

Amendment made: No. 57, in page 17, line 17, after '2(2)', to insert: '(Subsidies for conversions or improvements by housing associations)(4)'.—[Mr. Mellish.]

Clause 23.—(RIGHT TO OPT FOR SUBSIDY FOR CERTAIN LOANS IN CONNECTION WITH DWELLINGS.)

Mr. MacColl

I beg to move Amendment No. 60, in page 18, line 18, after 'for', to insert 'or in connection with'.

It may be for the convenience of the House to consider Amendment No. 61 with this Amendment.

We now come to Part II of the Bill. This Amendment deals with the payment of subsidy and restriction to certain purposes. The building societies fear that, as drafted, the Clause would not cover guarantee and life insurance premiums and other expenses connected with the purchase of property. We intended to cover such items anyway. It would not be easy to separate them from the main loan. The Amendments extend the powers to cover them.

Mr. Channon

We have no objection to these Amendments, which fulfil a useful purpose. There is no need to detain the House on them.

Amendment agreed to.

Further Amendment made: No. 61, in line 20, after 'for', insert 'or in connection with'.—[Mr. MacColl.]

Mr. MacColl

I beg to move Amendment No. 62, in line 32, to leave out from 'of' to 'periodical' in line 33.

Mr. Deputy Speaker

I understand that it would be convenient to discuss, at the same time, Amendment No. 75, standing in the name of the Minister, in page 20, line 20, at end insert: (v) if the number of the periodical payments referred to in subsection (1)(c) of this section is not fixed by or ascertainable under the repayment contract, the expiration of thirty years from the beginning of the period for which the option notice has had effect. and Amendment No. 96, standing in the name of the hon. Member for Southend, West (Mr. Channon) in Clause 25, page 22, line 11, leave out '(iv)' and insert '(v)'.

Mr. MacColl

That is so, Mr. Deputy Speaker.

This Amendment deals with a point which was raised in Standing Committee about standing mortgages. We had a discussion then in which I was maintaining the view that the object of the scheme was to help people to home ownership and that home ownership was not covered by a mortgage which had no end to it. That principle received support from hon. Members opposite but certain cases were put to us.

One case in particular was put by the hon. Member for Birmingham, Hall Green (Mr. Eyre). It was that of an invalid who wanted to raise a loan to pay for essential repairs to the property. This Amendment therefore sets up a notional end to the mortgage of 30 years. The intention is that, during that period, the subsidy will he payable.

Mr. Channon

Since we are also discussing Amendment No. 75, Mr. Deputy Speaker, I assume that we are taking, at the same time, my proposed Amendment to that Amendment, to leave out 'thirty' and insert 'forty'.

Mr. Deputy Speaker

That is so.

Mr. Channon

I do not want to detain the House at great length at this hour, but there are a number of points which I want to put briefly. We are grateful to the Government for being kind enough to put down Amendment No. 62. which takes out the words …a fixed or ascertainable number of … I explained in Standing Committee how I thought this would help the rare but still important cases of loans at interest only. The Government, by being kind enough to accept the point I made, are doing a useful service and we are most grateful.

Amendment No. 96 might be thought to be partially drafting, but I put it down because I wish to hear from the Government whether I have interpreted their intentions correctly. Its effect would be to add to the list of conditions under which an option notice shall expire the additional provision relating to the expiry of 30 years.

After 30 years, or 40 years if my Amendment were accepted, the person concerned would cease to be able to opt if they were still alive after that period. I have no wish to press my Amendment. I am not anxious that it should be accepted, but the logic of it is difficult to resist. For reasons I will come to I had hoped that the period would have been 40 rather than 30 years. Probably my Amendment would be redundant because few people would be alive after 40 years. But we know that medical science improves daily and that after the expiry of 40 years some people might still be alive.

Amendment No. 75 is the important one. This puts in for the first time the new subsection (v), which says: if the number of periodical payments referred to in subsection (1)(c) of this section is not fixed by or ascertainable the period is deemed to be 30 years.

11.0 p.m.

