HC Deb 08 March 1967 vol 742 cc1645-56
Mr. Mellish

I beg to move, Amendment No. 15, in page 4, line 14, at the end to insert: 'and for that purpose the Greater London Council and the Commission for the New Towns may each either be treated as a class of recipient authorities or be included in any class of other recipient authorities'. This is essentially a technical Amendment, designed to remedy an anomaly in subsection (3) which refers to different classes of recipient authorities. We are advised that the G.L.C., and the New Towns Commission, being each a unique type of authority, could not constitute a class of their own, nor is it clear that they could be included with another class of authority. For example, if the Minister were to decide that it was necessary to specify a separate representative rate for all county boroughs and all rural districts, and so forth, the G.L.C. would not fit into any of those classes.

In fact, the Minister has no such intention at the present, and he proposes to specify one representative rate for all local authorities. Consultations are in progress on this proposal, but if the need ever arises to break down the different type of local authorities into separate classes, obviously the G.L.C. will have to be taken into consideration.

The Amendment will enable the Minister to deal with that situation both as regards the G.L.C. and the New Towns Commisssion, which will be classed with the development corporations. As I began by saying, this is essentially a technical Amendment, and I am sure that the party opposite will not wish to contest it.

Mr. Allason

We agree that it is very helpful to make clear that the New Towns Commission should be treated on its own. The Greater London Council seems to be a peculiar bird which will not join the County Councils Association, but holds out as utterly independent. We concede that it is necessary to make clear that it should be treated separately. I cannot understand, however, why it is necessary to have an alternative. Surely it would be better to say that these two bodies should be treated as separate types of recipient authority and not to have any question of there being included in a class. The mere fact that they are to get the same rate of interest does not matter.

It is no trouble to the Minister to lay down that the rate of interest shall be so much for local authorities and so much for Greater London Council and the New Towns Commission. The last words in the Amendment are redundant, but that we do not make a great point about that.

Amendment agreed to.

Mr. Allason

I beg to move Amendment No. 16, in page 4, line 14, at the end to insert 'and in particular the Minister shall specify a different rate for local authorities and housing associations'. The wind has been taken out of our sails somewhat by the announcement that the Minister intends to have one rate for all forms of recipient authority. We understood in Standing Committee that the situation would be rather different and that there would be different rates reflecting the fact that different authorities are in different positions in relation to the money market.

An authority such as Greater London Council can obtain money at a rather cheaper rate than can an unknown local authority. We sought that at least housing associations should be favourably treated in this matter. They are deserving cases. It might well be that the Minister will think again about the idea of having one rate. I imagine that this is only a temporary measure. The rate for this year may be all one because this year interest rates are so fantastically high that probably there is not much difference between the highest and the lowest, but in better days which we hope will come eventually it would be desirable to have a different rate for housing associations.

Mr. Mellish

As the subsection is drafted, the Minister may, if he so decides, specify a separate rate for housing associations. This, however, is a matter for his discretion and it is his intention to specify one and the same rate for both local authorities and housing associations based upon the rates of interest paid by local authorities. It may be argued by that a single representative rate based upon rates of interest paid by local authorities will be lower than rates of interest paid by housing associations on local authority loans, but the Department has not accepted that view. That is because there is no firm evidence available to show that local authorities always lend money to housing associations at ¼ per cent. above the open market rate.

We appreciate that housing associations are another problem because they do not always want to borrow 100 per cent. of the capital cost of their housing schemes from local authorities. For example, some receive gifts of capital or obtain their capital from various sources at preferential rates of interest. This is especially true of charitable societies.

It being half-past Nine o'clock, the debate stood adjourned.

Ordered, That the Proceedings on the Housing Subsidies Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Mellish]

Question again proposed.

Mr. Mellish

Comprehensive statistics relating to housing associations' borrowing procedures are not available. We have tried hard to get this information from the associations but we have found difficulty in obtaining it. From the information we have, I understand that some housing associations believe that the single rate will be unfavourable to them.

I assure the hon. Member for Hemel Hempstead (Mr. Allason) that if it is found that the single rate works with marked iniquity against housing associations the Minister will consider any evidence to justify having a separate rate and we shall, of course, consult with them. I assure the House that there is no intention on our part of imposing a restriction on housing associations, and that if they produce evidence to show that there should be separate rates it will be considered by my right hon. Friend.

