§ (1) The provisions of this section shall have effect where arrangements have been made after the passing of this Act by a local authority with a housing association under section 121 of the Housing Act 1957 (which relates to arrangements for the provision of dwellings by a housing association by means of the conversion of buildings or for the improvement of dwellings by a housing association) in a case where, on the completion of the carrying out of the arrangements, the local authority certify to the Minister in such form as he may direct that, in the case of each building or dwelling to which the arrangements relate—
- (a) an estate or interest in the building or dwelling has been acquired by the housing association with a view to entering into, or for the purpose of giving effect to, the arrangements; and
- (b) the dwelling or dwellings resulting from the carrying out of the arrangements have been made available by the housing association for letting.
§ (2) Subject to subsections (3) and (5) of this section, the Minister shall pay for each of 1536 the twenty years beginning with the financial dear in which the carrying out of the arrangements is completed a subsidy equal to three-eighths of the annual loan charges referable to the amount certified by the local authority in such form as the Minister may direct to be the aggregate of—
- (a) the amount appearing to the local authority to be the cost likely to be incurred by the housing association for the purpose of the execution of any works of conversion or improvement required for carrying out arrangements; and
- (b) any expense incurred by the housing association in acquiring an estate or interest in a building or dwelling with a view to entering into, or for the purpose of giving effect to, the arrangements;
§ (3) The Minister shall disregard for the purposes of subsection (2) of this section any sum by which the aggregate referred to in that subsection exceeds the equivalent of two thousand pounds for each dwelling resulting from the carrying out of the arrangements unless in any case he is satisfied that in all the circumstances of the case there is good reason for allowing a higher aggregate.
§ (4) The Minister may by order provide, as respects dwellings resulting from arrangements made after the coming into force of the order, for subsection (3) of this section to have effect as if for the reference to two thousand pounds there were substituted a reference to such higher or lower amount as may be specified in the order; and any such order shall be made by statutory instrument and—
- (a) may vary or revoke any previous order under this subsection; and
- (b) shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.
§ (5) No subsidy shall be payable under this section unless, on the completion of the carrying out of the arrangements, the local authority certify in such form as the Minister may direct that in their opinion the dwelling or dwellings resulting from the carrying out of the arrangements—
- (a) will provide satisfactory housing accommodation for such period, and
- (b) conform with such requirements with respect to construction and physical conditions and the provision of services and amenities,
§ (6) Any subsidy under this section shall be paid to the local authority who shall pay to the housing association by way of annual grant an amount not less than the subsidy.
- (a) no contribution shall be made to the local authority under section 12 of the Housing (Financial Provisions) Act 1958 in respect of those arrangements; and
- (b) no grant shall be made to the housing association under section 30 of the said Act of 1958 or under section 4 of the House Purchase and Housing Act 1959 in connection with any dwelling in connection with which the subsidy is paid.
§ (8) In this section, the expression 'improvement' includes alteration, enlargement or repair.—[Mr. Greenwood.]
§ Brought up, and read the First time.
§ Mr. Speaker
I should like to make a brief announcement on a matter of detail. I call the attention of the House to the fact that the starred Amendment No. 108 in the name of the hon. Member for Southend, West (Mr. Channon), which appears on page 6264 by an oversight of the printers, should be on page 6276. In my selection of Amendments, I have selected it to be discussed with Amendment No. 76, on page 6276. I hope that that is clear to the hon. Gentleman.
§ Mr. Speaker
With this new Clause, I understand that we will also discuss the Amendment in the name of the hon. Member for Southend, West, in line 31, after 'thousand', insert 'five hundred', and in line 37 to leave out 'or lower', as well as Amendment No. 2 to Clause 1, in page 2, line 3 at end insert:'(including in the case of a housing association dwellings acquired by such an association for the purpose of modernisation conversion and improvement)'.
§ 4.0 p.m.
§ The Minister of Housing and Local Government (Mr. Anthony Greenwood)
I beg to move, That the Clause be read a Second time.
