HC Deb 08 March 1967 vol 742 cc1569-95

(1) Notwithstanding the provisions of section 2 of this Act no subsidy shall be payable under Part I of this Act to any local authority unless that local authority satisfies the Minister that all dwellings provided by that local authority are let at an economic rent and that that local authority has in force a Rent Rebate Scheme which has been approved by the Minister.

(2) The Minister may at his discretion dispense with the requirement in subsection (1) above but he shall make an annual report to Parliament on the exercise of his discretion.—[Mr. Murton.]

Brought up, and read the First time.

Mr. Murton

I beg to move, That the Clause be read a Second time.

During the Committee stage we had a very interesting discussion on the moral principle of local authorities to charge an economic rent if they are to qualify for this new subsidy. It has been our concern all along that as the taxpayer will have to shoulder a considerable extra burden under the proposed subsidy scheme, it is absolutely essential that the help which these subsidies bring should be directed explicity towards those who are most in need, and those who are most in need are in the minority. As a natural corollary, it is equally essential that the majority should pay an economic rent. I do not think that there can be any argument on this point.

Mr. Julius Silverman (Birmingham, Aston)

Would the hon. Gentleman tell us what he calls an economic rent? This is rather important. A lot of council tenants will be voting in a few weeks time, and they want to know the sort of rent which the Conservative Party propose to place on them. By "economic" rent, does the hon. Gentleman mean market rent?

Mr. Frank Allaun

Before the hon. Gentleman replies, would he say, for instance that £8a week for a council flat in Sutton is the sort of economic rent that he is advocating?

Mr. Murton

I am obliged to the two hon. Gentlemen for their successive interventions, but I do not propose to answer them. It is entirely a matter for the right hon. Gentleman opposite to decide what is an economic rent. He is operating this Bill, and he will have to make those decisions and recommend to councils what they should charge.

Mr. Frederic Harris

If the hon. Gentleman invites the two hon. Members who intervened to visit the Croydon housing authority, they will find that tenants are being charged economic rents very satisfactorily.

Mr. Frank Allaun

£8 per week?

Mr. Murton

I hope that it will be in order for me to go on with my speech, Mr. Deputy Speaker. The Exchequer subsidies to recipient authorities in the present year amount to about £83 million. Next year, under the proposals contained in the Bill, they will increase by £10 million, and by 1970–71, if the average borrowing rate remains at 6½ per cent., the figure will be £145 million. That is a considerable amount of money. I know that the right hon. Gentleman realises the importance to the success of his scheme that it should be fairly administered, and that it should also be proved to be fairly administered.

I did not often agree with the Minister's predecessor, the right hon. Gentleman who is now the Leader of the House, but if I might quote something which is germane to this discussion, he said: The need is to ensure that the Government's new housing subsidies are not frittered away but will go to those who need them. This is most important. We on this side of the House would agree with that sentiment if we could add as a pendant the word "most", so that it would read "those who need them most", and perhaps we should not be pressing the need for this Clause had it not been for an admission made in Committee by the Joint Parliamentary Secretary when he said: … we have been considering the whole principle of rent rebate schemes. Whatever our views may be on such schemes … all over the country it is a patchwork quilt, and … some authorities' ideas of rent rebate schemes are quite scandalous. I hope that I am always fair in these matters, and I therefore want to make it clear that the hon. Gentleman went on to say that there were some schemes under which too few received a rebate. I can understand that that could be so, but I think one can equally go on to say that there might be other schemes under which too many receive a rebate.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish)

It was a jolly good speech though.

Mr. Murton

We have to remember, too, that there are other local authorities in which no rent rebate schemes are in operation at all.

Mr. Frank Allaun

As the hon. Gentleman did not answer my first question, perhaps he will answer this one. He said that under this Bill £145 million a year would be granted to council tenants, but I do not think that he is going to vote against that, because it is a good thing. Is he aware that £125 million a year is paid in Income Tax relief to mortgage payers? He does not object to that. He does not say that there should be a means test to inquire whether they are on high or low incomes. Why should there be a means test for council tenants?

An Hon. Member

There is a means test.

Mr. Murton

I think the short answer to that is that one wants to see fairness all round. I do not think that anybody on the benches opposite would disagree with that.

If I might return to what I was saying, the Joint Parliamentary Secretary went on to say: The time is long overdue when we should try to arrive at a uniform system of what is meant by a rent rebate scheme so that all local authorities will have a pattern to follow."—[OFFICIAL REPORT, Standing Committee B, 24th January, 1965; c. 95.] During that Sitting I asked the hon. Gentleman how he intended to tackle this problem, whether he would be prepared to issue a prototype scheme, and whether, if he did, it would be mandatory. The hon. Gentleman, like a good Parliamentary Secretary, said that in the absence of his right hon. Friend he was not prepared to answer questions or make decisions which were the preserve of his Minister.

Mr. Mellish

Let us get this straight. I said that we would not make it mandatory.

Mr. Murton

Yes, I was about to make that clear. I confirm that the hon. Gentleman is right. I merely asked the question and received the reply which the hon. Gentleman has confirmed.

When the Minister replies, which I hope he will, will he say whether he thinks it might be a good idea to provide a prototype scheme for all local authorities to study? We know that it would need to be varied to suit local circumstances. We know that the Government have had consultations with the various local authorities on the problems of rent rebate schemes, but I am anxious—and I know that hon. Gentlemen opposite below the Gangway are with me on this—that there should be fairness.

If there is a prototype scheme, it should be circularised, because it would be a good thing if tenants realised that such a scheme existed. They might then be more willing to accept what local authorities issue. It is vitally important to ensure fairness, and it is only right that those who are dealt with under a scheme operated in their area should be able to see how it works. The Minister may decide that a prototype scheme is not possible, or practicable, or is not a good idea, but I suggest that it is a sensible thing to do. It is important that local authorities should gain the confidence of their tenants, and I think that this is the way in which that could be achieved.

5.45 p.m.

We as a party are concerned to see that there is fairness as between one tenant and another, and that these Exchequer subsidies are applied to the best advantage and in the way in which the scheme intends them to be applied. This is why we are insistent that there should be an economic rent for those who can afford to pay it. The application of the subsidy should be solely to those who are most in need, and I emphasise the words "most in need".