I am grateful to the Parliamentary Secretary for going a substantial way towards meeting the point raised by my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) and myself in Committee. I cannot pretend that whether it should be 30 years or 40 years raises an issue of great principle. We are most grateful for what we have received from the Government. I advanced the argument in Committee that an Amendment of this kind would be of help to the retired elderly lady who takes out a loan at interest only.

There are certainly cases of people, especially women, who for some extraordinary reason seem to live longer than men—and this is most unjust—living to be 100. I see that there are no hon. Ladies here tonight. The retirement age for women is 60 and there are cases, not an enormous number, of women living to be 100. The Government have made a substantial concession and they would meet all the cases if they would go as far as 40 years, rather than stick at 30 years.

I cannot pretend that if the Parliamentary Secretary says that he cannot go further I will press this to a Division, or that I will be angry. We are grateful for what he has done. There is no issue of principle, but there will be cases of people affected at the expiry of the 30 years' period. If he cannot say tonight that he will accept the Amendment, perhaps he will have it looked at again in another place.

I would have hoped that in view of the increasing longevity of the population it would be thought to be altogether fantastic that someone might take out a loan of this sort at the age of 60 and then live to be 100. It would be rather rough if at the age of 90 they suddenly ceased to be able to opt. In Standing Committee I pointed out how much difference this would make to someone considering the difference between opting and not opting.

I do not want to weary the House with details of which the Parliamentary Secretary will be aware. I thank him for moving his Amendment and ask him whether it is possible to go a little further and consider whether 40 years would not be a reasonable and practical period to write into the Bill, as it would cover every case. The period of 30 years might cause hardship for extremely elderly people and I am sure that the hon. Gentleman would be the last one to want to do that.

Mr. MacColl

When I studied it, I had some difficulty in understanding the precise object of Amendment No. 96. I do not think that it is necessary from a drafting point of view. Indeed, it confuses the position somewhat. In particular, the new paragraph (v), which refers to the option notice taking place, refers to something which will happen 30 years afterwards, which does not fit in very well. However, I shall look into it and, if there is a point to be dealt with, I shall see that it is taken up.

The general point raised by the hon. Gentleman is really one of geriatrics. There will not be very many of the sort of people with whom we are here concerned who would normally survive 30 years. Admittedly, it is somewhat arbitrary. The only other clue in deciding what period to take lies in the fact that endowment mortgages are usually worked up to 30 years. VWe thought it best, therefore, to keep this in line. That is why we chose 30 years.

Mr. Channon

I am much obliged for that explanation. If the Parliamentary Secretary sticks to 30 years, we shall not press him too hard about it. He has mentioned endowment mortgages. When a person opts in these circumstances, will he have the 1¾ per cent. endowment mortgage rate or the 2 per cent.?

Mr. MacColl

The 1¾ per cent.

Amendment agreed to.

Further Amendment made: No. 63, in page 18, line 44, leave out 'from time to time' and insert: 'at such times and by such instalments as may be determined under the scheme'.

Mr. MacColl

I beg to move Amendment No. 64, in page 19, line 25, at the beginning to insert: 'Subject to subsection (3A) of this section'. I cannot let this go in the hope that hon. Members will think that it is a drafting Amendment. It is a major Amendment, dealing with the problem of the late option. In Committee, we were pressed from both sides to do something to meet the position of the person who had an income which made it unwise for him to opt and who was subsequently affected by some disaster, with a drop in income, and then found that he could not get the benefit of opting because he had not done so at the right time.

The hon. Member for Southend, West (Mr. Channon) urged, also, that we should do something for the person who had opted and subsequently found that his income and prospects had improved. He argued that such a person ought to be allowed, as he would be paying a higher rate of tax, to get out of the option, as it were.

To take the second point first, I do not think that there is a good case for allowing a second option here. I agree that it would be tidy in the Bill, but, because of the difficulties in this system —for reasons to which I shall come in a moment—there is not a strong enough case to justify requiring the building societies and other lending agencies to do that.

The point here is that, if a person who is already getting the advantage of the subsidy is fortunate to have so great an improvement in his circumstances that he is paying a higher rate of tax, he is no worse off in the sense that, although he may be losing a certain advantage, he still has the benefit of the subsidy. He is not really all that worse off. It is merely the difference between what he pays with the subsidy and what he pays with full tax rebate.