Hon. Members who were in Committee will remember that, in response to pleas from hon. Gentlemen on both sides and in answer to an Amendment moved by the hon. Member for Hornsey (Mr. Rossi), I undertook to consider what additional help could be made avalaible to housing associations working under authorised arrangements with local authorities in converting older property to meet the needs of families who are homeless or 1538 1iving in bad conditions. Hon. Members will be aware that authorised arrangements are those which a housing association may enter into with a local authority. The association will normally provide acommodation with financial help from the local authority and the arrangement usually includes provisions as to the selection of tenants and the rents to be charged.
Grants are already available for improvement and conversion of the property that we are discussing, but no Exchequer help in England and Wales is available towards the actual purchase of the property. The Clause is designed to remedy this defect.
If the House accepts the proposal in the Clause, subsidy will normally be payable upon the combined cost of acquisition and of works for improvement and conversion for each dwelling which is created up to £2,000, as against the present ceiling of £800 for works of improvement and conversion only.
I will give the House two examples of how it will work. First, if a house is bought for £6,000 and converted into four flats or bed sitting rooms, the total cost of the house will be £8,000 as converted and, because it does not exceed £2,000 for each of the four dwellings, the whole of the total cost of £8,000 will attract subsidy. Secondly, if a house is bought for £10,000 and is converted into six flats at a cost of £3,000, the total cost will be £13,000, but there would be six dwellings each entitled to subsidy up to a ceiling of £2,000, meaning £12,000, so that only £12,000 of the £13,000 would be eligible for subsidy.
If an association acquires a property by gift or at a nominal sum, it can still use the Clause. In a case of this kind the practical result will be that the cost of works eligible for grant could amount to £2,000 per dwelling provided, but naturally the authority would need to be satisfied that the scale of the works was not extravagant.
I turn now to how the amount of subsidy is to be assessed. I think I should first relate the Clause to the existing provisions dealing with improvement grants as they are at present payable to housing associations working under authorised arrangements. The grant is, in fact, an annual payment for 20 years equivalent to three-eighths of the loan charges falling 1539 due on those costs which rank for grant. The new help that we are giving follows that precedent.
It is estimated that on a typical building acquired for conversion, particularly in the London area and in the larger cities, the new subsidy will be roughly equivalent to what an owner occupier of each of the new units of accommodation provided would get with the help of an option mortgage and with the help of an improvement grant. I should emphasise that where the costs of acquisition are substantially greater than the costs of improvement or conversion, the new subsidy will be significantly more favourable.
We have tried to keep the administration of the new scheme as simple and as straightforward as possible. It will not be necessary for each scheme to come to the Minister for approval. It is true that approval will be necessary for the general arrangements between a local authority and the housing association, but we hope to cover most cases by a general approval given in a circular.
I think that the House will agree that this is not the occasion for a complete recasting of the improvement grant system. That is much more appropriate in the current review of legislation affecting older houses. Consequently, the provisions of the Clause carry forward details of the existing system which, although some hon. Members may question them, could not be altered without reflecting prematurely on the system as a whole.
The Clause itself should be seen purely as an interim measure, dependent on the conclusions of the review. By that time the forms and levels of Exchequer assistance to local authorities, as well as the housing associations, can be considered afresh. Indeed, it is worth remembering that to a certain extent the Clause can be looked upon as a happy revival rather than as a new departure. It restores, though rather more generously, the grant on acquisition which dated from 1949 and which was consolidated in Section 12 of the Housing (Financial Provisions) Act, 1958, but which was dropped in the following year by the House Purchase and Housing Act, 1959. Scotland survived that repeal and hence the Clause applies only to England 1540 and Wales. The higher subsidy levels payable in the Clause reflect the probability of higher acquistion costs in England and Wales than in Scotland.
Before turning to the detailed provisions of the Clause, I should emphasise that if a housing associaton prefers, it can still take advantage of the present grant system. For example, if property is acquired by gift, a housing association, like an ordinary private owner, can seek grant by way of a capital payment.
Turning to the detailed provisions of the Clause, subsection (1) provides for recipients to be any housing associations within the meaning of Section 189 of the Housing Act, 1957. The Minister will direct the form of the local authority certificate relating to acquisition and availability for letting. For the purpose of subsidy, it will be immaterial whether there are more or fewer dwellings than before or whether the original number has merely been improved.
Subsection (2) provides for subsidies to be three-eighths of the loan charges over 20 years on an amount certified by the local authority in such form as the Minister may direct. This amount will represent the aggregate of the estimated costs of conversion and improvement and the actual expenses of acquisition.