I do not think that the Minister can cavil at this Clause because we are not in any way seeking to tie his hands. We are not seeking, over his head, to impose rent rebate schemes on any local authority. Indeed, if the Minister were to decide that rent rebate schemes should not apply in all cases, he would have complete discretion to dispense with them in accordance with subsection (2) of the Clause. All we ask is that if he does dispense with rent rebate schemes, he should give an account of his stewardship to Parliament annually so that the House may be informed of the manner in which the subsidies have been applied under the scheme.

Mr. Julius Silverman

I do not know whether this Clause should be taken seriously. I do not know whether it is a serious political exercise or whether it is a sort of regular ritual dance which the Tories have to execute to impress their owner-occupier Tory voters.

What does the Clause mean? What is meant by an economic rent? It might mean a number of things. It might mean a market rent. It might mean whether the premises were showing a profit or a loss based on the historical cost of the house or the estate. We are simply not told what is meant by an economic rent.

Why is there this attack on council tenants? My hon. Friend the Member for Salford, East (Mr. Frank Allaun) intervened in the hon. Gentleman's speech to point out that owner-occupiers who pay Income Tax get a substantial subsidy which, globally, amounts to more than all these subsidies. Following that, one hon. Gentleman opposite said that there was a means test on owner-occupiers. There is a means test, but it is a means test in reverse. The more a man earns, the bigger his house, the bigger the subsidy he gets.

This is the sort of means test which exists, and until the option mortgage scheme operates from 1st April of next year, the person who most needs a subsidy will not get anything. During 13 years of Tory Administration such a person never got a brass cent. There is a means test, but it is a means test turned upside down.

Mr. Murton

May I ask why the hon. Member for Birmingham, Aston (Mr. J. Silverman) used the words "attack on council tenants"? No one on this side of the House is attacking council tenants. We agree that this is a very good scheme, but we are proposing a new Clause which would make it even fairer. It is ridiculous to suggest that this is an attack. I think the hon. Member should withdraw.

Mr. Silverman

I have known these attacks made time and time again. I give hon. Members opposite the satisfaction that perhaps they are not serious about the attacks and that this is just a political exercise intended to convince some of their voters.

Mr. Eyre

With reference to the hon. Member's allegation of attack on council tenants, will he agree that there is a perfectly fair rent rebate scheme which operates in the City of Birmingham, and it would be a good thing if a scheme of that kind were applied by all local authorities?

Mr. Silverman

It is true that a Labour council produced a useful rent rebate scheme in Birmingham. I believe in a rent rebate scheme as distinct from differential rent schemes. A rent rebate scheme is intended to operate among a limited number of people to make sure that no council tenant is deprived of the opportunity of living in a council house because of his means. Birmingham and many other places have such schemes. I am completely in favour of them, but local circumstances should decide how such a scheme is applied.

When assessing an economic rent, what is meant by "economic rent"? On the largest number of its council houses Birmingham City Council, through its housing revenue account, is making a substantial profit. It uses the profit to pay for the rest. This applies to other local authorities. If they ran the whole system on a commercial basis they would make a very substantial profit. Every year nearly £2½ million is used in Birmingham for debt redemption. In an ordinary commercial company that would be profit, but in this case it is not. It is met out of revenue by tenants year by year. Therefore, in assessing what is an economic rent we have to decide the proper charges which the housing revenue account should incur against the ratepayer.

Why should a rebate scheme be a charge against the housing revenue account and be borne only by existing council tenants? This is a scheme of relief to poorer citizens, which should be borne by all the citizens.

Mr. Frederic Harris

Surely in the rate rebate scheme most of the rate rebate assessment is borne by the ratepayers generally?

Mr. Silverman

As a matter of fact, it is not. Most of it is borne by the Government.

Mr. J. T. Price (Westhoughton)

Under the equalisation grant.

Mr. Silverman

Not only that, but 75 per cent. is borne by the Government. The rest is borne by all ratepayers. The charge for keeping a register, for instance, has nothing to do with existing tenants. Why should all the future development taking place, which has nothing to do with existing tenants' houses, be borne by existing tenants? In Birmingham there is £30 million capital development in the pipeline for new housing. The loan charges on that are at present borne by existing council tenants. We have to take all these things into consideration, and a number of other things, when assessing what is called an economic cost.

I can appreciate the difficulty of hon. Members in failing to define this, but if this is intended as a serious new Clause and not just as a political exercise it ought to be defined by the hon. Member for Poole. Council tenants will be voting and they are entitled to know for what they are voting, what is the sort of rent which will be imposed on them.

Mr. J. T. Price

Perhaps the hon. Member for Poole (Mr. Murton) will tell us.

Mr. Silverman

I shall be glad if he will tell us, but, as he remains seated, I gather that he does not know and that this is a meaningless exercise.

Mr. R. W. Brown (Shoreditch and Finsbury)

Would my hon. Friend also ask the Opposition if they are taking into account the cost of land? During their term of office many authorities were charged scandalous prices for land on which to build hereditaments. Are they saying that the scandalous prices which those local authorities have to pay are now to be borne by the tenants as part of the programme?

Mr. Silverman

The prices are, in fact, being borne by the tenants. I do not complain unduly about that because, of course, owner occupiers are in the same position and suffer the same difficulty.

I ask hon. Members opposite: please do not make the council tenant the target for this political exercise. If hon. Members opposite do not like the word "attack", I will call it a political exercise. Even if it is meaningless and simply an empty political exercise, it is strongly resented by people who are as decent citizens as anyone. They are making a contribution to the rates and the work of the country the same as anyone else.

