§ 3.10 p.m.
§ Mr. William Price (Rugby)
I am grateful for the opportunity to raise a matter of interest to hundreds of thousands of council house tenants, many of whom face substantial increases in their rents. This Adjournment debate might be regarded in some ways as a public relations exercise on behalf of council house tenants, and I make no apology for that. My real objective is to abolish one or two of the myths which have grown up concerning council tenants, particularly the widespread belief that the majority are greatly subsidised by the rest of the ratepayers.
1988 I would like to quote the situation in my constituency of Rugby, with an anti-Labour majority on the borough council. That authority is introducing a new scheme which, for many tenants, will mean a 40 per cent. increase in rents, bringing weekly payments for three-bedroom houses in many cases up to £4.
In a period of frozen wages, I thought it not unreasonable to refer the matter to my right hon. Friend the Minister of Housing and Local Government. I got little satisfaction. I tried my right hon. Friend the Secretary of State for Economic Affairs, and I got even less satisfaction. The Government take the view that this is a matter on which local authorities should make up their own minds, and in normal curcumstances there might be substance in that argument. Circumstances, however, are not normal. The wages of council house tenants have been frozen, and frozen very effectively. There have been many price increases, some of them justified, but this is a swingeing increase which is causing grave concern to the people involved.
In their prices and incomes policy White Paper, the Government say thatIt is not possible to apply directly the criteria for increases in prices or incomes to rents.I am bound to ask: why not? My hon. Friend the Joint Parliamentary Secretary will argue that rents are not a price increase. I suggest that that is far too fine a distinction for the vast majority of my council house tenants, and, indeed, for myself.
The White Paper goes on to say:But the principle of moderation should apply here also".Does the Minister regard a 43 per cent. increase as moderate? If the answer is "No", what does he propose to do about it?
Finally, the White Paper states thatIt is of great importance that, where rent increases do prove unavoidable, local authorities should make the fullest use of rent rebates to protect tenants of modest means.To be fair to my council, it has introduced a rent rebate scheme and, I understand, has set aside the entire Exchequer grant of £60,000 to meet the rebates. The council has, however—this is where the argument arises—set limits so low that practically no tenants will qualify for 1989 any rebates and the council will be left with a substantial profit on the housing revenue account at the end of the year.
The position in Rugby is that the only contribution from general rates to the housing account has been 4d. in the £ to help to subsidise old people—few of my constituents would object to that—and slum clearance. What action does the Ministry take when it comes across a rebate scheme which is, perhaps, not just? Secondly, what control does it have, or should it have, over the way in which its £60,000 grant is spent?
In future, in Rugby minimum and maximum rents will be set and a family's payments will be calculated on the gross income of the man and his wife. The council proposes to use one-sixth of this income as the basis for the new rent structure. In my view, that is a very high figure. The objection arises, however, because it discriminates against the lower-paid workers.
What will happen is that many council tenants will be paying one-sixth of their income whereas others, because they are rather better paid, will reach the maximum rent by contributing as little as one-eighth or, perhaps, one-tenth of their gross incomes. I am sure that that is not what the Minister has in mind when he talks of the need for rent rebate schemes. I concede that in Rugby there was a need for an increase—
§ Mr. Speaker
Order. The hon. Member must link his remarks to some responsibility of the Minister. For the moment, he seems to be talking about something which is the responsibility of Rugby corporation.
§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish)
If I may intervene, Mr. Speaker, I would suggest that my hon. Friend is in order as he is properly asking, particularly with regard to rate rebate schemes, which are now a feature of local government finance, what action the Government of the day are taking. This is a relevant matter, because I propose, in answering it, to tell my hon. Friend exactly what we propose to do.
§ Mr. Price
I have this week been in the most unusual situation of having Front Bench speakers on both sides of 1990 the House come to my assistance, perhaps against the Chair but with the kindest of intentions, and I am extremely grateful to right hon. and hon. Members on both sides.
I concede that there is a need for an increase. The Labour group argued that a 15 per cent. increase with Bank Rate at 7 per cent. would have met the deficit. With a 6 per cent. Bank Rate, it would in all probability have shown a profit. Instead, we have a new rent structure which flies in the face of Government policy, which has aroused bitter resentment among council tenants and which will result in real hardship for many people.