Subsection (3) limits the amount concerned to £2,000, unless the Minister is satisfied that in the circumstances of a particular case there is good reason for allowing more.
Subsection (4) provides for the Minister by order to vary the £2,000 up or down. This is common form and is subject to negative Resolution by the House of Commons.
Subsection (5) provides for subsidy to be payable on completion of the carrying out of the arrangements, subject to the local authority's certifying, in such a form as the Minister may direct, that the resultant dwellings will provide satisfactory accommodation for such period and to such a standard as may be specified by the Minister by circular. This provision will allow flexibility over both the life of the property and the standards it must reach. Aid will not necessarily be precluded in respect of property which cannot be converted into self-contained accommodation. 1541 Subsection (6) provides for the local authority to receive in the first place and pass on the subsidy to the housing association. Subsidies for new dwellings and existing Exchequer contributions for improvements arc passed on under authorised arrangements in a similar way.
Subsection (7) provides for these provisions to be alternatives to the Exchequer contributions for dwellings improved under arrangements with local authorities and to improvement grants.
Subsection (8) defines the term "improvement". The limitation on repairs in Section 121(3) of the 1957 Act is carried on ipso facto along with the reference to Section 121. This means that the reference to repair does not include the execution of works of ordinary repair, except so far as these are incidental to or connected with the conversion of improvement works.
I hope that the House will accept that this is a genuine attempt to repair an omission of which we were all very conscious in Committee and to channel help to those in real need. I hope that the Clause will be regarded as a substantial contribution to the work of bodies which are doing the most valuable work.
§ Mr. Speaker
I remind the House that with the new Clause we are taking the proposed Amendments to lines 31 and 37 and Amendment No. 2 in page 6264.
§ Mr. Channon
The House is indebted to the Minister not only for introducing the new Clause, but for his very clear explanation of its provisions. As he said, it will be much welcomed by hon. Members. In Committee such provisions were pressed on the Minister by hon. Members on both sides—who were pressing at an open door, I am sure. I hope that my hon. Friend the Member for Hornsey (Mr. Rossi), who played such an impoitani part in moving an Amendment, has some satisfaction from the results of his speech on that occasion. Perhaps he will tell us later whether he is satisfied with the new Clause.
There is no doubt that there is a vast pool of ageing property in this country and that there have not been sufficient incentives for it to be adequately used. It has been estimated that 6½ million houses and flats were built before 1919. As 1542 originally drafted, the Bill seemed to us to be too restrictive, concentrating on new property as it did, and that very little was done for old property. Various reports have drawn attention to that, including the Milner Holland Report, and the Report of the right hon. Gentleman's Central Housing Advisory Committee.
These provisions will be a substantial help to housing associations if they enter into arrangements with a local authority to acquire and convert such properties. I echo what the Minister said about the good work so many housing associations have done over the years. I am sure that every hon. Member feels that they have done a good job in the past. I hope that as a result of the Clause they will be enabled to do even better in the next few years. As many as 1,500 to 1,600 housing associations might be able to qualify under the new Clause.
I imagine that the Minister is satisfied that his Clause has been drawn in such a way that only the bona fide housing associations will be included in its provisions. The third arm of housing, the housing associations—the others are the local authority and the private owner should be strengthened, and I am glad that the Government have done this.
In our first few sittings in Committee, it became commonplace to talk about the television play, "Cathy Come Home." I think that was inevitable, as the programme had been produced so shortly before we began consideration of the Bill in Committee. There is no doubt that it spotlighted the problem, and it also spotlighted the work that housing associations can do to help solve the sort of problems that were illustrated in it.
Since I have given the new Clause a general welcome, I hope that the will not think me churlish if I criticise one or two details. First, I wish to deal with houses at the cheap end of the scale. I understand that in certain parts of the country housing associations are buying up houses for as little as about £750. One housing association in Leeds, in particular, is doing that. I am glad to say that the cost of conversion is also very much less than it would be in London.
I am told that under the Clause as at present drafted such housing associations 1543 would receive less assistance than under the old improvement grants scheme. If so, I am pretty sure that that alternative is still open to them should they prefer not to take advantage of the terms of the Clause but prefer to stay in the old scheme, but I should be grateful to have that confirmed.