Mr. Rossi

The one thing which the Minister lacks on this subject is courage. With the hon. Members for Salford, East (Mr. Frank Allaun) and for Birmingham, Aston (Mr. Julius Silverman) snarling and growling, one can understand the lack of courage of his own convictions in this matter. I refer him to his own White Paper, the Housing Programme 1965–70, which was published in November, 1965. Paragraph 41 says: Help for those who most need it can be given only if the subsidies are in large part used to provide rebates for tenants whose means are small. A number of local authorities have had the courage to adopt thoroughgoing rent rebate schemes and have found that it does not entail raising general rate levels beyond the means of the majority of their tenants. The more generous subsidies now to be provided … Now to be provided, I take it, by this Bill— create an opportunity for all authorities to review their rent policies along these lines. These sentiments, with which all of us on this side of the House can agree wholeheartedly, have been spoken against by hon. Members opposite who disagree fundamentally and entirely with them. They regard this type of proposition as an attack upon council tenants. The Minister does not regard it as an attack upon council tenants. He regards it as a social necessity, as a quid pro quo for giving these additional subsidies to local authorities. He is firmly convinced of this. He has said it in his official White Paper and in speech after speech. But when it comes to the point of confrontation with his back benchers, who regard these terms as attacks on council tenants, he lacks the courage of his convictions. He will not stand up to them and say, "I am going to give these subsidies only where I am satisfied that proper rent rebate schemes are in existence."

6.0 p.m.

The right hon. Gentleman's colleague, the Secretary of State for Education and Science, has the courage to bully local authorities into adopting education schemes against their will. He does this with the help and support of his back benchers, including the hon. Member for Salford, East and the hon. Member for Aston. He has them on his side in that matter. He, therefore, has the courage to badger local authorities into adopting educational systems which he thinks are right. The Minister of Housing and Local Government, on the other hand, without the support of his back benchers, does not have the courage to insist on something which he believes is right.

When we raised this point in Committee we were told by the Joint Parliamentary Secretary that local authorities would be getting only a 15 per cent. subsidy from the Government. Education authorities, on the other hand, are getting a 50 per cent. subsidy.

Mr. Greenwood

Are we to take it from the hon. Gentleman's remarks that it is Conservative policy to bully and badger local authorities?

Mr. Rossi

It is my personal view— and I say this frankly—that local authorities which have not adopted proper rent rebate schemes should be compelled as hard as possible by the Government to do so. It is social justice that they should, because proper rent rebate schemes imply two things: first, that the lower income tenants get a subsidy—people who would not otherwise get housing accommodation from the council are thereby enabled to obtain accommodation; the argument of the hon. Member for Aston—but, secondly, that those people who do not require the subsidy do not get it. If this were accepted, public funds would not be squandered. We are discussing money which comes out of the pockets of taxpayers and ratepayers, a great deal of which is going to people who do not financially need this help. That is what a rent rebate scheme means in its full sense.

Mr. Julius Silverman

Would the hon. Gentleman adopt the same principle, when speaking of subsidies, to the owner occupier who is paying Surtax or another form of heavy taxation? In other words, would he say that such a man should not be given relief on his mortgage payments, for that is a subsidy as well?

Mr. Rossi

I do not agree. Home ownership should be encouraged in every possible way. When the hon. Gentleman says that he is being given relief, he is misrepresenting the position because the State is merely taking a little less in tax from him. Such a man is keeping a little more of his own money. That is all that tax relief means. It is ludicrous to say, "I shall take less money from you and, therefore, I am doing you a favour". That is the basis of the hon. Gentleman's argument when he refers to mortgages.

Mr. Frank Allaun

The hon. Gentleman must get the position right. If a person is liable to pay tax—and I take it that he agrees that people with certain incomes must pay tax—then if he is given an allowance he is surely being given a subsidy.

Mr. Rossi

When one says that a man should pay less tax because he has shouldered the burden of a mortgage, one is not giving him anything. One is merely taking less from him.

In this instance, if a rent rebate scheme is not being operated, we are saying that a council should take less than a just rent for accommodation from a tenant who can afford to pay a just rent, and that the difference between the rent that is being taken from him and what it costs the local authority to maintain the property should be paid out of the pockets of the taxpayer and the ratepayer. My hon. Friends and I say that this is wrong. If a tenant is able to stand on his own two feet and pay his own way, he should do so. This is the essential basis of a rent rebate scheme.

We regard this as a matter of social justice because not all taxpayers and ratepayers are Surtax payers. Every man and woman who pays rent pays rates because in the rent there is a rate element. Even where a rent is exclusive, an element of rates is still included. Every person in Britain is contributing to the subsidy that is being given to people living in council property—that is, unless a proper rent rebate scheme is being operated.

We are wholeheartedly with the Minister when he says in his speeches and when he declares in White Papers that these additional subsidies shall be given only to local authorities which have proper thorough-going rent rebate schemes. The trouble is that his back benchers are not behind him and we, therefore, accuse him of political cowardice because he does not have the courage of his convictions.

Mr. Arthur Blenkinsop (South Shields)

If anyone could convince me against the idea of rent rebate schemes, it is the hon. Member for Hornsey (Mr. Rossi). I have for a long time supported the idea of rent rebate schemes because I believe them to be valuable. Properly organised to take account of the conditions of the area, they can be extremely valuable. However, that sort of speech by the hon. Member for Hornsey can only provoke people into being opposed to these schemes.

I want the House to examine the matter in reality and judge it on a proper basis. The hon. Member for Hornsey merely said that the man in Whitehall knows best. I thought that was a phrase which hon. Gentlemen opposite resented. When we were in opposition they used to accuse us of falling into the trap of using it. Certainly the remarks of the hon. Member for Hornsey gave me the impression that he would rather these matters were left with the man in Whitehall.

The only division between the two sides on this issue is whether or not this provision relating to rent rebate schemes should, in effect, be made mandatory. That being so, the new Clause is a waste of time. We agree that rent rebate schemes are, in most cases, valuable. I thought that we also agreed that the responsibility for introducing them should rest with the people on the spot—those who know the problems of the area—rather than with the man in Whitehall. We should not try to lay down some rule of thumb procedure which should be followed in all areas.

Conditions vary greatly throughout the country. In many areas rent rebate schemes would be a waste of time and would not be worth the administrative expenditure incurred on them. That is so in areas where there is, broadly speaking, an even level of incomes, which is, I believe, frequent—

Mr. Rossi

Might I suggest that the hon. Gentleman should read the new Clause again, because he will see that under subsection (2) the Minister is given the power to do precisely what he is advocating, namely, to dispense with a rent rebate scheme where it is inappropriate for a particular area. Subsection (1) invites the local authority to prepare its scheme based on its local circumstances and the Minister has merely to approve it as satisfactory.

