§ Order for Second Reading read.
§ 7.14 p.m.
§ The Minister of Housing and Local Government (Mr. Anthony Greenwood)
I beg to move, That the Bill be now read a Second time.
It has been my privilege in the past two years to introduce a major Housing Act and a major Town and Country Planning Act. It is, therefore, with a great deal of pleasure that my right hon. Friend the Secretary of State for Wales and I ask the House to turn its attention to the problem of our older houses and to give a Second Reading to the new Housing Bill.
Since the war we have built nearly 6 million new houses, cleared over 850,000 unfit ones in England and Wales, and over 1¼ million old ones have been brought up to date. Great progress has been made. But it has become increasingly clear that it would make good social sense and good economic sense to prevent old houses deteriorating into slums and to avoid, as far as possible, the breaking-up of a well-established, well-integrated community by the clearance and redevelopment of a whole area. Houses which are beyond repair must go as quickly as we can get rid of them. Older houses, which are fit, must be modernised and repaired and then kept in repair.
While we improve the houses, so, too, must we improve the environment around them. It is not enough to give the housewife a sparkling new stainless steel sink with constant hot water, if her only view from the kitchen window is one of smoky, treeless dereliction and decay. We must heal the wounds of the Industrial Revolution and give a facelift to the scarred industrial areas which made so great a contribution to our national wealth.
When my father moved the Second Reading of the Housing Act, 1930, he referred to a great Lancashire Member, John Bright, as having said thatthe nation in every country dwells in the cottage.964 I believe that every hon. Member would subscribe to that view, and it is that philosophy which underlies the Measure that I am commending to the House.
While continuing with a big programme of new housebuilding, we have in the Bill an opportunity to tackle effectively the problem of over 1¾ million unfit houses in England and Wales and 4½ million which, though not unfit, need repair or lack the basic amenities. In doing so, we shall make a real contribution to human happiness.
I do not wish to give the impression that nothing much is being done about older houses at present. Since this Government came into office over 280,000 families in England and Wales have been moved out of unfit houses which have been demolished or closed. Over 580,000 improvement grants have been approved during the same period. So there has been steady progress on both fronts. But that is not enough. We organised a national sample survey in 1967, the first time that an attempt had been made to judge, on a consistent, country-wide basis, what the state of the nation's houses really was. It was, I am afraid, much worse than the returns previously sent in by local authorities had led us to believe.
What then must we do? The answer is as easy to give in words as it is difficult to carry out in practice. More of the houses which can be saved must be saved; those which are beyond saving must be got rid of more quickly. We spelt this out in greater detail in the White Paper published in April last year, "Old Houses into New Homes". That statement of Government policy, I am glad to say, had an almost universally warm welcome, and the continuing consultations that we have had with the local authorities and other interests concerned have confirmed us in the view that we are going in the right direction, though no doubt we have much to learn and to improve as the Bill goes through Parliament and as further experience is gained afterwards on the ground.
The legislation is the bare bones of our subject, and it is important that these bones should be right. But the human aspect of this problem is something we must remember at every step. The idea of continuing to live year after year without basic amenities, which could often 965 be provided at no great expense, is totally unacceptable at this period of our history. Older people may have got used to a settled way of life, and in many cases it would be wrong to disturb them, but we should do everything we can to see that children and young people are brought up in better than "sub-standard" conditions.
I have already said that the houses which are too far gone must be got rid of quickly, but there are very good human reasons—leaving aside the economic ones—for saving and improving those that are still worth it. It is remarkable how much attraction many older areas have for their inhabitants. They are familiar, and their friends live there. Slum clearance means disruption, scattering, and beginning again. This is not a plea to slow down slum clearance—far from it; it is a plea that wherever possible we should step in well before slum clearance is necessary—10 or 20 years before—and give suitable areas a longer span of life.
Many of these areas are old-fashioned, but they are quiet and near the centre of the town. People like them, and would like them still more if the houses were improved and repaired, and if the environment was made more attractive. So once again, there is an important human element here.