Mr. Channon

My hon. Friends and I are grateful to the Parliamentary Secretary for the assurance contained in the last part of his reply. It is comforting to hear that the Minister will consider any cases which indicate that iniquity has occurred. While being grateful to the hon. Gentleman, I hope that he will have another look at the matter to be absolutely sure, before committing himself to having the same rate for local authorities and housing associations, that this is the right course to take, even for this year.

I understand that the evidence from the Federation of Housing Societies shows that its members are extremely worried about the position. There is evidence to show that housing associations are, on the whole, borrowing at just over 7 per cent., and I imagine that local authorities are borrowing at about 6½ per cent. Certainly, the evidence I have suggests that the overwhelming number of associations are having to pay ⅜per cent. above the Public Works Loan Board rate, so that they must pay more when they borrow from local authorities.

I accept that the evidence which I have may be contrary to that in the possession of the Minister. Nevertheless, I should have thought that the overwhelming majority of housing associations are borrowing at rates higher than must be paid by local authorities. While appreciating the hon. Gentleman's assurance that the Minister will keep an eye on this matter, I hope that he will go a step further and, before making a final decision—and he has time to consider this issue before now and the Bill receiving the Royal Assent—see whether it is possible, even this year, to have separate rates—that is, if the evidence supports having different rates for local authorities and housing associations.

Mr. Mellish

The hon. Member for Southend, West (Mr. Channon) has been fair in his remarks. He will appreciate that my right hon. Friend has shown—this was made clear in our discussion of an earlier new Clause—that we support the work that is being done by housing associations. I assure hon. Gentlemen opposite that I will discuss the matter with my Department and the housing associations to see whether there is any difficulty over this issue, since we are anxious to help them.

Mr. Allason

In view of that assurance, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Mellish

I beg to move Amendment No. 17, in line 29, to leave out from 'instrument' to 'a' in line 30 and to insert 'and no such order shall be made unless a draft thereof has been approved by'. This Amendment provides that Orders specifying the borrowing rate or rates shall be subject to the affirmative instead of the negative Resolution procedure of the House. This fulfils an undertaking which I gave in Standing Committee. I said on that occasion that the Government would introduce an Amendment to provide an annual opportunity for adequate debate on the level of housing subsidies and hon. Gentlemen opposite will agree, despite what they have said earlier, that this is at least one promise that I have kept.

Mr. Channon

My hon. Friends and I thank the Minister for having introduced the Amendment. I am sure that the whole House likes the idea of having an annual debate—a reasonably short one, I have no doubt—on the rate which will make such a difference to the position of local authorities for the year. We are grateful to him for having made this subject to the affirmative rather than the negative Resolution procedure.

Amendment agreed to.

Mr. Mellish

I beg to move Amendment No. 18, in page 4, line 35, to leave out the cost of acquiring its site' and insert: 'so much of the cost of acquiring the site on which the dwelling is provided as is apportioned to that dwelling under subsection (6) of this section'.

Mr. Speaker

I understand that we are also considering, for discussion at any rate, the Amendment to this Amendment of the hon. Member for Southend, West, at the end to add: 'on the occasion when an apportionment is made: or otherwise the cost of the site'.

Mr. Mellish

I have a list here of about 14 Amendments which are all closely linked and I ask now for the patience and understanding of the House. Not that I will make a long speech, but I intend simply to explain that these are in a long series of what have come to be known as "site" Amendments. They are all part of one drafting operation.

This started with certain references to site or a part of a site in Clause 10. Hon. Members opposite, particularly the hon. Member for Hornsey (Mr. Rossi)— I am sorry that he is not here, as I wanted to say something nice about him for a change—

Mr. Channon

My hon. Friend asked me to apologise for him. He had an inescapable engagement. He asked me also to tell the Parliamentary Secretary how grateful he was for the way in which the Amendments have been put down. So if he had been here he would have had something nice to say to the Parliamentary Secretary as well.

Mr. Mellish

I will not quarrel with that; I want to keep this atmosphere going as long as possible.

The hon. Member for Hornsey provoked me into saying that I would look again at the words in the Bill to see whether we could clarify our intention I am obliged to him, as I think that he made a contribution here which resulted in our having another look at the definition of the words. The suggestion was timely. We had then substantially finished our preparatory work, in consultation with the local authority associations, on the most effective way of administering the new subsidy system.