The person who has a catastrophe is in a different position. He has neither benefit, he no longer has a tax benefit because his income has dropped, and he cannot have the subsidy. It occurs to me that that was precisely the position of "Cathy's" husband. We discussed earlier whether "Cathy" could benefit under the scheme for capital grant.

As I remember the story, Cathy's husband was earning quite good money, but then was ill and fell out of work; and this is the kind of case which we were anxious to look at. I ought to say that the building societies do see considerable administrative difficulties in working a late option, and they are reluctant to see it carried out.

What we were really proposing to do was to provide that the Minister should be able to give directions about the general way in which a second option could be given. They would be general directions, but would at least mean that my right hon. Friend could keep some control over what is happening. We expect the lending agencies to deal with these cases in order to see if it will be possible for them to agree to a late option. In most cases, there is no very great incentive for the lending agencies not wanting to have the benefit of the subsidies because they would be dealing with somebody worse off. From their point of view, the security could be quite substantial.

As I have said, the real difficulty is administrative; but by having this power, the Minister would be able to give some sort of guide line. I can tell the House that we have thought a good deal about this and have tried to find out what are the best arrangements we can make. We feel that what is now proposed is the best in all the circumstances.

Mr. Channon

I am not certain which Amendments we are taking together. Are we, for example, including Amendment No. 76 with Amendment No. 108, which Mr. Speaker ruled earlier had been put in the wrong place on the Notice Paper?

Mr. MacColl

I suggest that we take the Amendment we are now discussing, No. 64, with Amendments Nos. 70, 80, 82, 83, 86, and the separate Amendment No. 108.

The Deputy Speaker

It is in order to deal with these together, in addition to the separate Amendment, No. 108, which appears erroneously on page 6264 of the Notice Paper.

Mr. Channon

Slightly different points are raised here. There is the Minister's own Amendment which allows people to opt later on, and our Amendment, No. 65—to leave out subsection 3(a)—which would allow people to "de-opt", if I may use that not very nice word to describe what we have in mind. We have no objection whatever to the Amendment which the Parliamentary Secretary has moved. I think that it was made clear earlier during our discussions in the Standing Committee, that the only objections to allowing people a second choice were rather on the grounds of administrative difficulty. The Parliamentary Secretary has been able, however, to say that these administrative difficulties have now been overcome. I am very glad that the hon. Gentleman has been able to achieve this end.

11.15 p.m.

I cannot, however, agree that, having done one, it is equitable not to do the alternative. I could understand the position as the Bill first arrived in the House. It was a sort of rough justice. One had to make up one's mind, on the information available, whether or not it was in one's interests to opt. I tried on a number of occasions in the Committee to show that this was not a very easy choice for one to make. On grounds of equity. therefore, there is something to be said for the Minister's view that people should be allowed to change their minds later. but if we are to allow that for one section it is very hard to argue that administrative difficulties take away the equitable rights of other people.

As I understand the hon. Gentleman, his only reason for not being prepared to allow people later to change their mind is administrative difficulties, but those administrative difficulties have not deterred him from taking the first step and it is only fair that he should see whether he cannot take that second step before the Bill receives the Royal Assent. Otherwise, it will mean that in certain circumstances people who were promised that they would be better off because of the Bill will find themselves worse off.

People will opt, and then they will discover that their circumstances change, their income increases—which is very nice for them—but as a result of the introduction of this Bill, since they will not be able to get the tax rebates they will not be better off because of the passing of the Bill but worse off. I cannot believe that, in equity, the Government, who are introducing the Bill to help people who are buying their own houses, can want one class of people to be worse off as a result of the Bill. If the Government are prepared to make an adjustment they should look at the other case, and not let administrative difficulties stand in their way.