Turning now to the provisions of the Bill, in Part I we have made the system of improvement grants simpler and more flexible, and have increased the grant limits very substantially, as we promised in the White Paper. This part of the Bill replaces in a single comprehensive code, provisions which are scattered at present through a number of statutes. The owners will still have to find half the money for improvements—and that is only right—but subject to that, the discretionary grant limit goes up from £400 to £1,000, the conversion grant from £500 to £1,200 and the normal full standard grant from £155 to £200. Local authorities will have to find the other half and of this half, three-quarters will be contributed by the Minister.
So the Minister contributes on the basis of three-quarters of a half—that is, three-eights towards private improvement costs. In the same way he contributes on the basis of three-quarters of a half, or three-eights, 966 towards the improvement costs of local authorities or housing associations working with local authorities. The cost limits are similar.
§ Mr. Eric Lubbock (Orpington)
Clause 5 refers to£1,000, or such other amount as may be prescribed …Does that mean that the Minister has power to vary this figure of £1,000 if building costs continue to increase?
§ Mr. Greenwood
It is possible to vary it to meet the situation to which the hon. Gentleman refers, or in special cases it may be desirable that ad hoc limits should be applied.
§ Mr. J. Enoch Powell (Wolverhampton South-West)
I wonder whether the right hon. Gentleman made a slip of the tongue. In referring to houses other than local authority houses, I understood him to say that the other half would be found by the local authority. I wonder whether he meant that.
§ Mr. Greenwood
Perhaps I did not make myself clear. It should really be that the other half comes out of public funds. The local authority will make the grant, and three-quarters of the half which the local authority contributes will be paid by the Minister. I hope that that clears up the right hon. Gentleman's doubt.
In addition, the Minister may contribute to the approved costs of buying property for conversion or improvement as well as the costs of the work. This extends to local authorities the help that I was able to give to housing associations in the Housing Subsidies Act, 1967. and it increases the limit per dwelling provided from £2,000 to £2,500 for both authorities and associations. There is power to go even beyond this in special cases or special classes of case.
In a number of ways, which we can consider in more detail in Committee, we are making the code simpler and more flexible. I mention at this stage, however, the special grants for improvement of houses in multiple occupation. We do not expect the volume of work under these special grants to be great, but it is important that local authorities should not only be able to control these bad conditions more effectively, but also be 967 able to give some help towards relieving them.
There will also be more help for repair work done in connection with improvement. For this purpose Clause 31 defines improvement as includingsuch repairs and replacements as are either incidental to some other improvement or needed … for the purpose of making the other improvement fully effective.Under Clause 74 local authorities will be able to lend money for improvement work which will be repayable only at the end of a fixed period, or, for instance, on the sale of the house, and, under Clause 75, to act as the owner's agents in carrying out improvements.
As we said in the White Paper, we want improvement of houses to take place more in whole areas than it has done up till now, and not just in scattered houses. The environment can make or mar the quality of life in an area, and can enhance or diminish the value of the houses there. That is why we are proposing, for the first time, grants for environmental improvement. But here let me beg for a realistic outlook. We want such environmental improvement as will encourage and make worth while the improvement and proper maintenance of the houses. It is to be ancillary to that. We have not enough money to turn all our older areas into the hanging gardens of Babylon. At this stage I shall simply stress how much can be achieved by providing playgrounds and open spaces with a few seats, by stopping through traffic, by improving the pavements and street furniture, and by planting trees and flower beds—and all for a fairly modest expenditure to which the Government will contribute.
We are proposing to wind up the "improvement area" powers of the 1964 Act, which have, I am afraid, not proved very successful in practice. Instead, we want something different—powers that can be used more informally and more simply; powers that can be used to the greatest possible extent by persuasion and co-operation, with compulsion only as a very last resort; powers that go to the whole area, including the environment. These are the sort of powers which Part II of the Bill aims to give, and which will call for a major exercise in public relations and public participation on the 968 part of every local authority which takes advantage of them.
Hon. Members will notice at the outset that the declaration of a general improvement area does not require the Minister's confirmation. The authority's purpose is, after all, to improve the whole area, not to clear or redevelop it. To have an inquiry and confirmation procedure therefore would be an unnecessary piece of ministerial control, and it would have two definite disadvantages. First, it would pile up on the Minister's doorstep a volume of proposals which could cause great delay. Secondly, it would tend to result in a rigid plan, which could not be varied without another formal procedure. We want just the opposite—the least possible delay, and plans which can be adapted and varied in the light of experience and of local knowledge and circumstances.