I have with me a petition signed by nearly 2,000 people. I am dubious about asking the rhetorical question but I will put it to my hon. Friend the Parliamentary Secretary: what does he suggest that I should do with it? I have no idea where these petitions should or could usefully go.
The point of this Adjournment debate is the need for a national inquiry into council house rents. I would like that inquiry to establish the precise relationship between council tenants and private house owners. I would like it to consider and report upon the relationship between council house tenants and the rest of local government finance. What I really want to see is the misunderstanding and, in some cases, the outright prejudice towards council house tenants cleared up once and for all. This will only be done by considering the facts on a national basis.
I have referred to the fact that in Rugby there is no general subsidy. I have to agree that we get a substantial Exchequer grant, but it is no more than private house owners get in the form of Income Tax relief. Too many people are seeking to drive a wedge between council house tenants and private house owners. I am not one of those. I want the Government to give every possible assistance so that people can buy their own houses.
I would like the inquiry to consider the broad question of council house rents, the responsibilities of the community as a whole—not merely of council house tenants, but of the community—towards old people's homes, slum clearance and provision in relation to unproductive land 1991 costs, which all to often tend to fall on council tenants. When the inquiry has reported—I assume that my hon. Friend the Parliamentary Secretary will concede one—I would like the Ministry to lay down the principles on which council rents and rebates should be based to ensure fair and equitable schemes throughout the country.
I want to be objective and I am happy to say that I know of Conservative councils which operate a sensible rent structure with reasonable rebates. I know of Conservative councils that are not doing so. I have no doubt, on the other hand, that there are Labour councillors and councils who are in need of advice and guidance from the Ministry. I hope that in that sense this is very much a non-political issue. Why is it not possible to have a measure of consistency over the whole country? It can be done only in one way, and that is by the Ministry taking a more direct interest in what it now regards as basically a matter for the local authorities.
For years we have had the picture painted in some quarters of the council tenant with £40 and £50 a week coming in and a Jaguar in the drive and with a rent of a few shillings a week. I leave aside the question of their salaries and of their cars, but let me say this: no one will convince me that £4 a week, with no Income Tax relief, for a 20-year old council house, is anything less than a very substantial rent. Yet, despite that, the image of the second-class citizen living off the rest of the community remains.
The type of inquiry I am seeking may, of course, prove me to be quite wrong. I am prepared to take that chance. If, as I suspect, the Parliamentary Secretary sees no need for the inquiry, I would urge him to take a close look at rent schemes being introduced not only in Rugby, but all over the country and whether in Labour-controlled or Conservative-controlled or Liberal-controlled areas. The Ministry has a direct responsibility in this matter, and so, in view of the restrictions on incomes, has the Department of Economic Affairs.
As I said at the beginning, hundreds of thousands of people are involved. This is not a question which should be left to the whims and fancies of individual councils, whatever their make-up. The 1992 Minister has taken a stand on the sale of council houses. I suggest the time has come for him to take the initiative on council house rents.
§ 3.22 p.m.
§ Mr. Hugh Rossi (Hornsey)
First of all, I should like to compliment the hon. Member for Rugby (Mr. William Price) on the objective way in which he has put forward his proposal, which receives a great deal of sympathy from this side of the House. I cannot say I can comment in detail on the position at Rugby but there are some general observations I should like to make about the need for a public inquiry into the whole structure of local authority rents and the very formidable case the hon. Member has put forward for this.
There are, no doubt, very great anomalies throughout the country, and great disparity between the rents being charged by one local authority and another. If one takes as an example a post-war three-bedroomed house one finds that within the Greater London area alone the variations in the maximum rents chargeable are between 44s. 5d. a week and 92s. 4d. per week. Those are maximum rents charged as between one London authority and another for a postwar three-bedroomed house. In county boroughs one will find a range from 24s 6d. a week to 88s. 8d. a week, and in non-county boroughs the range is between 20s. 11d. and 76s. 5d. a week.
I think it is a fair comment to say that this is a situation which requires the closest examination and investigation, because one of the side effects of this must be to put a brake on the mobility of labour when there is need for it. A man who is living in one London borough and paying a maximum rent of 44s. 5d. a week for a three-bedroomed house is not going to move readily to another borough which will charge him 92s. 4d. a week for identical accommodation, or to another part of the country outside of London where he may have to pay 88s. 8d. a week. This is a matter of general public policy and something which the Government must look into most carefully.