Mr. Blenkinsop

I did not mean the hon. Gentleman to make another speech. I am well aware of what the new Clause says, but the hon. Member for Hornsey was making a case—if it meant anything at all—for a mandatory scheme, because he was saying that he would compel authorities. He was going further than his hon. Friends. I agree that the hon. Members on the Front Bench are very timid about this—the very thing of which they accuse us. They say, "We will not make it mandatory, but are merely saying that the authorities should do this and that the Minister should have a reserve power to excuse them under certain conditions."

This makes the whole operation a waste of time. I much prefer the kind of action which my right hon. Friend is now taking, that is to say, to initiate discussions with the authorities concerned and to encourage them to review the matter in their own area and come to a rational decision. Many authorities are increasingly introducing rent rebate schemes of their own. I prefer to leave it to them and their schemes rather than insert in a Bill a form of words whose meaning is doubtful, if it means anything at all.

The criticisms made by my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) are valid. Some of the words in this Clause could have a host of different meanings. For these sound reasons, it is far wiser to let my right hon. Friend and his staff work out in the discussions throughout the country which are taking place at the moment a reasonable way of introducing rent rebate schemes on the initiative of the local authorities.

I remain quite unmoved by the efforts of hon. Members opposite to suggest that the man in Whitehall knows best. I do not believe that he does in this respect. This is essentially a local matter, in which local opinion must prevail. To say on the one hand that there ought to be some general rule of rent rebate schemes and then to take it away with the other and say that the Minister should nevertheless have power to exempt local authorities in certain restricted cases makes the whole thing meaningless.

I see nothing gained at all by this procedure, as against the measures being taken by the Minister. Therefore, although I strongly recommend rent rebate schemes of a proper nature being initiated in the local areas—I have said this publicly for a long time—I believe that this is a matter entirely for local option and that the new Clause would be utterly meaningless.

6.15 p.m.

Mr. Peter Bessell (Bodmin)

I should like to concentrate on the last few words of the third line of the new Clause. I have great sympathy with the two hon. Gentlemen opposite who have asked the very important question, what is an economic rent? We must examine this. I am by no means out of sympathy with what, I hope, is the objective of the new Clause. There may be a political objective—I do not know, but I will leave that aside.

I understand the objective to be to ensure that the subsidy is used for the benefit of those who need it most, that there shall be no waste of the subsidy by putting it into the pockets of people who can well afford to pay a fair rent—

Hon. Members

Hear, hear.

Mr. Bessell

I gather that Conservative hon. Members confirm that this is the case, but I am afraid that the ingenuity of the Conservative Party has failed it in the curious wording of the new Clause, Notwithstanding the provisions of section 2 of this Act no subsidy shall be payable under Part I of this Act to any local authority unless that local authority satisfies the Minister that all dwellings provided by that local authority are let at an economic rent. There is also the bit about the rent rebate scheme, on which we are not divided.

"An economic rent" can be based on the amortisation over a period of years of the original capital cost of the building. If the land cost were very high— in some cases local authorities have to pay a great deal to acquire land—the rent might not be £8, as one hon. Gentleman suggested, but as much as £10 or £15. Many private enterprise schemes have shown this to be the case.

Another way of assessing an economic rent would be to take the rateable value, which varies in different parts of the country enormously, but it does not follow that incomes naturally fall into the same pattern. Another means might be the amount of money which a local authority is able to raise from local sources, in addition to what it gets from the Government—

Mr. Frank Allaun

I am following with interest what the hon. Gentleman is saying and I agree that there are alternative interpretations, but if he will refer to the city treasurers of any of the local authorities represented here this afternoon I think he will find that they agree on what an economic rent is. The economic rent of a house is the full cost, including the interest, over 60 years, with no subsidy at all. It must be accepted that that is what it is, because there are many experts on housing from local authorities here.

Mr. Bessell

I am grateful to the hon. Gentleman, because he is strengthening my argument. My point is that the economic rent based, as he said, on the period of 60 years of the life of the house, including interest, means also that the land cost must be taken into account. This is where the economic rent can be a very high sum. If the new Clause had defined an economic rent, if it had placed a ceiling on the rent, I should have felt it right to support it.

I recognise the principle that it is wrong that the council house tenant with a substantial income should be subsidised by the Treasury when he has no need of the subsidy. If this is not careless wording, at least it lacks clarity. Unless the hon. Member for Southend, West (Mr. Channon), in winding up, can give a clear definition, I would feel it wrong to vote for the new Clause.

Mr. R. W. Brown

The hon. Member for Bodmin (Mr. Bessell) is absolutely right in his argument about economic rent. I am astounded sometimes to hear some hon. Gentlemen opposite speaking about these things, because they seem to be completely out of touch with the issue. I would say to the hon. Member for Hornsey (Mr. Rossi), who suggested that I was snarling at my right hon. Friend, that I certainly was not. The Minister of Housing has talked more commonsense since my right hon. Friends have been in control than we ever had when his own right hon. Friends were running the Ministry.

I can give some figures on this, as I was a chairman of a housing committee in London which began a rent rebate scheme back in 1956. To listen to the hon. Gentleman, one would think that this was a new device. We have been running it satisfactorily for ten years. The hon. Member speaks glibly of economic rents or some other kind, but has he ever done it? I know the burden of trying to determine a fair rent. In the last year of the Tory Administration every house built in the London Borough of Camberwell cost the ratepayers £300 a year. That was with a rent level of £5 10s. to £6 a week. Does not the hon. Gentleman regard that as a high rent? I do. It was nowhere near the economic rent. The cost of the land was very high, as the hon. Member for Bodmin (Mr. Bessell) pointed out. However, that factor made no impact on the Conservative Government. We petitioned them enough times about it.

We had a rent rebate scheme. We endeavoured to get the best possible solution. Hon. Members who talk about rent rebates should understand what is meant by the phrase. Do they want a rent which nobody, except a very small group at the top of the curve, can afford? Is that what they regard as the optimum rent? If that is not what they mean, what do they mean? Do they mean that it is to be a rent which is not the optimum, but that from the optimum is deducted the amount the Government give in subsidy? Or do they argue that it should not be that amount, but that both the Government subsidy and the local authority subsidy should be deducted? What are they talking about? It is no good tabling a Clause like this, which does not help local government in any way. It makes an attack on council tenants. Let there be no dubiety about it. It has been the purpose of Tory Members for years —I have argued with them about it for years—to make an attack on council tenants. The recent policy in Birmingham of selling council houses to tenants is only another way of going about the same exercise.