I now turn to the problem of the bigger cities, particularly London, where property is much more expensive. When the Minister introduced the Clause, we heard in his first example of the property bought for £6,000 on which a further £2,000 was spent on repairs and conversion. Were that example generally the case, I do not think that we would have any quarrel with his figures. But we were told in Committee, and I do not think that the evidence has been seriously challenged, that in many cases it is necessary to spend as much as £3,000 on repairs and conversion of houses bought for £6,000 in, say, Notting Hill Gate or the centre of London, after which one would have four dwellings with the five basic amenities. I have heard that from very reputable sources. The total then comes to £9,000 and not £8,000.
That is one of the reasons why my hon. Friends and I have put down an Amendment to line 31 to make the figure £2,500 instead of £2,000. My hon. Friend the Member for Hornsey was not challenged in Committee when he gave the figures of £6,000 and £3,000 as reasonable in the London area, giving a total of £9,000 for the four dwellings.
In those conditions there is much to be said for the Minister making his figure £2,500—or £2,300 if he likes. I think that £2,000 is a little low. It is also a little mean—although I do not want to press the point very hard—that the Minister should take powers not only to raise the figure of £2,000, but to lower it. Our Amendment at line 37 would remove from him the power by Order to lower the figure of £2,000 by Statutory Instrument.
I accept that if he laid such an Instrument it would be subject to a negative Resolution in the House and think that he would have a very hard time in justifying it in any conceivable circumstances. Does he really need the power to reduce the figure below £2,000? It is highly 1544 improbable that we shall get a dramatic drop in house prices, and in any case my hon. Friends and I think that the £2,000 is on the low rather than the high side. Would he consider taking away that power?
On the issue whether the figure should be £2,000 or £2,500 in the first place, I have prepared some calculations which I will give for what they are worth. I am not a mathematician and I feel that I should have asked my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell), whose mathematical qualities are well known, to check them. But I hope that they are reasonably accurate.
Let us assume that the Minister's figure of £2,000 remains in the Clause. One buys a house for £6,000 and then spends a further £3,000 on converting it, at the end of which there are four dwellings. The loan charges, probably at about 7 per cent., will be £630 to £640 approximately on £9,000. One divides that by three-eighths, and if one were allowed to have all that included, one would have a subsidy of £240, which would mean that, instead of £640, one was paying about £400 a year. That is a very substantial help indeed.
But if the Minister keeps the figure at £2,000, one cannot get three-eighths on the whole £9,000 but only on £8,000. I think it would mean that one could only get three-eighths of £560, which would be loan charge on £8,000, and a subsidy of about £210, so that one would have £350—that is, £560 minus £210—plus £80 for the last £1,000 between £8,000 and £9,000.
Instead of paying £400 a year, one would be paying just over £430 a year. I concede that, on the four dwellings involved, the difference is only £100 to £108 a year, which is 4s. or 5s. rent per week. This is not an issue of fantastic importance. It would cost the Government hardly anything. In view of the fact that all the reputable sources I know maintain that the figure of £9,000 is likely to be more realistic than £8,000, the right hon. Gentleman should consider looking at this again.
I have no right to speak for Scotland, but no doubt the Under-Secretary of State for Scotland heard the points made by my hon. Friend the Member for Moray and Nairn in an earlier debate and will 1545 intervene, if that is in order, and tell us exactly what is intended in Scotland and whether the Scots are to be treated in the same manner as the English in this respect. I am sure that my hon. Friend is most anxious to have some information about this matter.
We welcome this Clause. We regret the £2,000 figure and hope that the right hon. Gentleman will consider substituting £2,500. It would cost very little and would be more logical and a little fairer. Subject to these small criticisms, we think the Clause a great step forward and are grateful to the Government for having accepted the arguments put by both sides in Standing Committee.
§ Mr. Hugh Rossi (Hornsey)
I join in the welcome given to the Clause and I would also say a personal word of thanks to the Minister for implementing as he has the assurance he gave in Standing Committee when I moved my Amendment. I am certain that the Clause will be welcomed by all the housing associations. It will be a tremendous encouragement to them in the very valuable work they are doing in our big cities to provide decent accommodation for the "Cathy" type family we are all so much concerned about.