The second anomaly to which the hon. Member drew attention is the hardship which is being suffered by many lower-income council tenants. In fact the housing statistics for 1964–65 brought this 1993 out quite clearly when it showed that half the local authority tenants with incomes of up to £10 a week pay more than one-fifth of their income by way of rent to their authorities and at the same time 95 per cent. of local authority tenants with incomes of £20 a week or more pay less than one-tenth of their incomes by way of rent. Here again one feels that there is injustice and unfairness.
This, of course, must be examined against the background of public expenditure. The Exchequer subsidies for 1966–67, the current year, are running at a figure of about £83 million. In 1969–70, in three years' time, those subsidies will be about £130½, million. I do not think that there is anyone in this country who would gainsay that taxation and rating has now reached the level of being oppressive and penal. No wonder we have a brain drain, with people escaping from this country to get jobs where they feel they will be able to retain a true proportion of the reward of their efforts. No wonder one hears a workman saying, "I am not going to work overtime. Why should I work overtime when the greater part of it is going to be taken away from me in tax?" Taxation has reached a level where it is a disincentive to greater productivity.
Therefore, the question immediately must arise, at what level is public expenditure at this rate justified? Are we satisfied that we are getting value for money? Are we satisfied that the money is being used to the best possible purpose? Are we sure the money is being used for the people who really need it, or are we just lavishing it indiscriminately on people who have no need of public assistance of any kind? Are we giving subsidies where they are not required? It this is the case, then it has to be checked, it has to be stopped, because it is fruitless, is impeding initiative, cutting down the desire to produce more, to work harder, if we take so much in taxation and use that money pointlessly and wastefully.
I do not think there is any fair-minded person in this country who would not agree that the poorer people in our society who cannot afford the full rent for their accommodation should receive some help from the general body of taxpayers and ratepayers. I think every fair-minded 1994 person would be prepared to see some part of his income devoted to that purpose. It is another thing to say, "I am going to pay tax in order to help people who are the same as I am—or who are better off than I am".
It is at this point that not merely a ludicrous situation but a social injustice arises, and it requires the greatest scrutiny. It is at this point that one has to examine the need for thoroughgoing differential rent schemes devised so that such subsidy as is taken from the taxpayer or ratepayer is applied to help the person with the lowest income and the person in need of that help, and is not given to the person who is able to stand on his own feet and pay his own way. Only by doing that will any saving in public expenditure be attained.
In that connection, I want to draw attention to the report of a meeting of the London Boroughs Association which took place last October and at which an admirable address was delivered by Mr. Stephenson, the Treasurer of the City of Birmingham. He made these comments on the situation:It is clear that as any reserve in the rents of pre-war houses becomes exhausted we are being brought each year nearer to the realisation that we are left with a straight fight between a full rent (less the Government subsidy) or an increasing contribution from the ratepayer often himself paying an excessively inflated price for his accommodation. As far as the elected representative is concerned it is a more precise dilemma—whether it is better to take the odium of increasing the rent or increasing the rates. There is no doubt that we must ultimately reach the position"—and I ask the hon. Member for Rugby to bear this in mind—that the municipal tenant must pay sums more nearly approaching the full value of his accommodation; if he is on average earnings he may not even have the full benefit of the Government subsidy which may by the operation of rent-rebate schemes be pulled towards the poorer tenant. At the present time the fortunes of the housing tenant are often regarded as bound up with the finances of the housing revenue account and fierce argument develops as to whether this charge or that charge is fair to the housing revenue account, for example, loan charges on houses under construction and land bought in advance; some arguments are used in the extreme case not in an endeavour to assess an equitable rent for the municipal tenant, but to prevent any scrutiny of his rent at all. The Labour Mayor of Rochdale recently disposed of many such arguments, putting it far more concisely than I could achieve when he declared, 'You can 1995 fiddle your books in any way you like but the net result is that you will increase rent or rates. There is no other way before you'.That is really the dilemma. To what extent does one place an additional burden on the ratepayer and the taxpayer, and to what extent does one require the tenant occupying council accommodation to pay his own way? That can be achieved only by a differential rent scheme whereby the rent which he pays is geared to his income.
§ Mr. William Price
When the hon. Gentleman refers to the income of the tenant, would he also agree, as happens in my constituency, that the gross income of the wife should also be taken into account?