The Bill gives a clear lead on what I have just referred to as the public relations aspect of the exercise. When a general improvement area is declared, details must be published. In addition to the resolution and the map of the area, the Council must make available for inspection the report on the area which it has had from its officers, or from consultants, or both acting together. Then it has a duty to tell the people who live in the area what it intends, and what help people can get in improving their houses. This is most important: the authority must get the message of improvement across to the people it is going to affect; it must be receptive to their citizens' wishes and ideas, and be ready to modify its proposals if necessary in the light of them. It is two-way public relations that we want to see.
Authorities are given wide powers to do work and buy land, including houses, for the various purposes of area improvement. Compulsory purchase powers can be used but any Order made by an authority has to be confirmed by the Minister or Secretary of State before it becomes effective. I have already said on more than one occasion that persuasion and voluntary action must be the guiding principles in general improvement areas and that compulsory powers should be used only as a last resort.
I now want to be more specific and to say quite clearly and bluntly that Orders will not be entertained if they 969 show a harsh or unconscionable use of the powers. What I particularly have in mind are cases where some internal improvement is lacking—say, a bathroom—and the house, which is otherwise satisfactory, is owned by an elderly couple who do not want to have such an improvement. Again, I might instance the case of a quite fit occupied house which it is proposed to acquire for some marginal environmental improvement.
I am certain that most local authorities would not consider using compulsory powers in such cases, and in other cases where—although we cannot write into the Statute all possible combinations of circumstances—the use of the powers would be harsh or unconscionable. If, however, there are any authorities who think otherwise, I must tell them now that Orders will not be confirmed in such cases. I am making this statement in agreement with the Secretary of State for Wales, who is every bit as determined as I am to see that these powers are used moderately and humanely.
Part III of the Bill relates to the policy about rents set out in the White Paper. Of all the parts of the policy and the Bill, this has received the longest and most careful and anxious thought, because the Secretary of State for Wales and I know that some of my hon. Friends are unhappy about it, and we certainly do not treat their criticisms lightly.
We propose in Part III that a fair rent under the rent regulation system introduced by my right hon. Friend the present Secretary of State for Health and the Social Services should be chargeable where a house is in what the White Paper called the "required state". The Bill calls it the "qualifying conditions", and sets out what these are. The house must be provided with all the standard amenities for the exclusive use of its occupants; it must be in good repair, having regard to its age, character and locality—disregarding internal decorative repair; and it must be in all other respects fit for human habitation.
I will now describe briefly what happens when a house let on a controlled tenancy is improved under the Bill, and later I will come to those which are already in an improved state. Here, let me interpose that there are believed to be about 1.5 million houses let on controlled 970 tenancies in England and Wales. Of those, perhaps 200,000 are worth improvement and repair, and another 200,000 are already in improved state.
§ Mr. Lubbock
These figures were given to me in a recent Parliamentary Answer. In total the figure for England and Wales was 1,550,000, but that was as at December, 1967. Can the right hon. Gentleman give some indication about the rate at which controlled properties are being transferred into the regulated sector or into owner-occupation since December, 1967, and how he thinks the trend will move in the future?
§ Mr. Greenwood
I doubt whether precise figures can be given but generally speaking the number of controlled let-tings is diminishing each year by about 10 per cent. That means that some controlled houses are being demolished under clearance schemes and others for road widening and other purposes. Others of course are moving into rent regulation.
§ Mr. Evelyn King (Dorset, South)
The right hon. Gentleman keeps referring to houses. Does he mean dwellings?
§ Mr. Greenwood
Yes. Technically the hon. Member is quite right, but I find the use of the word "dwelling" a rather unsympathetic and unattractive way of referring to somebody's home. If the hon. Member would like me to refer to dwellings I will, but I would much sooner call them houses or homes—or flats, if driven to it.