We realised that, by some comparatively minor though necessarily repetive Amendments to the Bill, we could express more clearly and firmly the way in which subsidies payable on site cost will be paid. This is important, because under the Bill, unlike its predecessors, not only expensive subsidy will be payable on land costs but the basic subsidy as well. The upshot is daunting, looking at the Amendments, but they are basically repetitive and are a series of drafting Amendments.

We began the process in Committee with Amendments to Schedule 1 and now complete the process throughout Part 1 of the Bill. The key Amendments to the present series are the one which I have moved, which concerns the site costs in relation to the basic subsidy—to which the hon. Member for Hemel Hempstead (Mr. Allason) tabled an Amendment—and Amendment 32, which concerns expensive site subsidy, but all the other site Amendments are consequential or drafting.

The essential concept behind the Amendments is this. Previously, we spoke of basic subsidy as payable on the site of a single dwelling and expensive site subsidy being payable on the site on which any approved dwellings stand. What we shall do in administering the basic subsidy is to take the cost of the whole site which is the subject of one tender and to allocate to each of the houses or flats built on the site a proportion of that total site cost. For example, if there were to be built on a particular site two blocks of ten flats, we would allocate to each flat one-twentieth of the site cost.

When we come to the expensive subsidy, the process is a little more complicated, as the subsidy has to be calculated by reference to the acreage of the site. That is to say, instead of paying subsidy in effect as a percentage of cost, as with basic subsidy, the Bill provides a subsidy of so much per acre, in Clause 10(1,a). But the administration of the expensive site subsidy will be done in the same way as the basic subsidy, in that we will work out the total subsidy payable on the site and then divide it upon the same basis for each of the houses or flats to be built on the site.

I am sure that I am carrying the hon. Member for Hemel Hempstead with me, because he was arguing about this question of whether, in putting a dwelling on the site, it would be only on that part of the site on which it was situated or the whole site that the subsidy was payable.

9.45 p.m.

I do not want to go into any of the complicating details, except to say that the total cost or total acreage of the site may be reduced for both subsidies alike by excluding non-housing items such as shops, public open spaces and garages. We pay a subsidy on a house, but we do not pay a subsidy on shops and we are not going to pay subsidies on cars either.

This is how it works. It is necessary to tackle it in this way, because the administration of the whole subsidy system must be related to individual approved dwellings. This is essential, for example, where only half the dwellings on a site are completed in one year. We have to take the costs of those dwellings, including the proportionate site costs, in calculating the subsidies payable on dwellings completed in that year.

All these "site Amendments" flow from the basic concept of paying subsidy, not in relation to cost of acreage of the site as a whole, or the physical part on which the dwelling stands, but in relation to the proportion of the total which is referable to each individual house or flat.

I assure hon. Members that these Amendments reflect no change of substance or intention. They only underpin more securely the proposed administrative arrangements governing basic subsidy for site costs and expensive site subsidy. These arrangements and the draft subsidy application forms in which they are embodied have already been accepted in principle by the local authority associations.

I have tried reasonably hard to make this as clear as I can. The doubts which were expressed in Committee went something like this. Where we talked of a site, the difficulty was that the subsidy would only be payable for the dwelling on that individual site, whereas these Amendments show that we take the site as a whole. For example, an open space—a children's playground—within that site and associated with the housing on it would qualify for subsidy. The site as a whole would be considered for the basic subsidy where this was definitely associated with housing. We have tried in the Amendments to make this much clear. The local authority associations are satisfied. I hope that the party opposite is, too.

Mr. Allason

I am sure that the Joint Parliamentary Secretary has explained this entirely to his own satisfaction. We were extremely confused in Committee because of the reference to the cost of acquiring the site on which the dwelling was built. We wanted to know whether this meant just the area covered by bricks and mortar. That question remains, because the Amendment says: so much of the cost of acquiring the site on which the dwelling is provided". We are still exactly where we were, except that we have the benefit of the extremely clear explanation of the Joint Parliamentary Secretary of what he thinks it means. Everyone will rush to read HANSARD, but undoubtedly when someone takes the matter to the law courts it will be discovered that it means something quite different.

I do not think that the Joint Parliamentary Secretary was quite as helpful as he intended, because he still left exactly the same words about which we complained. We have at least got the question of an apportionment, so the intention is getting clearer.

We hope that our Amendment to the Government's proposed Amendment will be helpful. If there is one site with one dwelling on it, presumably there is no apportionment. Under the terms of the Government's Amendment, the cost of the site is excluded from subsidy. I am sure that it would not be the Parliamentary Secretary's intention to exclude the site. I therefore commend to him our Amendment to his proposed Amendment.