Mr. Rossi

The hon. Gentleman has questioned the experience of hon. Members on this side. I invite him to read the debate which took place on this subject in Standing Committee, when I gave the answers to all the questions he has asked, drawing on my 10 years' experience of local authority work and chairmanship of a housing committee. He will there find the answers to his questions. I will not take up the time of the House by repeating my speech now.

Mr. Brown

The hon. Gentleman knows that I know of his experience in London. What he has not done for the benefit of the House today is to answer the question he was asked. He was asked how he defined an economic rent. I know why he would not answer. He knows that I know why he would not answer. It was right that the hon. Gentleman should be pressed to say what he means. The House cannot accept a Clause like this if hon. Members supporting it are scared stiff to say precisely what they mean.

Mr. William Roots (Kensington, South)

We have now reached the point at which everyone is agreed, first, that a provision such as this is clearly fair and, secondly, that it is entirely in accordance with the Government's White Paper. As far as I could gather from the remarks of the hon. Member for Birmingham, Aston (Mr. Julius Silverman), he was entirely in favour of the scheme which operates in Birmingham.

I come to the question whether this is for or against tenants. No attack has been made on tenants. The whole object of the exercise is to help tenants by giving to poorer tenants the larger slice of the subsidy to which they are entitled. It would appear that nobody in the Chamber has not run a differential rent scheme or a rent rebate scheme. I will not stand out of the crowd. I have run one. This is the only way in which poorer tenants can be helped. In equity they should be helped.

We all know that for a short period there can be a household where the tenant has several older members of his family living with him and the household income is large. The fact that during that period the tenant pays a high rent and perhaps receives no subsidy need not worry anyone. What should worry us is that poor tenants—for instance, a husband who has had an accident at work and whose wife cannot go out to work— do not get all the help which could be given to them. This is a very easy principle to comprehend. This is what I understand by the Clause, and this is why I shall vote for it.

Mr. Mellish

This is the second bite at the cherry the Opposition are having. At the Sixth Sitting of the Standing Committee they moved an Amendment which sought to outline current Conservative Party policy on rent rebates. The hon. Member for Hornsey (Mr. Rossi) advised us to read the great speech he then made.

We are now faced with this Clause. The Opposition seem to have got rid of some of their earlier mumbo-jumbo. That is a phrase which the hon. and learned Member for Kensington, South (Mr. Roots) once used about some wording in Clause 1. The new Clause outlines a new policy.

If I understand the Clause rightly, the Opposition want to insist that local authorities shall let all their houses and flats at an economic rent. It was very natural and proper that my hon. Friends the Members for Birmingham, Aston (Mr. Julius Silverman), Salford, East (Mr. Frank Allaun) and Shoreditch and Finsbury (Mr. R. W. Brown) and the hon. Member for Bodmin (Mr. Bessell) all asked the question which I now ask the hon. Member for Southend, West (Mr. Channon). Will the hon. Gentleman explain what the Conservative Party means by an economic rent? Will he spell it out so that not only we in the House understand it but everybody outside understands it? He should ensure that this time he says it in words which people outside will understand.

I want to state one or two difficulties which the hon. Gentleman must try to overcome. What does "economic rent" mean? It cannot mean that the rents are tied for ever to the original cost of the building. If it meant that, the rent of a pre-war house would probably be less than £1 a week and the rent of a new house or flat would probably be from £7 to £10 a week.

If it does not mean that, what does it mean—the market rent, the cost rent, the fair rent? Let us hear from the Conservative Party exactly what it means by "economic rent". They should not put the phrase in a Clause and then, when they are challenged to define it, choose not to answer. The hon. Member for Poole (Mr. Murton) made sure that he did not answer that question when he was asked it by my hon. Friend the Member for Aston. The hon. Gentleman ducked that one and turned to the oldest argument we have had in the House about rent rebate schemes.

What I find so nauseating about the Tory Party is that it believes that it suddenly invented this. The father of my right hon. Friend talked about housing subsidies going to those in the greatest need. There is no division in the House on the principle of rent rebate schemes.

Mr. Murton

That is what I have said.

Mr. Mellish

I am saying it again. I do not know how many times the hon. Gentleman wants to be told. In the Clause the Conservatives bring in the economic rent argument which they did not use before. On the rent rebate argument the hon. Member for Hornsey accused my right hon. Friend of lack of courage. I suppose the hon. Gentleman has to make such accusations. After all, an hon. Gentleman who represents a borough like Hornsey, which had a Tory majority of thousands but which today has a majority of only 600, must make speeches like that to justify himself. The hon. Member has no right to talk to this Government about courage, because the Tory Party were in Government for 13 years and I do not remember that any formulas were produced for rent rebate schemes. Why did they not do it in 13 years? Why say that we lack courage to do something that they could have done in 13 years but did not try?

6.30 p.m.

What we have done about the matter is to set up the working party to which reference was made in Committee. It was for the working party, on which the local authority associations and the G.L.C. were represented, to consider principles on which adequate and comprehensive rent rebate schemes could be based, allowing for adjustment for local circumstances. I am glad to be able to tell the House that the working party has completed its report and we shall shortly be discussing with the members of the local authority associations—the working party was composed of officials —the exact implications of the report.

With the active encouragement of the Minister, the working party has addressed itself not only to the theory of rent rebate schemes, of which the party opposite talk a lot, but also the practice. Whilst it has not recommended that all authorities should be obliged to adopt the same type of scheme, it has produced detailed advice on methods and practice, at the same time stressing that there must be room for adjustment to local circumstances.

I hope that in the very near future my right hon. Friend will be able to advise all local authorities on the prototype of the schemes the working party has produced. [HON. MEMBERS: "Hear, hear."] At least we are doing something, which is more than the party opposite ever did. We are asking for support to ensure that the new Clause is resisted. I wonder if the party opposite will press it to the vote. If so, will they first spell out exactly what they mean by "economic rent"?