Of the 1.5 million houses, perhaps 200,000 are worth improvement and repair and another 200,000 are already in an improved state. I mention these figures because I want the House to keep the aspect of the Bill in perspective. This is the procedure. The landlord will first seek approval from the local authority for the works he proposes. The local authority will tell him, when approving, whether these works will, if properly carried out, enable the house to fulfil the qualifying conditions. If so, he will then seek from the rent officer a certificate saying what the fair rent will be if those works are done.
The tenant will be consulted by the rent officer and the tenant's consent to the work must be given or confirmed after he has been informed what rent will result. If the consent of a statutory 971 tenant is not forthcoming the landlord can apply to the county court for an order to enter and do the work.
The court, in deciding whether or not to make such an order, must consider all the circumstances, including any disadvantage to the tenant, his accommodation while the work is being done, and his means in relation to the new phased rent. This provision has been included so that the court will have full power—which I am sure it will exercise—to give consideration to the tenant's circumstances and not allow something which will be a disadvantage rather than a benefit to him, or which he cannot afford.
Under Schedule 3 increases of rent on a change from rent control to regulation will be phased over five annual stages; increases of rent in regulated tenancies following grant-aided improvements will be phased over three annual stages.
I now turn to controlled tenancies where the basic amenities already exist. We believe that there may be 200,000 of these. They, too, will qualify for rent regulation if they meet the conditions, and there will be a right of appeal to the county court on the question whether the conditions are satisfied.
We cannot, however, afford to see the primary purpose of the Bill—namely, further new improvement work—take second place because the time of the rent officer is pre-empted for those houses already improved. Therefore, we are requiring these landlords to wait for rent regulation as follows: houses with rateable value of £90 or more in London, or £60 or more elsewhere will come forward for regulation on 1st January, 1971; those with rateable values of £60-£90 in London or £40-£60 elsewhere will come forward on 1st July, 1971, and those with values of less than £60 in London or less than £40 elsewhere will come forward on 1st January, 1972.
That, in bare outline, is the way in which this part of the Bill will work. I want now to discuss the objection of many of my hon. Friends, which, I can assure them, the Secretary of State and I have thought about long and anxiously. They think it is wrong to take improved houses out of rent control. The Bill, on the other hand, embodies the principle of a fair rent for a decent house accepted 972 by Parliament when the 1965 Rent Act was passed. The reason is that we want to provide the necessary incentive—at present lacking—to get improvable tenanted houses improved, and the necessary means to maintain them in good repair when they have been improved.
Only a minority of the "controlled" houses are still improvable. As I have said, we estimate tentatively that about 200,000 are already in a fair state, though some of these may need substantial repair, and perhaps another 200,000 will be worth improving. About two-thirds of the 1½ million controlled houses are probably already unfit. This is the condition of our controlled houses, and this is, in some measure at least, a consequence of the present rent structure
Let me remind hon. Members what controlled rents are: they are basically twice the 1939 letting value of the house. They have not moved at all since 1957, while costs in general and repair costs in particular have been steadily moving up. Indeed, during this time average male earnings have nearly doubled, and the cost of repairs has increased by over two-thirds.
There seems little doubt that these 1957 rent levels have meant in many cases that repairs have been neglected. I had a case only a week ago of an old lady in my constituency who owned two rent-controlled houses. The tenants of each pay 10s. 6d. a week in rent. She has just spent £40 on repairs and is now faced with spending a further £25 or £30. I am not suggesting that this elderly lady is representative of all landlords, but she is certainly representative of many of them.
I have been studying five published surveys of private landlords—"Housing in Transition" by Professor Cullingworth, "Private Landlords in England" by John Greve; the Milner Holland Report; "The Deeplish Study" sponsored by the Ministry of Housing; and the Fair Rent Associations' "Two Million Homes at 17s. a week" by Stephen Rosenberg. I think the House will agree that these five surveys are broadly based, and inevitably they show disparities. Taken together however they probably give a broadly accurate picture. I can perhaps summarise them best by saying that they show a range 973 of individual landlords owning one rented dwelling as being between 61 per cent. and 78 per cent. of all landlords. And the proportion of individual landlords who are elderly ranges from 39 per cent. to 63 per cent. In these circumstances it is clear that there are real difficulties for many landlords in the way of getting the necessary repairs done and thenceforward keeping the property in a good state.