Mr. Mellish

The Amendment of the hon. Member for Hemel Hempstead (Mr. Allason) gives me the opportunity to say that the Amendment which I moved and the many consequential Amendments—I apologise for their number—must be read in total. I am advised that the hon. Member's Amendment is covered by ours. His Amendment is apparently directed at a situation where only one dwelling is provided on a site and therefore the whole of the site costs will be attributed to it.

Such a case would be wholly exceptional, but I assure him, from legal advice I have been given and discussions with the local authority associations, that it should be covered by our Amendment and the consequential Amendments. If he is dissatisfied with that, the Opposition have lawyers on their side—probably too many, as we have on our side—and he can have some advice.

Mr. Bessell

Could the Parliamentary Secretary clarify one point on which I am in some doubt? If the dwelling included a garden, either at the front or at the rear, would it be included in the apportioned site?

Mr. Mellish

Absolutely. I am obliged to the hon. Member for giving me a chance to talk in terms I understand. In Committee the argument was that only that land would get the subsidy on which the bricks and mortar were situated. Now, where a site is cleared for housing as a whole, say, for ten houses to be erected, it would be apportioned. The subsidy would be payable on each site for a proportion of the subsidy as a whole. That would, of course, include the gardens, front and back.

Amendment agreed to.

Further Amendments made: No. 19, in line 36, at end insert 'any land comprised in'.

No. 20, in line 40, at end insert: 'and subsection (6) of this section'.

Mr. Mellish

I beg to move Amendment No. 21, in line 3, leave out from 'Where' to 'works' in line 4 and insert: 'the cost of any'.

It may be for the convenience of the House to discuss Amendment No. 22 with this Amendment.

Clause 3(4) was introduced by the Government in Committee following representations by the local authority associations. It enables the Minister to take account of substantial increases in cost over the original approved tender figure where such increases are due to unforeseeable conditions below ground.

Amendment No. 21 will enable the Minister to take account of additional works occasioned by unforeseeable conditions underground, whether the works are carried out above or below ground. When taken with Amendment No. 21, Amendment No. 22 avoids the need to differentiate between the original ground level and any new ground level created by cut and fill, since the unforeseeable conditions could only relate to the site as it was before the development began.

The Amendment fulfils an undertaking I gave in Committee on points raised by the hon. Member for Folkestone and Hythe (Mr. Costain). I promised that we would consider Amendments designed to remove any ambiguity about the works to he taken into account in assessing increased costs, and that I have done.

Mr. Allason

I am sure that if my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) could be here he would be grateful for this Amendment. I, too, am grateful. The Parliamentary Secretary will recall that the hon. Member for South Shields (Mr. Blenkinsop) and I had an Amendment on the Notice Paper in Standing Committee. The Government put down their own Amendment which did not, however, go as far as ours. This Amendment amends the Government Amendment made in Committee and comes very much closer to the position that the hon. Member for South Shields and I sought.

This position was that, if there should be any unforeseen costs arising out of the lack of a careful examination of the site and the possibility of subsidence, this should be taken care of. The provision is very much improved by this Amendment. In Committee, I inquired what would happen if a tower block started to lean sideways and I take it that the answer now is that such a situation would be taken care of as a result of the Amendment. This covers the cause being below ground even though the effect is above ground.

Mr. Blenkinsop

I add my thanks for this further Amendment. The point was put to some of us by local authorities that there might be other forms of increased cost. I understand that the local authority associations are now quite satisfied with the proposal in the light of the Amendment and I am grateful to my hon. Friend.

Amendment agreed to.

Further Amendment made: No. 22, in line 12, leave out 'subsisting below ground level' and insert 'underground'.

Mr. Speaker

I take it that the two following Government Amendments, Nos. 24 and 25, are consequential.

Mr. Mellish

That is so, Mr. Speaker.

Mr. Speaker

It helps the Chair to assist the House if the Chair has in advance a list of consequential Amendments. I have now been given a list. I must protect the interests of both sides when groupings are proposed.

Further Amendments made: No. 24, in line 30, leave out 'the cost of acquiring its' and insert 'any cost attributable to the acquisition of a'.

No. 25, in line 32, after 'apportionment', insert 'of cost'.—[Mr. Mellish.]