There are about 3 million of these families in the United Kingdom and it would take well-nigh 10 years or more for the local authorities to make any impact at all upon the problem by their own efforts. Clearly, the work of the local authorities in public housing has to be supplemented and it is this precisely that these housing associations are doing by rescuing our older houses—6½ million pre-1919 houses—and reconstructing, modernising or repairing them and converting them. Any help to these associations must be, a most valuable contribution to solving the housing problem. For that, we welcome this Clause on behalf of ourselves and the associations.
I would add, on a more personal note, that it is gratifying for hon. Members of the Opposition, after beating against what is apparently a brick wall week in and week out, to find that occasionally we are able to achieve something and make a positive contribution towards legislation.
The figure of £9,000 was originally, as was stated in Standing Committee, sup 1546 plied to us by "Shelter". We were told that, from actual cases in Notting Hill Gate, a £6,000 house required about £3,000 to be spent upon it to convert it into four separate units. I am not certain whether, in his calculations in bringing the £9,000 total down to £8,000, the Minister added the £1,000 improvement grant that would be attracted by these four units. Perhaps this might explain the present difference of arithmetic as between the right hon. Gentleman and my hon. Friend the Member for Southend, West (Mr. Channon). It is a possible explanation.
Nevertheless, it appears that, in the £2,000 upper limit, the Minister is working on too narrow and too tight a margin and that one can conceive that, with building costs, particularly on this kind of repair, reconstruction and maintenance work, rising as rapidly as they are, it will not be long before the right hon. Gentleman must come to the House with an Order asking for the £2,000 limit to be raised. He should, therefore, be a little more generous to himself, give himself more elbow room—if I am not mixing my metaphors—and look forward a little in time in the realisation that the figure of £2,000 is already on the deadline. If he gives himself a little more money to play with he will not find it necessary in a few months' time to come and ask for an increase. That should be borne in mind.
I hope that the right hon. Gentleman can say something about the three-eighths subsidy of the annual loan charge. I believe that he is following a precedent in doing this. But three-eights is less generous than eight-eighths and, as I am anxious to give the most generous financial assistance possible to the housing associations, perhaps the right hon. Gentleman can assure me that, by coming down to this fraction, he is not being less generous than I would hope him to be.
§ Mr. Frank Allaun (Salford, East)
This Clause will be a tremendous help to the housing associations. It will mean at least 40 per cent. of the cost being saved to them on most of these houses and will, of course, encourage their work. I hope that my right hon. Friend will consider being equally helpful to the purchase of houses by local authorities. This point will be raised later, but it 1547 seems only just that, if housing associations are to receive this very valuable aid, the local authorities should receive it, too, particularly as they give priority always to those in greatest need. Having said that, I add my congratulations to my right hon, Friend.
§ 4.30 p.m.
§ Mr. Julian Ridsdale (Harwich)
I always hesitate to intervene in debates on a Bill like this, especially not having been a member of the Standing Committee, because it is very difficult to understand some of the jargon which flows backwards and forwards across the Floor of the Committee or House. I intervene in this case, however, because I have been converting and modernising an old property in London. I heard my hon. Friends saying that building costs have risen and I know that to be true, from personal experience.
One has only to call a district surveyor to an older house to know that if he looks at a wall and sees that it is leaning slightly the wall will have to come down, and that whereas one thought the cost would be £200 it will turn out to be £1,000. Furthermore, this does not always happen in the case of only one wall; it can often happen to two at the same time. I agree with my hon. Friend the Member for Southend, West (Mr. Channon) that the Minister is not giving himself enough elbow-room in fixing the limit at £2,000, because building costs have risen considerably during the last year, owing to the Selective Employment Tax, not to mention anything else.
I welcome the Bill. It will help housing associations and also do a great deal to help many people buy or rent houses, especially in London and the big cities. Nevertheless, we must also consider the private landlord. The Minister seemed to slur over the fact that grants are available in respect of certain property. He merely said that provision would be made for older houses. Grants in respect of older property were made as far back as 1963, and some of those now available to private landlords have not been increased to keep pace with the increase in building costs. I refer both to standard grants and discretionary grants.