Mr. Roots

Could the Parliamentary Secretary tell us what wording he would like instead of "economic rent"?

Mr. Mellish

Unlike the hon. Gentleman, I have not the nerve to put such a phrase in a new Clause.

Mr. Channon

We have a great many Amendments to deal with tonight, and I do not intend to detain the House for very long, nor shall I try to get quite so angry as the Parliamentary Secretary, who must be very sensitive in this matter because for some extraordinary reason his usual good humour has completely forsaken him. If I did not like him so much, I would almost say that his behaviour was nauseating— but I shall not say that.

At least we have had a partially satisfactory answer from the hon. Gentleman insofar as we have heard that the working party has reported. I am sorry that we cannot be told its conclusions this evening. I am astonished that as it has now reported, and as I gather from the Parliamentary Secretary that the Government seems to be satisfied with what it says, he should attack us for proposing a scheme like this, because that is exactly what the Government want to do, although they will not make it mandatory. That is right. The hon. Gentleman says so. He accepts that our intentions are the same as his. If we are nauseating, then so is he. Perhaps his hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) agrees with me. He looks glum about it.

Mr. Julius Silverman

I cannot understand the significance of what the hon. Gentleman is saying, so I do not know whether I agree or disagree.

Mr. Channon

That is a state we frequently found in the hon. Gentleman in Standing Committee.

I think that we have clearly shown that we are not in favour, if we can avoid it, of rigid, mandatory rent schemes. I would go further and agree with the hon. Member for South Shields (Mr. Blenkinsop) that in certain areas we think that it is unnecessary to have rent rebate schemes. I seem to remember that, in our discussions in Committee, South Shields was one of the examples the hon. Member probably had in mind. As far as I recall, it does not have a rent rebate scheme. I am sure that since the hon. Member was so keen on rent rebate schemes he would no doubt have pressed it on his local authority if it had been necessary.

We wish to show how we think that there is such great unfairness in the present situation. I think that all the statistics bear out that there is no difference in incomes between tenants of privately-owned accommodation and those who live in local authority accommodation, and there is a burning sense of grievance that tenants of private landlords with the same income must very often subsidise out of the rates people in local authority accommodation who may have exactly the same income. We accept that there are certain areas where it must be possible to have rate subventions. But in general we think that there should be an economic rent and those who cannot pay should have the benefit of rent rebate schemes. I shall go on to deal with the points the Parliamentary Secretary so courteously invited me to deal with. For example, let us deal with the situation in London.

Mr. Frank Allaun

The hon. Member has just stated that it is unfair to subsidise many council tenants. I put it to him as forcefully as I can that council tenants are not being subsidised. It is the moneylender who is being subsidised today, because three-quarters of a council tenant's rent goes not to pay for the bricklayers and the materials, but to pay interest to the financier, and it is precisely that interest burden which also afflicts the owner-occupier.

I do not propose to speak on this occasion, but I think that it is very wrong for hon. Members opposite to attempt to drive a wedge between the council tenant and the owner-occupier, because they are both suffering from the same burden, and the Bill aims to relieve the burden on both.

Mr. Channon

The hon. Member said that he did not propose to speak, but he has made an effective speech already. If he is so worried about cost, and the moneylenders getting so much money, the answer is that his Government have brought in the highest interest rates in our history; they are going on now and have gone on for longer than any period I can remember. I shall not deal with that point in detail, but I was challenged on it and have attempted to answer it.

I was about to deal with the situation in London. I was not challenged on this by the Parliamentary Secretary in Committee, and, therefore, I think that it is reasonably accurate to say that the average income of council tenants in London is £25 a week and the average rents they pay for local authority accommodation is £2 5s. a week. Those are the figures I have given in the past, and have not been challenged.

Mr. Mellish

The hon. Member was challenged on the latter figure by me in the sense that the term "average" was misleading in this context, because in the Greater London area to which the hon. Gentleman referred there is a vast pool of pre-war accommodation. When that type of property is put with the expensive post-war accommodation one gets an average that is unfair in the sense of saying that that is all that people are paying.

Mr. Channon

It is true that there is a large pool of pre-war accommodation in London, and that also applies to a lesser degree in other parts of the country. I do not think that it is misleading, but whether or not the hon. Gentleman thinks that it is the fact remains that the average rent in local authority accommodation in London is £2 5s. a week when the average income of the council tenant is £25. That is the situation which the Parliamentary Secretary was not, interestingly enough, prepared to defend in Committee, although admittedly he would not attack it. That is one example. Perhaps the hon. Member for Shoreditch and Finsbury (Mr. R. W. Brown) will defend it.

Mr. R. W. Brown

The average the hon. Gentleman is quoting is meaningless. My hon. Friend the Parliamentary Secretary is quite right in his attitude. The hon. Gentleman must know that it depends on the holding one has—the relationship between houses with one, two, three, four or five bedrooms—for the rent for each type of house is different. If one has a preponderance of higher number of rooms than smaller, then the proportion of rent is higher; if there is a preponderance of a smaller number of rooms the proportion of rent is lower. There is no direct relationship with income.

Mr. Channon

I know that the hon. Gentleman is sensitive on this point and I can understand why. But I am not prepared to accept the figure as meaningless. The fact remains that the average rent in the Greater London area is £2 5s., and the average income £25. It is said by every authoritative body that rents and subsidies in public housing are in a chaotic state. They are unfair as between one tenant and another and often arise from historical reasons. There are some fantastic disparities in rents.

For local authority three-bedroom postwar houses, the maximum rents vary from 17s. 6d. a week to 94s. 6d. Can anyone justify that? If it is claimed that the circumstances may be different as between one area and another, I remind the House that, in the case of houses built since 1964—three-bedroom dwellings—the maximum rents charged by local authorities for these houses of broadly similar standard vary from 20s. 9d. a week to 193s. a week, which is perhaps a freak example. Can anyone justify these disparities? I should like to hear an answer, but I never have so far.

I am not trying to drive a wedge between council tenants and owneroccupiers. What we are trying to do by this new Clause is to ensure—as the Parliamentary Secretary has said many times— that subsidies go to the people who need them. As my hon. and learned Friend the Member for Kensington, South (Mr. Roots) pointed out, rent rebate schemes help the worst-off council tenants. I would refer the hon. Members for Salford, West (Mr. Frank Allaun) and Birmingham, Aston (Mr. Julius Silverman) to the Minister's speech to the Labour Party's local government conference, reported in the "Local Government Chronicle" on 7th March.