§ Mr. Rossi
There are many schemes, and it is done in many different ways. The local authority with which I was concerned took into account a proportion of the wife's earnings, but not the whole amount. That is something which requires the inquiry for which the hon. Gentleman has asked, to find an equitable way in which to arrive at a computation so as to achieve a rent which a tenant or a tenant's family is able to afford.
There is a great deal of variety in rent rebate schemes or differential rent schemes up and down the country. Some of them are no more than a sham, as the Minister mentioned in the course of the debate on the Housing Subsidies Bill the other day.
What one has to do is to carry out the inquiry which is asked for and arrive at a system which will bring about a fair and equitable result for all concerned—the ratepayer, the taxpayer and the council tenant and his family. That is implicit in the White Paper on the Housing Programme, 1965–70, which has been quoted frequently in this Chamber and in Committee upstairs. Paragraph 41 of that White Paper 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 authorities have had the courage to adopt thoroughgoing rent rebate schemes and have found that it does not entail raising general rent levels beyond the means of the majority of their tenants. The more generous subsidies now to be provided create an opportunity for all authorities to review their rent policies along these lines.1996 The one criticism that one has is that, despite these fine words, the inference of this White Paper is that these new subsidies being given under the Housing Subsidies Bill should really go only to those authorities adopting these fair means of distributing these subsidies.
Although the Government have asked local authorities to enter into consultations with them, the Government have, in fact, drawn back from the point of saying, "We will not give you these subsidies unless you satisfy us that you have produced a fair scheme having regard to the needs and circumstances of your locality".
That is our criticism from this side of the House, and we have repeated it time and time again. The Minister, in answering this criticism, has said, "Well, the Government are reluctant to compel local authorities to do things which are really within the discretion and the ambit of the local authorities' own sphere of activity". But—and here is the inconsistency—in matters of a comprehensive system of education, there has been compulsion by the Government, and only yesterday, or the day before, the Government issued a circular in which they indicated pretty clearly that there will be compulsion over the sale of council houses. But when it comes to the question of implementing their declared policy, which social justice so clearly demands, the Government draw back.
The view held on this side of the House is that the Government draw back because there are so many hon. Members opposite who are opposed fundamentally to the concept of a differential rent scheme. It is mostly amongst Labour-controlled authorities that this resistance is felt, and the Minister is reluctant to offend his friends in the country. That is why he has not had the courage to come forward and insist, far more strongly than he has hitherto, that schemes of this kind should be adopted.
That is the opinion and impression that he has created. I hope that later on in the debate he will show that we are wrong in this, and that in future he proposes to take a far more firm line than he has been willing to take hitherto. He cannot come to us with this argument that he is reluctant to use compulsion, or think that it is wrong to say, "I will not pay the subsidy unless you bring 1997 forward these schemes", because compulsion is used by the Government in other spheres of local authority work, education in particular, and now more recently over council houses. So the Minister of Housing is quite prepared to use compulsion where he feels that his friends are possibly solidly behind him, and it is only because he feels that they are not behind him in this matter of bringing forward differential schemes that he has been so slow. He will probably tell us that these consultations are going on, and that he hopes to bring forward some kind of fair model rent rebate scheme which, with adaptations, may be used by authorities up and down the country.
We should like to see this scheme, and we should like to study it. We should like also to see a greater definiteness in the action of the Minister. It is for this reason that one welcomes an inquiry and an investigation into the anomalies of the kind that have been mentioned.
§ 3.40 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish)
My hon. Friend the Member for Rugby (Mr. William Price) has not been a Member of this House for very long, but already he has established a reputation for speaking often, and speaking frankly. I think that he is a good constituency Member. I shall do my best to reply to him at length, because he has raised a subject which is causing much concern in many local authority areas.
Before I do so, however, I would like to say a few words to the hon. Member for Hornsey (Mr. Rossi). I find it odd that the hon. Gentleman, who is a member of the Conservative Party which was in power for 13 years, should tell us what to do, and how to do it, when throughout that time all this talk about courage in dealing with council rents was noticeably lacking. Now we are suddenly told about this need for courage, and even that the Government lack guts in dealing with rent rebate schemes. Throughout the period when the party opposite was in power all that hon. Gentlemen did was to bleat about the situation. I hope that the hon. Gentleman will not convey to the House or to the country that this position has suddenly arisen, because deficits in 1998 housing revenue accounts have been with us for a long time.