If the Minister wants to help the private landlord—and he must be part of the 1548 scheme; I am sure that the right hon. Gentleman does not want to discriminate against him—he must provide that help quickly by altering the standard grant made available in 1963. I will not benefit from these schemes, because in my case the work has been carried out, but I should like to know whether help will be available to private landlords if they enter schemes to improve property. At the moment, this help seems to be limited. Nevertheless, I welcome the Bill.
§ The Under-Secretary of State for Scotland (Mr. Norman Buchan)
I should like to answer the points made earlier by the hon. Member for Southend, West (Mr. Channon), which he could not bring out under the Money Resolution. The hon. Member for Moray and Nairn (Mr. G. Campbell) and I have been in correspondence on this situation. The hon. Gentleman knows the position, but it might be useful if the House also knew it. It would be inappropriate and unnecessary to extend the new Clause to Scotland, because the Housing Act, 1964, already allows for subsidies to housing associations both in respect of acquisitions and improvements, on the same basis as that provided in the new Clause in respect of England and Wales.
As for acquisitions, the limit in respect of England and Wales is £2,000, and under Section 62 of the 1964 Act it is £1,400 for Scotland. Since then, we have had the Cullingworth Report, and as a result we are reviewing the position. My noble Friend the Under-Secretary of State for Scotland has had discussions with some local authorities and is continuing them with others. One aspect of the discussions concerns the need to increase this amount. I cannot go further than that. Separate legislation will not be required if any change needs to be made; it can be done by Order, under Section 62 of the 1964 Act.
§ Mr. Gordon Campbell (Moray and Nairn)
I am grateful to the Under-Secretary of State for intervening, but he has not covered the point I made. I would remind the Minister that when the Government made their statement in Committee I welcomed the new proposal. I did so presuming that it would cover the whole country. The difference between Scotland and England lies mainly in the limit of costs. As the Minister has just 1549 said—and as I said when speaking to the Money Resolution—there is a £1,400 limit for Scotland, whereas it is proposed that the limit should be £2,000 for England.
I was worried because the Minister, in effect, said that the costs of acquisition in Scotland were likely to be lower than in England and Wales. This is a doubtful premise. There may be parts of England and Wales which are very expensive, and parts which are not, and I am sure that the same situation exists in Scotland. Speaking to the Money Resolution, the Under-Secretary said that it was a matter of policy. Of course it is. That is why I now ask him for an assurance that if the limit of £1,400 proves to be too low for Scotland the Government will be prepared to increase it at least to the limit eventually decided upon for England and Wales.
My hon. Friends and I take the view that such housing associations all over Britain should be treated on the same basis, and that there should not be different limits in respect of the two countries. Since this can be done by Order, provided we receive an assurance from the Government we do not wish to press the matter at this stage. But we want an assurance, especially in the light of what the Minister said about costs being higher in England and Wales than in Scotland.
§ Mr. Buchan
It would be wrong to read too much into my right hon. Friend's statement. It was a factual one. The hon. Member asked for an assurance. We are willing to give an assurance that if, after review, the amount is seen to be insufficient, and if the correct amount is considered to be £2,000, we shall increase it accordingly. We can give that assurance.
§ Mr. Campbell
I understand what the hon. Member says about the review being undertaken at the moment, in the light of the Report of the Cullingworth Committee, but that is not good enough for me. It might be that as a result of the review it was not thought necessary to raise the limit, although in a year or two's time it might be necessary to do so. I therefore want a more general assurance than one which relates simply to tle review now being undertaken in the light of the Report of the Cullingworth Com- 1550 mittee. That Committee has underlined the fact that many important matters need to be dealt with. This is only one of them. I do not want the assurance to be limited to the review.
§ Mr. Buchan
A general assurance can be given. If it were seen to be necessary, either as a result of the immediate discussion or in the long term, the amount could be increased. The answer is, "Yes".
§ Mr. Reginald Eyre (Birmingham, Hall Green)
I join in welcoming the new Clause, which will be of considerable assistance to housing associations operating in industrial cities, and trying very hard to make a contribution towards solving the very difficult housing problems which exist there and which in some cases—as in the case of Birmingham—have been made more difficult by the influx of great immigrant populations. In those areas— one thinks particularly of, say, the Sparkbrook area of Birmingham, where great efforts are being made by the Corporation and by voluntary organisations to cope with these problems—the new subsidies will give substantial assistance.