Hon. Members will recall that I have refused to make an order under Section 8 of the Rent Act, 1968, bringing blocks of controlled tenancies into regulation without regard to the condition of the property. That is why I come back to the principle I have already stated—a fair rent for a decent house, with the basic amenities, and kept in good repair. Unless it is in the required condition there will be no question of moving into regulation.
Any increases in rent for controlled tenants will normally be phased over five annual stages where there is a move over from control to regulation, and in this way sharp increases of rent in any one year will be avoided as far as possible. There is also a three year phasing following grant-aided improvements where the tenancy is already regulated. We have in fact gone to great lengths to protect tenants.
Some of my hon. Friends have suggested to me that even this is too favourable to the landlords of property already in a good state, but it is difficult to imagine that further money is going to be spent on maintaining houses which are already improved if the landlords are not treated the same as those who have still to carry out improvements.
We have not put forward these proposals without thinking of possible alternatives—for instance, to take the most obvious one, a larger percentage of the landlord's costs than 12½ per cent. to be chargeable as extra rent. Even then, however, the resulting rent would bear no relation to the value of the premises. Sometimes it might mean a higher rent than under the Bill. And the tenants of the most badly neglected houses would be faced with the biggest rent rises. Expenditure of £1,000 by the landlord, for example, would put up the rent by £125 974 a year, even if the percentage remained at 12½ per cent.
Others have suggested the municipalisation of all rented property. The House will not be surprised to learn that I have a great deal of sympathy with this, and if we had been returned in 1955 it would have been the perfect solution. But here and now I do not believe that it is practicable, because local authorities in general would not be willing to take over all such property. If they did take it over they could not begin to cope with the management problems involved, and the increase in public expenditure would be very much greater. Instead of only 50 per cent. of the cost of the policy coming out of public funds it would mean that 100 per cent. would do so. And that is a charge which we cannot face in existing circumstances. Local authorities do, however, have certain powers to buy houses where it is necessary to do so.
My hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved) put forward an interesting idea in our debate last Thursday—that we should give the tenants of private landlords the right to buy their houses. It would certainly introduce a large new element into this Bill if it could be brought within its scope, and I suspect that a great many controlled landlords would be only too glad to sell if the controlled tenants were willing to buy.
The Secretary of State and I have been turning my hon. Friend's idea of compulsory purchase over in our minds, but I know that he will not expect us to have come to a conclusion about it at this stage. But I should like to ask him to develop one or two points. How, for instance, would he ensure that needed improvements were carried out as a result of the transaction? At what valuation could the house be bought? And how could we be certain that a controlled tenant was not buying simply in order to sell again with vacant possession? Again, what effect would this extension of owner-occupation have on the supply of rented accommodation? I hope that my hon. Friend, with his great experience in these matters—I know the warmth and sincerity of his views—will have an opportunity later in the debate to deal with some of the obstacles which I foresee.
§ Mr. W. S. Hilton (Bethnal Green)
My hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved) unfortunately has another engagement tonight and has asked me to apologise for his absence. But is it not the case that, even today, when mortgages are given by private building societies, there is often a preliminary contract which the mortgagee must sign, undertaking to put the house in a certain state of repair, and that there would be no difficulty in that direction?
§ Mr. Greenwood
That may be one of the answers which my hon. Friend the Member for Erith and Crayford had in mind. I had not realised that he was not sitting behind me—and I have no doubt that, in Committee, we shall be able to go further into some of the suggestions and possibly some of the answers to the questions which I have asked.
At this stage we are only too willing to listen to, and consider, any alternatives or additions to the rent proposals in the Bill. We must, however, consider them in the light of one basic question. Will they provide the means and the incentive to get improvements done in tenanted houses, and to enable these houses to be maintained properly afterwards?
§ Mr. Frank Allaun (Salford, East)
My right hon. Friend is talking about incentives. Does he not admit that this part of the Bill will mean increases in rent of 300 to 400 per cent. in many cases? In view of that, will not the Bill, far from providing acceleration, actually bring the whole process to a halt, because tenants will resist? Even if we introduce compulsory powers through the court, surely no one will operate them if it means quadrupling a tenant's rent in this way?