§ Mr. Mellish
I have only just started.
The fact is that these deficits have been with us for a long time, and it happens to be the fact that the more progressive a local authority is on the housing side, the greater its deficit, and yet it is argued that many Labour-controlled councils have greater deficits than others. This is due, not to mismanagement, but because they have been more progressive.
§ Mr. Rossi
Would not the hon. Gentleman agree that the Conservative Minister of Housing and Local Government said time and time again in answer to authorities which asked for increased housing subsidies that he would consider giving them only when he was satisfied that most authorities in this country had adopted fair differential rent schemes?
§ Mr. Mellish
Yes, but we must judge people on what they do, and not on what they say. This is what will happen at the next General Election. When that comes, the Government and the Opposition will be judged not on what they have said but what they have done.
We accept the argument that some action has to be taken because this is a problem which is causing so much concern in many local authority areas. Let us be clear about the responsibility for fixing rents. I want, first, to refer to the legal position. Under the Housing Act, 1957, local authorities have independent responsibility—and it must be remembered that that Act was passed by the party opposite—forthe general management, regulation and control"—of the houses they own, and for making—such reasonable charges for the tenancy or occupation of the houses as they may determine.It follows, therefore, that local authorities are solely responsible for the fixing of rents and the timing of increases, and my hon. Friend knows that because of the importance of price restraint the Government have asked local authorities—and this is all we can do, ask them—to avoid, or to limit, rent increases as far as they can during the time 1999 of economic difficulty. But the Government have no power to direct councils not to increase their rents, and they recognise that some authorities may find increases unavoidable. We have appealed to councils, where there have to be increases, to protect poorer tenants from the impact of the higher rents by granting rent rebates, and I shall say something more about this in a few moments.
It is sometimes forgotten that local authorities do not provide housing on a commercial basis, and that they are directly accountable for their actions to the local electors. They are also obliged by law to balance their housing revenue accounts annually so that the true cost of the housing service can be seen and met each year. Any deficit has to be made up from the general rate fund. The ultimate decision, therefore, whether to increase rents, and the responsibility for this decision, must lie with individual councils, for they alone are responsible to their tenants and ratepayers for the rents and rates they charge.
This is a basic and long-established principle of the independence of local government. The Government happen to believe that local democracy is an essential part of the life of the community which should not be interfered with from Whitehall.
§ Mr. Mellish
With respect, that, too, was dealt with, because the money which the Government pay for education is separate from that for housing, as the hon. Gentleman knows only too well. This point was dealt with when we discussed the Housing Subsidies Bill.
The Government's housing record is sufficient proof not only that we have a realistic and sympathetic understanding of the housing needs of both tenants and owner occupiers, but that we are doing something effective to help them. For instance, one of the major objectives of the Government's housing policy is to enable local authorities to build new houses at a reasonable cost. This is why we brought in the Housing Subsidies Bill which introduces a new system of housing subsidies which are far more generous than those given by any previous Government.
2000 I might say that in going round asking, almost begging, local authorities to increase their housing programmes—and this includes the constituency of the hon. Member for Hornsey—I have found that they, in turn, have begged me to ensure that this Government will introduce more generous subsidies than have ever been given before. We have done that. These subsidies will also help local authorities to adjust the rent to poorer tenants.
The new basic subsidy, to be paid on all council houses approved after 25th November, 1965, will bridge the gap between the average loan charges incurred on the cost of providing housing and the charges which would have been incurred had the interest rate been 4 per cent. To give my hon. Friend an example—and I hope that his friends in Rugby will read at least this part of my speech—assuming a current borrowing rate of 6½ per cent., the proposed new basic subsidy on a house or flat costing £5,000 would be £112 a year for 60 years. This compares very favourably with the previous basic subsidy of only £8 or £24 a year under the Housing Act 1961.
The Government have done something else to help council tenants. I should mention briefly the Government's rate rebate scheme, since what we are very much concerned with in this debate is the effect of rent increases on council tenants with low incomes.