I expect most hon. Members will have spotted that the mortgage rate at any particular moment makes a great deal of difference. What happens, for example, if by some miracle the party opposite gets interest rates down, and we have a mortgage rate of 4 per cent.? The Bill will presumably last for a long time, but I have not heard any Government spokesmen say that in those circumstances they would be prepared to legislate again. They have hinted that they might be prepared to do so if local authority borrowing rates went down to 5 per cent. —I think that was the percentage mentioned in Committee—but I have not heard them say that they would legislate again if the mortgage rate went down to 4 per cent.

If the rate does go down to that level, all those who have opted and who pay any tax at all will be worse off under the terms of the Bill than they would have been if they had stuck to their tax rebates. That is a very serious case for the Government to consider. Should the mortgage rate ever get down to 4 per cent. the Government should think about taking powers to allow anyone taking part in the mortgage option scheme to get out of it if they wish. If not, it would mean that no matter how small the amount of tax one paid, one would be worse off by taking up the mortgage option scheme than one otherwise would be. That is unsatisfactory. It may be unlikely that we shall get a mortgage rate of 4 per cent. for some considerable time but we cannot rule it out for all time—it has been known even in my time.

Let us take the case a little further. Different rates make a great deal of difference. If the mortgage rate is 4 per cent. there is no mortgage option subsidy at all, so that in those circumstances there will be large numbers of people who would like to have got out. At the moment, say, the mortgage borrowing rate is 6 per cent. or more. This is about where one will get the maximum benefit by opting. But let us assume—and I hope that it will never happen—that borrowing rates get higher. There will come a point, if the market borrowing rate gets up to 8 per cent., and one takes an option, when one will still be paying ing 6 per cent. One would probably have been better advised to take tax rebates in the first place.

Whether or not one is better under the mortgage option scheme or under tax rebates will much depend on the mortgage borrowing rate at any moment. I throw that in as a subsidiary point, but the main point, which is reinforced by the subsidiary one, is that there will be cases where people have opted and will wish later that they could change their mind.

If the Government had not put down the first Amendment I would not have pressed the second because I think that one can argue a rough logic in a person taking the chance and sticking to it, right or wrong. What is not equitable is the position in which the Government have put themselves. If those who have not opted at first can do so later if it suits them, then those who have opted at first should also be allowed to change their mind if it suits them. I hope that the Government have not firmly closed their mind about this.

The hon. Member said that I was arguing this case more strongly than anyone else in Committee. The reason was that other people were arguing the other case. It remains my position that if one thing is done, so should the other be. Once one decision is taken on grounds of equity, I do not think it right that administrative difficulties should stand in the way. The Government should change their mind.

Certain borrowing rates will make a difference to people in the way they have chosen. It is extremely difficult for one to be sure that one has made the right decision. I say that because I think that it is very difficult for laymen in the House to be sure about this. I am told by some experts that they expect 90 per cent. to opt, and by equally authoritative people that they will be astonished if more than 10 or 15 per cent. opt. So expert opinion is not clear and conclusive on this point.

On the ground of equity I hope that the Minister will have another look at this, and consider whether it is possible to make an exception and see that both categories, whether they take that option or not, are treated on the same footing. The Minister and the qualifying lender would have to agree and if those hurdles are surmounted I hope that the Minister will not completely shut his mind to the possibility of change on this.

Mr. MacColl

With the leave of the House, perhaps I might reply shortly. I do not know that I have shut my mind to the arguments of the hon. Member for Southend, West (Mr. Channon). I do not shut my mind to reasonable argument and anxiety to improve the Bill at any stage.

The hon. Gentleman has rather exaggerated and distorted the position. In the debate in Committee, it was clear that there were strong feelings on both sides. The hon. Member for Poole (Mr. Murton) pointed out the difficulties of the building societies in doing this, and although the hon. Member for Birmingham, Hall Green (Mr. Eyre) pressed the importance of doing it, he recognised the difference between the two.

Primarily, this is a scheme to provide assistance to people of moderate means to enable them to get the benefits of the subsidy. We consulted the building societies, and received strong advice from them. We started with the position of rough justice, that a person had to make his judgment at the time. There are all sorts of imponderables, of course. No one could know what the rate of interest might be, what future tax legislation there might be, or what Government might be in power. The choice had to be made between the two, and the basis of the Bill was that, having made it, although it would be possible to get another mortgage on another house, as far as the original transaction was concerned, the person was bound by it.