§ Mr. Greenwood
I read my hon. Friend's interesting letter in today's Times and have heard him put this point of view before. I do not necessarily accept all his figures, but from his letter, in which he refers to an extra 7s. a week for a bathroom, I came to the conclusion, basing it on the 12½ per cent. increase that a landlord can now charge on the capital investment that he has made, that this would mean that the cost of the bathroom shared between the local authority 976 and the owner would be about £290. Seven shillings would mean an increase of £18 4s. a year. If the owner had borrowed the money with which to do the work, he would have to pay about £14 10s. interest on the money borrowed, leaving £3 14s. a year, subject to tax, out of which to repay the loan and meet the costs of repair. I ask my hon. Friend to look at the difficulties of what he proposes as well as pointing out the difficulties in the proposals which we are advancing.
Part IV of the Bill carries out the White Paper proposals to improve the control of multiple occupation; the changes are mainly matters of detail, but there is an important power to exercise control before the degree of occupation becomes excessive. In discussing this, I hope that we shall always remember that this is a matter of degree. Excessive occupation or, if you like, over-use of a house, is one of the worst housing evils; but some sharing, as we should all recognise, is no evil at all.
I now turn to compensation for slum clearance. The Bill fulfils the intention which we set out in the White Paper to pay a supplement to owner-occupiers of unfit houses which are closed or pulled down, so as to bring their compensation up to full market value instead of site value. This will operate where action started after 23rd April, 1968, the date of the announcement in the White Paper. The general rule is that the owner must have been in occupation for two years, or during the whole period since 23rd April, 1968, if under two years, when the Order is made. But the precise terms will be seen in Part V and the Fifth Schedule. The House will agree, I think, that this is a very long overdue reform.
Part IV also brings payments for good maintenance up to four times the rateable value of the house, subject to the detailed provisions of Schedule 4, and a further proposal, not made in the White Paper, is introduced; namely that, where only the interior, or only the exterior, of a house has been well maintained, a payment based on half the full rate for the whole house should be payable.
There are some important provisions in Part VI—and I apologise for taking up so much time. The first of them is the wider duty in Clause 71 for local authorities to review their districts with a view 977 to deciding what to do about the unsatisfactory houses. This is one of the important changes we are asking the House to make, and it signifies a radical change of emphasis.
§ In Clause 72 there is a small but important addition to the criteria of unfitness—"internal arrangement"—which would cover, for instance, a dangerous staircase design, or a W.C. opening directly out of a kitchen.
§ There is also in Part VI the extended power of serving repair notices, in Clause 73. The power which is thus extended is the long-standing power of local authorities to serve repair notices, under Section 9 of the Housing Act, 1957. There is a right of appeal to the county court against such notices, and this would apply to the Clause. The difference we are making is this: the authority will be able to call for repairs before the house becomes unfit for human habitation. At the same time, it will not be able to act unless substantial repairs are required. It is important, in our view, that authorities should be able to act in good time where disrepair is becoming serious, especially as we are proposing to put so much public money into improvement and repair. The money would be wasted if houses were allowed to fall into disrepair afterwards.
§ We have included Clause 78—the hon. Member for Crosby (Mr. Graham Page) will welcome this—to fulfil our promise that we would make it clear that genuine service charges, etc., do not rank as rent when considering what is a "tenancy at a low rent" for the purposes of the Rent Act. This should allay the doubts which have been expressed—though never tested in the courts—on this point, and I hope that everyone who is affected will accept the publication of the Clause as a sufficient assurance for business purposes. The House will see that the Clause declares that the exclusion now expressly stated shall be deemed always to have had effect.
§ The White Paper listed in its summary 25 proposals. Every one of these has been carried into the Bill. But the Bill will be only the beginning of a very long haul for the Government and the local authorities. Expenditure will gradually increase, but by the time we are spending big sums, in the housing sense of the term, I believe that the balance of supply 978 and demand in many parts of the country will enable this shift of emphasis to take place. When these opportunities open out, we must not just be starting on the road to a better improvement policy, but must be already pushing ahead with such a policy. In any case, there is a great deal that can be done straight away. I want to see every authority tackle one or more areas when the Bill passes.