In the weekly payment a council tenant makes for his house there is, of course, an element for rates. Under our rate rebate scheme, householders— tenants or owner-occupiers alike—may be relieved of up to two-thirds of their rate bill, apart from the first £7 10s. a year which all must pay. A single person qualifiies for a maximum rebate if his income is £8 a week or less, and a married couple with no children qualify if their weekly income is £10 or under. The income limit is raised by £1 10s. a week for each child in the family.
Thus, in considering the effect of rent increases on council tenants, we should take into account the fact that rate rebates can give really effective relief to poorer tenants. Indeed, about 1 million people obtained rate rebates in 1966–67. The average rebate they received was £15, which is half the average applicant's rate bill for the year. But there may be some people who are entitled to rate 2001 rebates who have not applied for them. We have recently given further publicity to the scheme, and issued 13 million explanatory leaflets to all holders of family allowances and pension books. I beg my hon. Friend and all other hon. Members and local authorities to do all they can to ensure that council tenants are aware of the scheme, because they are ratepayers, as I say, as well as being council tenants.
§ Mr. William Price
All of us on this side appreciate what the rate rebate scheme did, but it is only fair to point out that those million people would be very largely the elderly and the long-term sick. My concern in my constituency is with those taking home between, say, £12 and £14 a week. In spite of having a West Midland constituency, with the motor industry, I have a very large number of these people who are not qualified under the scheme.
§ Mr. Mellish
I have not forgotten that aspect, and I will come to it.
My job is to say what the Government have done with regard to rents and rates generally, because every council tenant is also a ratepayer. I am arguing that certain council tenants are not getting the rate rebates they ought to have. I hope that my hon. Friend is satisfied that everyone in Rugby entitled to the rebate is getting it—if so, he must be the luckiest Member in the House.
Another measure we have introduced to help poorer families is contained in Section 6 of the Local Government Act, 1966. Under that Section, from 1st April, 1967, all rating authorities will be required to charge a lower rate in the £ on dwellings than on rateable hereditaments generally in their areas. In 1967–68, the differential will be 5d. and in 1968–69 it will be 10d. We expect the differential to go up by a further 5d. in succeeding years. The loss of rate income caused by these reductions will be made up by a new Exchequer grant of £23 million in 1967–68 and £47 million in 1968–69.
This differential may not stop domestic rates from rising altogether, but it will certainly mean that rises will be much smaller than they would have been otherwise. For example, in my hon. Friend's constituency, after taking account of the 5d. reduction, domestic ratepayers will, 2002 in general, face no increase at all next year. Let us get that on the record and tell the people of Rugby.
§ Mr. Mellish
I hope that my hon. Friend has. It needs to be emphasised. In the country as a whole—the hon. Member for Hornsey will be glad to hear this—the existing evidence from nearly 600 authorities suggests that on average domestic rates will not rise by more than 1 per cent. for 1967–68.
I have been asked by my hon. Friend why council house rent increases should not be referred to the National Board for Prices and Incomes. My hon. Friend said that he himself had written to my right hon. Friend. It should be clear from what I have already said that this would not be appropriate, but it may be helpful to the House and to local authority tenants who may read about this debate if I spell out why the Government do not regard council rents as a suitable subject for the Board.
Local authority rents are very different from most other prices, for this reason. They are not fixed on a commercial basis and the councils which fix rents are directly accountable for their actions to the local electorate, whereas traders and manufacturers have far greater freedom to take pricing decisions.
No post-war housing legislation has included any provision for Ministerial supervision and control of local authority rent policies. If I am asked why this is, the answer is that there are 1,200 housing authorities in England and such a power would mean that civil servants in Whitehall would have to sit in judgment on the policies decided by locally elected representatives.
The present Government, like previous Governments, do not think that it would be right to introduce such a provision or to diminish the local authorities' statutory responsibility for deciding their own rent policy and balancing their housing revenue account from year to year, as they are obliged to do.
However, we have already advised local authorities. The Government have made it perfectly clear that we want councils to make a serious review of their rent policies and to make absolutely sure that they do, in fact, give the greatest help where it is most needed. Paragraph 2003 41 of the White Paper has already been quoted.