Mr. Mellish

It was a good conference.

Mr. Channon

I am glad to hear it. It may not be so good after next month.

I want to quote what the Minister said. I am sure that the hon. Gentleman has noted every word of it. The right hon. Gentleman said: About two housing authorities in every five have rent rebate schemes. But there are not enough of these schemes, and many of the schemes that exist do not go far enough. Some, indeed, are hardly schemes at all. The report went on: Surveys for 1964 and 1965 showed that council tenants with a family income of £10 a week or less paid up to a fifth of their income in rent; those with £20 a week or more paid less than one-tenth. The Minister added: 'Given that local authorities provide housing as a social responsibility this is a funny way of showing it. The poorest tenants are not getting the fair deal they have a right to expect'.

Mr. Mellish

Hear, hear.

Mr. Channon

It is all very well for the hon. Gentleman to say that, but when we propose to do something about this situation he says that our attitude is nauseating. He cannot have it both ways.

Mr. Mellish

It is humbug.

Mr. Channon

The Minister went on: The experience of enlightened authorities shows that it is perfectly possible to set standard rents which most tenants can afford, and then only those tenants who, knowing the basis of the rent rebate scheme apply to get help from it, need be asked for a simple statement of their income and family commitments. That is a fair statement in favour of rent rebate schemes, which we are trying to put into the Bill.

Local authorities, in normal circumstances, should, taking one year with another, keep their housing revenue accounts in balance; and I include for this purpose rates but exclude subsidies, contributions from the rate fund and capital expenditure not related to existing habitable houses. I accept that we cannot everywhere do away with the rate fund contribution, but we would specifically give the Minister power, in circumstances where it was thought necessary, to waive the requirement. It is unfair to suggest that this would weaken the whole effect of the Clause.

It is not a criticism that in certain areas a rent rebate scheme is needed. This was the point mentioned by the hon. Member for South Shields. It is precisely why we have included this provision. Surely the hon. Gentleman should be delighted that we have met him on that point. In their White Paper, the Government referred to the housing programme for 1966–70, and I shall not quote it because it might embarrass the Parliamentary Secretary.

Paragraph 41 refers to the necessity of not using subsidies to keep general rents low. We are glad that the discussions of the working party have come to a conclusion, but we regret that, to deal with the sense of great injustice which exists in a number of cases, the Government are unable to accept our moderate and reasonable Amendment.

I have no alternative, in view of their attitude, but to ask my right hon. and hon. Friends to divide the House.

Question put, That the Clause be read a Second time:—

The House divided: Ayes 113, Noes 189.