I urge the Minister to consider the Amendment to increase the upper limit beyond which the subsidy will not be payable. Again, to take the example of Sparkbrook, which is typical of many areas in our industrial cities, if a house is to be acquired for conversion into, say, three units, the present price of the house will certainly be £4,750, or possibly more. If one is to convert that house into three units and cover the cost of building works —there have been references to the high and rising level of building costs—the total cost, with all factors taken into account, will press at the upper limit which the Minister has fixed.
I urge the right hon. Gentleman, therefore, to give a little more scope by accepting the Amendment. For very practical reasons, this would be a valuable improvement and would add to the benefit which can flow from the new Clause.
§ Mr. Greenwood
I thank hon. Members opposite and my hon. Friend the Member for Salford, East (Mr. Frank Allaun) for their kind words about the Amendment. For my part, I am glad to say how much we admired the skill with which the hon. Member for Southend, 1551 West (Mr. Channon) led the Opposition in our discussions in Committee, and how much, also, we appreciated the courtesy and good humour which he invariably showed to us.
I re-echo what the hon. Member for Hornsey (Mr. Rossi) said today about the need to rescue our older houses, a point which was reinforced by the hon. Member for Harwich (Mr. Ridsdale). This is a matter of great importance. I remember stressing in Committee the review we were making of the general problem in the light of the Denington Report, the Deeplish study, the Hallmark study in Bolton, and the general attention being given to the problem.
We have enlisted the services of 26 public health inspectors who are making a survey of the problem of older houses throughout the country, and we hope, in the light of those reports and the further information which we are obtaining, soon to have a much better assessment of the scale of the problem, the economic implications of various ways of dealing with it, and the general legislative provisions which may need to be made. I emphasise that to show how much importance we attach to the question.
I was a little doubtful about the figure of £750 for buying houses which the hon. Member for Southend, West gave, but I am sure that he has evidence to support what he said. In the cases which he cited, however, the housing association would have opportunity to decide whether it wanted to operate under the old scheme or under the new Clause.
§ Mr. Channon
I assure the Minister that there are cases of that kind which have been brought to my attention by the National Federation of Housing Societies. It is a real point.
§ Mr. Greenwood
I appreciate that. If housing associations find it more beneficial to take advantage of the old provisions, they will still be able to do so.
The hon. Member for Hornsey asked about the three-eighths. The figure is arrived at in this way. At present, if a housing society buys a house and improves and converts it, it is eligible for grant in respect of one-half of £800 or, in the case of a building of three or more storeys, half of £1,000. The local authority 1552 can contribute half, and towards that half it receives an Exchequer grant of 75 per cent. Seventy-five per cent. of half is three-eighths, so we have faithfully reproduced the arithmetic of the existing legislation. This is not unreasonable, as we have our much wider review of the treatment of old houses under consideration.
I welcome what was said by the hon. Member for Birmingham, Hall Green (Mr. Eyre). It is in areas such as Sparkbrook that the new Clause will do a great deal of good. I hope that the hon. Member for Moray and Nairn (Mr. G. Campbell) will forgive me if I do not involve myself in the Scottish controversy which has been going on. I say only that, in the light of his plea for equality of treatment accorded to the two nations, it should be remembered that the Scots have had the advantage of Exchequer help towards the acquisition of these houses since 1959, something which we in England and Wales have been denied.
The hon. Member for Southend, West suggested that it would be far more sensible to raise the ceiling from £2,000 to £2,500. This is an attractive proposition, but I must emphasise how much more generous is the provision we are now suggesting than that which at present exists. Under the present improvement grants scheme, the Exchequer contribution works out at 10s. 11d. a week, or, on a house with three or more storeys, at 13s. 7d. a week. On the proposed £2,000 ceiling, the Exchequer subsidy will be £1 7s. 2d. a week per dwelling, which is a substantial step forward.