There is nothing new about this for the Labour Party. The hon. Member for Hornsey made fun of the fact that we were terrified of some of our back benchers who did not want to introduce rent rebate schemes. In fact, the Labour Party has always taken this view about rent rebate schemes. The Tories seem to have got on the band wagon a little late. The late Arthur Greenwood, the father of my right hon. Friend the present Minister of Housing and Local Government, issued a circular way back in 1930 to all local authorities which contained this statement:Rent relief should be given only to those who need it, only for so long as they need it.I freely admit that the case for this is as strong today as it was in 1930. It can best be demonstrated by the fact that, according to the Ministry of Labour Family Expenditure Survey, about 30 per cent. of council tenants with household incomes of £500 a year or less were paying more than one-fifth of their income in rent, whereas almost 98 per cent. of those with household incomes of £1,050 a year were paying less than one-tenth of their income in rent. The results are very similar if we take head-of-household incomes instead of household incomes.
These disparities in what is a major social service are very disturbing indeed, especially because of the burden they place on the poorest families. Let it be very clear that housing subsidies are not paid to produce such inequitable results. The Government acknowledge a responsibility to give a lead to local authorities in this matter. This they have done and will continue to do.
The new rates of subsidy should serve to remind local authorities that they are administering a major social service which must be based on a clear assessment of individual needs and a strong sense of social justice.
At the end of last year my right hon. Friend set up a working party with the local authority associations and the G.L.C. to consider the principles upon which an adequate and comprehensive rent rebate scheme could be based while allowing for adjustment to local circum- 2004 stances. I am glad to be able to say that the working party has finished its report and that my right hon. Friend is now discussing it with the local authority associations. We propose to send out to all local authorities model rent rebate schemes and we shall, in effect, ask them to follow the principles contained in these rent rebate schemes.
My hon. Friend the Member for Rugby mentioned his authority's rent rebate scheme. I ask his authority, through him, seriously to consider the guide lines we shall be issuing before it implements its own scheme. Frankly, from what he has said—and it is not for me to criticise any rent rebate scheme—the scheme in Rugby falls far short of what we believe to be a fair scheme. I say to the party opposite and to my hon. Friend that the Government have already decided to take the necessary action on rent rebate schemes generally, by issuing the circular which I have already mentioned.
My hon. Friend said that there seemed to be a feeling in the country that there was a prejudice against council tenants. This is perfectly true. There is this sort of attitude of mind that, somehow, council tenants are being heavily subsidised by the other ratepayers. It is very sad that this idea should get abroad. If local authorities were to apply their rent rebate schemes it would mean that those who could afford to pay would be paying the sort of rents which are realistic for them to pay, and that the only people getting the benefit of full subsidy would be those right at the bottom end of the scale. All sorts of people get subsidies. Farmers get subsidies and nobody ever queries that fact. Family allowance is a form of subsidy. It is the council tenant who seems to bear the whole brunt of this criticism, although most of them are being asked to pay rents which they can ill-afford to pay.
I recognise the strength of the question: why have rent increases been allowed at a time of wage freeze and severe restraint? Throughout the period of the freeze hardly any authorities increased rents. They responded to the Government's lead. Most of the authorities which have now put rents up have done so because their housing revenue accounts are in deficit. My Department is conducting a survey of the whole question of housing 2005 revenue accounts. Some of us believe that there is a tendency—we may have to bring in legislation to deal with this—for many items to be put on the back of housing revenue accounts although they ought not to be there, so that council tenants are being asked to bear a load which they should not bear.
This is, indeed, a situation in which we may have to intervene. We have been asked to have courage and to make it mandatory. First of all, there will have to be variations for the different regions in the schemes which we shall introduce. We cannot lay down one particular scheme and say, "This is what it has got to be". In some parts of the country a rent rebate scheme would not be logical at all. It is all very well for people to talk about what we should do at Whitehall from the mandatory point of view, but we ought to be clear about what we all want to do. Hon. Members opposite mention rent rebate schemes, which they have mixed up with the word "differential". I do not know whether hon. Members opposite are clear what they are talking about.
When we send out these guidelines and principles, they will be the basic framework which we shall expect local authorities to follow. If some authorities refuse to follow them it may then be fair to ask us, say in a year's time, what we are going to do about Rugby. My hon. Friend may well have the right to ask that question then, but at the moment I can only say that I have shown that since the present Government have been in office, we have done what we can to keep rates steady by our domestic rate levy. We are doing what we can for council tenants by increasing subsidies by almost trebling the amount involved.
We are not unaware of the problems, and we shall continue to ensure that those in the greatest need get the greatest help.