Then we were faced with the case of someone who had a sudden catastrophe and found that he was in need, had not got the income upon which he had made his option, was not getting tax reliefs from that, and, in terms of need, required help. That was the case on which we went to the building societies, and it is on the basis of the discussions that we had that we make this exception to the rule and provide that there should be this opportunity of opting into the scheme late.

From the point of view of the person who suddenly finds his income increasing unexpectedly, he has greater flexibility—

Mr. Channon

It is not quite fair to refer to a person who finds his income suddenly and unexpectedly increasing. I know that, on average, mortgages last about seven to 10 years, but there are cases which last a great deal longer. As a politician, the Parliamentary Secretary has not the faintest idea what his income will be in five years' time. If his party loses the next election, it may be a great deal lower. If it wins, it might be a great deal higher. There are classes of people who cannot forecast their incomes with the great accuracy which the hon. Gentleman is demanding. He may say that I have made too much of the case. I hope that he will not make too little of it.

Mr. MacColl

If I became Minister in five years' time, I should not worry that I was not getting the tax rebate that I might get. I should be pleased to get the extra "lolly" and should not worry about it. This is an artificial point.

Mr. Lubbock

When the hon. Member for Southend, West (Mr. Channon) loses his seat, he can ask for the subsidy, can he not?

Mr. Channon

Yes, I can.

Mr. MacColl

I do not want to delay the House unnecessarily on this point, but if a person gets a very low rate of interest due to an increase in income, he has substantial compensation for the fact that he did not opt with complete accuracy of judgment at the time. The real case is that of "Cathy's" husband, who has had an accident and cannot find the money. That is the case which we could deal with.

Amendment agreed to.

11.30 p.m.

Mr. Channon

I beg to move Amendment No. 65, in page 19, line 27, leave out subsection 3(a).

We had a short discussion on this point in Standing Committee, and we received a sort of half-promise from the Government that they would have a look at the matter again. This Amendment deals with the question of the notice in writing of intention to give the option, and I made the point during the Committee stage that it seemed a bit unnecessary to have this written into an Act of Parliament. Indeed the hon. Member for Birmingham, Aston (Mr. Julius Silverman) seemed to support me when he said: The effect of this is that, even if it is willing to take the administrative responsibility of dealing with this question of the option, the building society cannot do so if notice in writing was not given at the time."—[OFFICIAL REPORT, Standing Committee B, 14th February, 1967; c. 444.] I would suggest that if it is necessary to have something like this in, I do not think it is necessary as well as having to sign your option notice also to have to sign in writing a notice of intention, and if you do not, you cannot get the option. I think it is a bit steep to write that into an Act of Parliament.

I should like to ask the hon. Gentleman two questions. What happens if one signs one's notice in writing of intention to opt, one goes along to one's solicitors and changes one's mind at the last minute and says "I do not think I will opt." Is one bound? If one has signed an option notice and then one goes along to the solicitor for conveyance and just before one gets to his office one says "I have taken advice and I think it better for me not to opt," is one bound?

If one is not bound, I think that to write the point about notice in writing of intention to give the option into an Act of Parliament, rather than doing this by administrative arrangements is making rather a mountain out of the whole performance.

I do not know whether the Government are wedded to this, but it seems to me to be a minor point and one which could well be omitted.

Mr. MacColl

I think that there is one lapse of logic in what the hon. Gentleman said. He said that if one does not send one's notice of intention one cannot get an option. One cannot get an option as of right; that is the important difference, and that is why the safeguard of the notice of intention has been put in. It is not something about which we care desperately, but it is something which those who have to administer the scheme care about. They do not want to be in the position of having somebody waiting up to the very last moment, having given no indication that they are to ask for an option, and when all the mortgage deeds have been prepared and are to be signed, coming along and saying, "Now I shall exercise my right to have an option," so that everybody is back to square one.