Both the hon. Gentleman and his hon. Friend the Member for Hornsey mentioned the "Shelter" figures, suggesting that £2,000 was on the low side. I have not got them with me at the moment, but my recollection of the "Shelter" figures is that they work out at about £2,000 per dwelling. In our view, the figure of £2,000 covers pretty well all the cases outside London and most inside. The figures which "Shelter" gave ranged from about £2,000 to about £2,600. But I want the House to realise that I have discretion under the Clause to increase the amount in special cases. A very good case would have to be made for going above the £2,000 limit, but I hope that the 1553 House will accept my assurance that I shall not be unsympathetic if a good case is made.
It should be said that, if the ceiling were to be raised to £2,500 generally, it might create a tendency to increase costs and rents. What both sides of the House want to do here is to concentrate all our efforts on encouraging provision for families who can afford only comparatively low rents. If we can keep it down to the £2,000 figure, I think that it will be to the general advantage. I am certain that this figure is broadly right for the Provinces, and in London it will probably turn out to be right. However, I shall watch the situation very sympathetically, remembering that what we are proposing in the Clause constitutes a substantial increase in the Exchequer commitment.
The hon. Gentleman's other Amendment to the new Clause deals with the power which I am taking to increase or decrease the £2,000 figure, and he suggested, though with no note of asperity in his voice, that this was, perhaps, a little mean. It is normal to take power to vary subsidies up and down in this way, subject to annulment by the House of Commons. There is nothing unusual in it, and I assure the hon. Gentleman that he need not be frightened by it. He may be right that a drop in prices is unlikely, but it would be improvident to rule out the possibility and not make provision for it.
The most important point to be borne in mind is that this is an interim measure, and when we get round to the general review of older properties this is, no doubt, the kind of point that will have to be taken into account. But I can assure the hon. Gentleman that I should not have introduced the new subsidy at the present level if I had had any intention of reducing it in the near future. I do not think that hon. Members need have any fears on this score. It is my very firm belief that housing associations need some prospects of reasonable stability if they are to plan their affairs properly. I very much appreciate the support which the new Clause has attracted.
§ Mr. James Allason (Hemel Hempstead)
The theory behind the new Clause, which we very much welcome, was pressed on the Government from 1554 both sides in the Standing Committee. As the Minister says, it is extremely important to provide accommodation at low rents for the type of people who should benefit in this way, but the right hon. Gentleman did not give any figures to show how this sort of arrangement would work out. I have some entirely alternative figures to those that my hon. Friends have mentioned, and I would be interested to see whether the Minister agrees with them.
The right hon. Gentleman mentioned £1 7s. 2d. a week as the benefit coming from this provision, but that amount ignores the fact that this is an alternative to the improvement grant, which is worth about £20 a year on the cost of the house. The figures I used were based on a £2,000 dwelling. If we suppose the loan charge to be 7 per cent.—though I do not suppose that it would be, because we have heard of 7 per cent. over a 30-year period and the rate over 20 years would probably be much higher—we get £140 per annum.
Three-eighths of that amount is £52 10s. If the loan charge was £140 and there was no subsidy of any sort, the actual cost rent that would have to be charged would be about £160 a year. With the improvement grant, that would be reduced to £140. That is roughly the situation in which such organisations as "Shelter" now find themselves.
But I calculate that the subsidy under the new Clause comes down from £160 to £107 10s., a difference of £52 10s. as opposed to what it would be at the moment. Taking in the improvement grant, this means that those paying rent would be 12s. 6d. a week better off—the rent would be about 42s. a week, which is a reasonable rent—and very much better than paying the 54s. a week which has to be charged at the moment on this type of accommodation.
Let us suppose, however, that the cost is not £2,000, but higher. The figure we were given by "Shelter" for a London house was an average of £2,250, and that produces different figures. It would be even better to suppose a cost of £2,500, as we do. The actual cost rent would then be £200 a year, reduced by improvement grant to £180 a year. With the subsidy as it is in the new Clause at present, the amount would be reduced to £147 10s. a year—the people are still 1555 £32 10s. better off—but the rent is now £40 a year higher. It comes out at £2 17s a week. Therefore, with a dwelling costing £2,500 it means that even now the charge will still be too high.
However, the Minister has said that in suitable cases he is prepared to use his discretion. We are very grateful for what we regard as a promise, and not just a pious hope—and not a lightly given promise, either. We therefore do not wish to press our Amendment.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.