Division No. 286.] AYES [6.45 p.m.
Alison, Michael (Barkston Ash) Hall-Davis, A. G. F. Murton, Oscar
Allason, James (Hemel Hempstead) Hamilton, Marquess of (Fermanagh) Nichols, Sir Harmar
Astor, John Harris, Frederic (Croydon, N.W.) Nott, John
Atkins, Humphrey (M't'n & M'd'n) Harris, Reader (Heston) Osborn, John (Hallam)
Batsford, Brian Harrison, Col. Sir Harwood (Eye) Page, Graham (Crosby)
Bell, Ronald Harvie Anderson, Miss Percival, Ian
Bennett, Sir Frederic (Torquay) Hastings, Stephen Peyton, John
Bennett, Dr. Reginald (Gos & Fhm) Heseltine, Michael Pink, R. Bonner
Boyle, Rt. Hn. Sir Edward Hill, J. E. B. Pym, Francis
Brewis, John Hirst, Geoffrey Ridley, Hn. Nicholas
Brinton, Sir Tatton Hobson, Rt. Hn. Sir John Ridsdale, Julian
Bromley-Davenport,Lt.-Col.SirWalter Hogg, Rt. Hn. Quintin Roots, William
Brown, Sir Edward (Bath) Holland, Philip Royle, Anthony
Bruce-Gardyne, J. Hornby, Richard Russell, Sir Ronald
Buck, Antony (Colchester) Howell, David (Guildford) Scott, Nicholas
Bullus, Sir Eric Hutchison, Michael Clark Sharples, Richard
Campbell, Gordon Iremonger, T. L. Shaw, Michael (Sc'b'gh & Whitby)
Carlisle, Mark Irvine, Bryant Godman (Rye) Sinclair, Sir George
Carr, Rt. Hn. Robert Jenkin, Patrick (Woodford) Smith, John
Channon, H. P. G. Jones, Arthur (Northants, S.) Stoddart-Scott, Col. Sir M. (Ripon)
Cooke, Robert Jopling, Michael Summers, Sir Spencer
Crawley, Aidan King, Evelyn (Dorset, S.) Taylor, Sir Charles (Eastbourne)
Crouch, David Kirk, Peter Taylor,Edward M.(G'gow,Cathcart)
Cunningham, Sir Knox Kitson, Timothy Taylor, Frank (Moss Side)
Dalkeith, Earl of Knight, Mrs. Jill Teeling, Sir William
Dance, James Lancaster, Col. C. G. Temple, John M.
Dean, Paul (Somerset, N.) Langford-Holt, Sir John Turton, Rt. Hn. R. H.
Dodds-Parker, Douglas Lewis, Kenneth (Rutland) van Straubenzee, W. R.
Eden, Sir John Lloyd, Ian (P'tam'th, Langstone) Walker-Smith, Rt. Hn. Sir Derek
Errington, Sir Eric McAdden, Sir Stephen Walters, Dennis
Farr, John Maclean, Sir Fitzroy Webster, David
Fortescue, Tim McMaster, Stanley Whitelaw, Rt. Hn. Wiliam
Gibson-Watt, David Maxwell-Hyslop, R. J. Wills, Sir Gerald (Bridgwater)
Gilmour, Ian (Norfolk, C.) Maydon, Lt.-Cmdr. S. L. C. Worsley, Marcus
Gilmour, Sir John (Fife, E.) Mills, Peter (Torrington) Wylie, N. R.
Goodhew, Victor Mills, Stratton (Belfast, N.)
Grant, Anthony Mitchell, David (Basingstoke) TELLERS FOR THE AYES:
Grant-Ferris, R. More, Jasper Mr. Eyre and Mr. Monro.
Gurden, Harold Munro-Lucas-Tooth, Sir Hugh
NOES
Abse, Leo Concannon, J. D. Garrett, W. E.
Albu, Austen Crawshaw, Richard Gordon Walker, Rt. Hn. P. C.
Allaun, Frank (Salford, E.) Crossman, Rt. Hn. Richard Gourlay, Harry
Allen, Scholefield Dalyell, Tam Gray, Dr. Hugh (Yarmouth)
Anderson, Donald Davidson, Arthur (Accrington) Greenwood, Rt. Hn. Anthony
Archer, Peter Davidson,James(Aberdeenshire,W.) Grey, Charles (Durham)
Armstrong, Ernest Davies, Dr. Ernest (Stretford) Grimond, Rt. Hn. J.
Ashley, Jack Davies, Ednyfed Hudson (Conway) Hamling, William
Atkins, Ronald (Preston, N.) Davies, Robert (Cambridge) Harrison, Walter (Wakefield)
Atkinson, Norman (Tottenham) Davies, S. O. (Merthyr) Haseldine, Norman
Bacon, Rt. Hn. Alice Delargy, Hugh Hattersley, Roy
Bagier, Gordon A. T. Dempsey, James Henig, Stanley
Barnett, Joel Dickens, James Hobden, Dennis (Brighton, K'town)
Baxter, William Dobson, Ray Holley, Frank
Bessell, Peter Doig, Peter Horner, John
Bishop, E. S. Driberg, Tom Houghton, Rt. Hn. Douglas
Blackburn, F. Dunwoody, Mrs. Gwyneth (Exeter) Hughes, Emrys (Ayrshire, S.)
Blenkinsop, Arthur Dunwoody, Dr. John (F'th & C'b'e) Hughes, Hector (Aberdeen, N.)
Boardman, H. Eadie, Alex Hunter, Adam
Booth, Albert Edwards, Rt. Hn. Ness (Caerphilly) Irvine, A. J. (Edge Hill)
Boyden, James Edwards, Robert (Bllston) Jackson, Colin (B'h'se & Spenb'gh)
Braddock, Mrs. E. M. Evans, Albert (Islington, S.W.) Jackson, Peter M. (High Peak)
Bradley, Tom Evans, loan L. (Birm'h'm, Yardley) Jenkins, Hugh (Putney)
Brooks, Edwin Faulds, Andrew Jenkins, Rt. Hn. Roy (Stechford)
Broughton, Dr. A. D. D. Finch, Harold Jones, Dan (Burnley)
Brown, Bob(N'c'tle-upon-Tyne,W.) Fitch, Alan (Wigan) Jones, J. Idwal (Wrexham)
Brown, R. W. (Shoreditch & F'bury) Fletcher, Raymond (Ilkeston) Judd, Frank
Buchan, Norman Foley, Maurice Kelley, Richard
Cant, R. B. Foot, Michael (Ebbw Vale) Lawson, George
Chapman, Donald Forrester, John Lestor, Miss Joan
Coe, Denis Fraser, John (Norwood) Lewis, Ron (Carlisle)
Freeson, Reginald Loughlin, Charles
Luard, Evan Owen, Dr. David (Plymouth,S'tn) Stonehouse, John
Lyon, Alexander W. (York) Padley, Walter Strauss, Rt. Hn. G. R.
Lyons, Edward (Bradford, E.) Page, Derek (King's Lynn) Swain, Thomas
McCann, John Pannell, Rt. Hn. Charles Swingler, Stephen
MacColl, James Pardoe, John Symonds, J. B.
Macdonald, A. H. Park, Trevor Taverne, Dick
McKay, Mrs. Margaret Parkyn, Brian (Bedford) Thorpe, Jeremy
Mackintosh, John P. Pearson, Arthur (Pontypridd) Tinn, James
McNamara, J. Kevin Pentland, Norman Urwin, T. W.
Mallalieu, E. L. (Brigg) Price, Thomas (Westhoughton) Varley, Eric G.
Manuel, Archie Probert, Arthur Wainwright, Edwin (Dearne Valley)
Mapp, Charles Randall, Harry Walden, Brian (All Saints)
Marquand, David Rankin, John Walker, Harold (Doncaster)
Mellish, Robert Redhead, Edward Wallace, George
Mendelson, J. J. Rees, Merlyn Watkins, David (Consett)
Millan, Bruce Rhodes, Geoffrey Watkins, Tudor (Brecon & Radnor)
Miller, Dr. M. S. Roberts, Goronwy (Caernarvon) Wellbeloved, James
Morgan, Elystan (Cardiganshire) Robinson, W. 0. J. (Walth'stow, E.) Wells, William (Walsall, N.)
Morris, Charles R. (Openshaw) Rose, Paul Whitaker, Ben
Morris, John (Aberavon) Rowland, Christopher (Meriden) Wilkins, W. A.
Moyle, Roland Shaw, Arnold (Ilford, S.) Willey, Rt. Hn. Frederick
Murray, Albert Shinwell, Rt. Hn. E. Williams, Alan (Swansea, W.)
Neal, Harold Shore, Peter (Stepney) Williams, Clifford (Abertillery)
Newens, Stan Silkin, Rt. Hn. John (Deptford) Williams, W. T. (Warrington)
Noel-Baker, Francis (Swindon) Silkin, Hn. S. C. (Dulwich) Winstanley, Dr. M. P.
Noel-Baker,Rt.Hn.Philip(Derby,S.) Silverman, Jullus (Aston) Winterbottom, R. E.
Oakes, Gordon Silverman, Sydney (Nelson) Woodburn, Rt. Hn. A.
Ogden, Eric Slater, Joseph Woof, Robert
O'Malley, Brian Small, William Yates, Victor
Orbach, Maurice Spriggs, Leslie
Orme, Stanley Steel, David (Roxburgh) TELLERS FOR THE NOES:
Oswald, Thomas Steele, Thomas (Dunbartonshire, W.) Mr. Whitlock and Mr. Harper.