They feel they want to be protected from that person. But if it is a reasonable case, and the lending agents—who, after all, presumably want business—agree to do it, then they can do it, and that is covered. But is it the right of the opter to exercise his option, and the notice of intention comes there. Supposing it goes the other way, and he has given notice to opt, is he caught and cannot he get out of it? No. If he cancels that particular transaction, he starts again and on the new mortgage he is able to take it without option. So I do not think that the point the hon. Gentleman has been worrying about is really a valid one.

Mr. Channon

That is a small point, but I notice, once again, that if it is all right one way round, it is not all right the other way round. I would much prefer it, if this is the intention of the Government and the building societies, that this should be done by administrative arrangements and not by an Act of Parliament. I know there are some building societies who take the view I do.

However, this is not a major point and if the Government are insisting upon it I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. MacColl

I beg to move Amendment No. 67, in page 19, line 43, to leave out 'over the age of eighteen' and to insert: ('whether legitimate, adopted or illegitimate) over the age of sixteen or a step-child over that age'.

Mr. Deputy Speaker

I think that it would be convenient to discuss, at the same time, the Amendment to the proposed Amendment, after second 'or', insert 'a grandchild or'.

Mr. MacColl

The Amendment arises as a result of our agreeing that probably we had over-simplified the definition of "family" in the Bill and our undertaking to consider the matter. We have produced a form of words which hon. Members who have been dedicating themselves to the Leasehold Reform Bill may recognise.

The Amendment removes the age limit of 18, the argument against us having been that if a person can marry at 16, why should he not be able to get the benefit of an option mortgage. The Amendment covers also the case of a stepchild and we consider that it represents a reasonable compromise and attaches a reasonable limit.

It is necessary to retain some control, otherwise it might be possible for a borrower who was acting purely commercially, as a commercial investment to set up relatives in various houses to get the advantages of the option. Therefore—

Mr. Lubbock

Your illegitimate children.

Mr. MacColl

I do not know why the hon. Member says, "Your illegitimate children". They could not be anything other than illegitimate if I had any.

The trustee point also arises. In most cases, it would be possible for an adult who was, say, a grandfather to overcome the difficulty by having a joint mortgage. Provided that one of the joint mortgagors was resident in the premises and using them for his use, it would be easy. I am thinking of, say, a case where a building society says, "You are merely a retired Parliamentary Secretary and a man of straw, and we are not prepared to give you a mortgage. But you have a relative"—not an illegitimate son, I hasten to say, but a relative—" who is a man of substance, a Conservative Minister, and we would accept him. We will not give you a mortgage without his support." That is the kind of case that could arise. It could be dealt with by a joint mortgage. There is, however, a lacuna, to which I plead guilty, concerning the orphan who is under the age of 21 and cannot, therefore, himself be a legal owner of property. We do not want to accept the Amendment of the hon. Member for Southend, West (Mr. Channon) to insert "grandchild", because the situation can be dealt with the other way by, for example, a joint mortgage in the case of an adult. I agree, however, that there is a difficulty concerning somebody under the age of 21, and I would like to look at this when we consider the trustee point.

Mr. Channon

I thank the Parliamentary Secretary for moving the Amendment. It arose largely from a discussion in Committee on Clause 23, and I am grateful to the hon. Gentleman for modifying his definition of a child to take in these various categories.

The one point on which we are still not quite satisfied, and the reason for our Amendment to the Government's proposed Amendment, is the inclusion of "grandchild". I may not have followed clearly the hon. Gentleman's argument about this. I accept that if the grandchild is over the age of 21 there is no problem. One could have a joint mortgage with anyone over the age of 21 I should have thought. However, the sort of case that I had in mind was a grandchild of 18 with no parents marrying—a quite likely case. A grandfather might like to make the effort to help provide his grandson with a house, or, at least, the grandson would not be able to buy a house on his own account because he was under 21. That is the sort of case that I wanted to include.

Did I understand from what the Parliamentary Secretary said about trustees that he thought that he might be able to meet the point of the grandchild under 21 on a later Amendment? He must agree that if he does not meet it somewhere there will be a lacuna. There must be many people without parents. in which case the help of a grandfather might prove—

Mr. MacColl

I began to talk about trustees, but the hon. Gentleman snapped my head off and said that it was something else. Therefore, I am in some difficulty about this. I could not accept the proposed Amendment about the grand- child. I think that the other is a field that one might more usefully explore than this one.

Mr. Channon

Perhaps we should have taken the later Amendment with this one, but I thought it easier to wait. Perhaps in a moment the Parliamentary Secretary will tell us exactly what he means about trustees and the beneficiary point.

Amendment agreed to.

Mr. MacColl

I beg to move Amendment No. 68, in page 19, line 45, at the end to insert: 'so, however, that such a declaration shall not constitute notice to the lender of any interest in that land which may be subsequently acquired by any person other than the borrower'. This Amendment, again, deals with a point made by the Building Societies Association. It is rather concerned that it might in some way appear from the declaration by the borrower that he will occupy the house that the building society was consenting to that person having a controlled or regulated tenancy and that there might be complications about the security. It is to protect the building societies from that that we propose the Amendment.

Amendment agreed to.

Mr. Channon

I beg to move Amendment No. 69, in page 19, line 45, at the end to insert: 'or the borrower is not beneficially entitled to the land in question but is a trustee for the beneficiary and the land in question will be used wholly or partly for the purposes of a residence by a specified person being beneficially entitled to the said land'. I apologise if I inconvenienced the House just now. I did not realise that the Parliamentary Secretary wished to discuss this Amendment with the earlier one.

It seemed to me, on rereading Clause 23(3,c), that, just as I thought in Committee there was a gap about "child", there was a gap here about trustees. My Amendment seeks to include, as well as father or spouse, a trustee for a beneficiary. I do not know whether the Parliamentary Secretary will say that this perhaps goes a little too far. I did not wish to widen it unreasonably. I was thinking largely of beneficiaries under the age of 21. I should have thought that there must be cases, for example, when people die and the property belongs technically to the trustees for the beneficiary. I do not think that it would be possible to opt in these circumstances because the borrower himself would not be beneficially entitled to the land.

I think that there is a point here. I hope that the Parliamentary Secretary can explain, if there is a further explanation that he can give us, the point that I raised about the grandchild as well, but there may be wider points. It seemed to me that there ought to be something in the Bill about trustees and beneficiaries as well as the other categories of persons included in the definitions in Clause 23(3).

11.45 p.m.

Mr. MacColl

When we thought about this and had the advantage of seeing the Amendment, we felt that there was a problem which was wider than that of the grandchild. If someone is lucky enough to have a grandfather, that is one thing, but if he is a complete orphan, with no adult in a position to do this, he will be in an equally bad position. We would not be in favour of extending this power to beneficiaries over 21 because there might be the possibility of abuse, and of it being used for the purpose of evasion.

The case about which we are concerned, and which we would like to consider, is where there is a trustee and a person under 21 is the beneficiary and he cannot himself be joined in the mortgage because he is under 21. He has no parent to join with him. Before the Bill goes to another place I would like to consider this and see what we can do about it.

Mr. Channon

I am grateful to the hon. Gentleman for his undertaking to consider this matter before the Bill reaches another place. In view of that undertaking, which I welcome very much, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 70, in page 19, line 46, after 'subject', insert 'to the said subsection (3A) and'.—[Mr. MacColl.]

Mr. MacColl

I beg to move Amendment No. 71, in page 20, line 6, at the end to insert: (iii) the said interest's ceasing to be security for the loan; This Amendment deals with certain cases where the property ceases to be a security for a loan, and the main case which this is meant to deal with is that of compulsory purchase.

Amendment agreed to.

Mr. MacColl

I beg to move Amendment No. 72, in page 20, line 10, at the end to insert: 'who has become beneficially entitled to the interest in land in question'. With your permission, Mr. Deputy Speaker, perhaps we may discuss also Amendments Nos. 89, 90, 91, and 93.

Mr. Deputy Speaker

If the House agrees, so be it.

These Amendments deal with the same problem where the rights under a continuing mortgage are transferred to or taken over by another person. The main cases are those where on death an executor takes over, on bankruptcy where the trustee in bankruptcy takes over, or where the operator may be incapacitated by illness from managing his own affairs, and a receiver takes over. In cases of this kind, although the responsibility and the liability continue, the obligation to continue with the benefits of the subsidy might be held in suspense, and this is to deal with the transitional period. The different Amendments deal with different types of cases.

Mr. Channon

We have no objection to these Amendments. They introduce something which we welcome as an improvement to the Bill. This is an enormously long Clause, but even at this late hour we are grateful to the hon. Member for making this Amendment.

Amendment agreed to.

Mr. MacColl

I beg to move Amendment No. 73. In page 20, line 11, to leave out from the first 'the' to 'as' in line 18 and to insert: 'vesting of the lender's rights under the repayment contract in some other person, so, however, that, if at the expiration of the period of three months beginning with the date of that vesting that other person is a qualifying lender, the option notice shall not cease to have effect by virtue of this paragraph and that notice and the provisions of this Part of this Act shall be treated as having continued to have effect during that period'. As drafted, the Bill provides that when a mortgage is transferred to a non-qualifying lender the payment of the subsidy does not stop immediately but continues for a further three months. This is designed to give a period of grace in which the position can be adjusted—for example, where there has been a transfer of a business from one lender to another. If that other lender was not a qualifying lender, he would have to obtain his qualification and would need time in which to do that.

The Building Societies' Association has pointed out that there might occasionally be a private person with a second mortgage on which a borrower has defaulted, and the building society might want to assist him by transferring the benefit of the mortgage to the second mortgagee. This provision is, therefore, designed to deal with a special type of case.

Mr. Channon

I do not imagine that this special type of case will occur often, although it might occur if two building societies merged. I understood the hon. Gentleman to say that under normal circumstances the mortgage option would cease after three months but that, in special cases, the option will not cease to have effect. How will this be organised administratively? If suddenly a non-qualifying lender takes over a business, how will the Government make sure that the option goes on? After all, the new lender may not wish to continue it for the period of three months. It might be of inconvenience to him to do so. While I do not oppose the Amendment, I trust that the Parliamentary Secretary will explain how the Government will make such a person continue the option for three months.

Mr. MacColl

It I heard the hon. Gentleman aright, he has mis-instructed himself. A non-qualifying lender could not claim the subsidy. As I understand the position, this will be a voluntary arrangement. We must remember that we are here considering a special problem relating to the second mortgagee. There are cases where this is done by consent and, presumably, if either party thought that it was not worthwhile making this arrangement, they would not make it.

Mr. Channon

The Parliamentary Secretary is probably right in saying that I have mis-instructed myself. However, the Clause states: An option notice … shall be of no effect … after … the expiration of the period of three months … unless … that other person is a qualifying lender …". Presumably under certain conditions he might not be a qualifying lender, yet still he will have this three months' period. We need not detain the House on this point, but I trust that the Parliamentary Secretary will look into the matter further, and then let me know the position.

Amendment agreed to.

Further Amendments made: No. 74, in line 20, leave out 'is' and insert 'was'. —[Mr. MacColl.]

No. 75, in line 20, at end insert: (v) if the number of the periodical payments referred to in subsection (1)(c) of this section is not fixed by or ascertainable under the repayment contract, the expiration of thirty years from the beginning of the period for which the option notice has had effect.—[Mr. MacColl.]

No. 76, in line 20, at end insert: (3A) The Minister may from time to time direct that, in such circumstances or in such cases or class of cases as may be specified in the direction, an option notice shall, if the qualifying lender in question so agrees, have effect notwithstanding that the conditions specified in subsection (3)(a) and (b) of this section are not satisfied; but the period for which an option notice has effect by virtue of this subsection shall not begin— (a) if the lender is a building society whose financial year ends on a date not earlier than 30th September, until 1st April next after the end of the financial year of the society in which the option notice is signed; or (b) in any other case, until 1st April falling between three and fifteen months after the date of the signing of the option notice, except where the lender agrees to its beginning on an earlier 1st April falling after the date of the signing of the option notice.—[Mr. MacColl.]