I hope, therefore, that the House will give a welcome to this Bill, and to the policy it is designed to serve, of saving the older houses and older housing areas that can still be saved, and enabling us to clear the slums, with less opposition and therefore with greater speed. In this way every one of us will have made a really worth while contribution to improving the quality of life in our country and we shall be able to quote, as my hon. Friend the Under-Secretary of State for Wales did recently in a speech in Cardiff, the words of the Prophet Isaiah:
And they shall build the old houses, they shall raise up the former desolation and they shall repair the waste cities, the desolation of many generations".
§ 7.55 p.m.
§ Mr. Peter Walker (Worcester)
The whole House will be grateful to the right hon. Gentleman for his detailed explanation of what is certainly a very important Bill.
The object of the Bill is to tackle the problems of houses in need of repair and improvement, and I am sure that hon. Members in all quarters of the House will be anxious for the Bill to reach the Statute Book in order to improve the housing conditions of people living in low-standard accommodation. It will be a very successful Act of Parliament towards that end.
I assure the right hon. Gentleman that when the Bill goes into Committee we on these benches will tackle it in a constructive manner in an endeavour to assist in the main theme and objective of the Bill which is to improve these deteriorating houses in which something approaching one-third of our population are living at present.
Most people who have any necessity to consider social problems will agree that housing is more fundamental than any other form of social service and social aid, and that probably a great 979 deal of delinquency and difficulty which we have in our cities is associated more with housing than with any other cause. I therefore welcome any measures which will assist in this task.
Before dealing with the two major themes of the Bill—the improvement grants and the change in the basis of rents—I should like to refer to one or two minor matters to which the right hon. Gentleman referred in the latter part of his speech. On Clause 78, concerning leases and high services charges, although I agree that the Bill states categorically that the whole position will be back-dated, I feel that there will be large numbers of solicitors who will advise clients not to buy such properties until the Bill becomes law. It is, after all, prudent for any solicitor to say to a client, "At the moment this is the position. There is a Bill before Parliament and, if I were you, I would not purchase such a property until it becomes law."
So far as I know, there has been no disagreement expressed from either side of the House on Clause 78. Therefore, I suggest that because quite a few people are suffering from the present situation, particularly in London where many men and women are in difficulty, perhaps because of their job or a death in the family, and cannot dispose of their property, the Minister might take this Clause out and introduce it as a one-Clause Bill. We would let it go through on the nod, without any amendment, so that it could reach the Statute Book speedily without creating any difficulty in Parliamentary time. I hope the Government will consider that suggestion. There is, I believe, a procedure called a Second Reading procedure, and it would eliminate a degree of human suffering which neither side of the House wishes to see.
As to the slum clearance provisions, I am delighted that the Government have decided to ensure that proper compensation is paid to the owner-occupier. There is no doubt that some poverty-stricken families have been hard hit by the existing provisions, and I am sorry that they have not been amended. I wonder whether in Committee we could look at some of the problems involved in terms of inadequate professional advice. Last Thursday we referred to the 980 Land Commission in this context. We should bear in mind that the type of people concerned frequently do not have the necessary means to obtain the best professional advice in order to settle the price. Would it be possible to introduce into the Bill an element of legal aid whereby a person living in slum property and not knowing a firm of solicitors or assessors could negotiate with the local authority and obtain a proper professional valuation? I shall raise this matter in Committee.
§ Mr. John Fraser (Norwood)
Lest people become unduly alarmed by what the hon. Gentleman has said, would he confirm that it is the general practice of local authorities to pay the legal costs and surveyors' fees in these instances, so that people are not entirely without aid when slum property comes to be sold?
§ Mr. Walker
I was thinking more in terms of what happens after the negotiations have taken place. It is an undoubted fact that many people do not obtain the proper professional advice in these circumstances. If it was well known that they could obtain this advice, that would be a welcome move; and perhaps something along these lines could be incorporated in the Clause. I know that the hon. Member for Norwood (Mr. John Fraser) agrees with the line I am pursuing. I assure him that I have no wish to frighten people. I am merely drawing attention to a genuine problem that exists.
In Committee we shall also wish to look carefully at Clause 23 because it carries important powers affecting the individual. I am always somewhat unhappy about provisions which give powers to authorities and which use words like "substantial" and "reasonable". These words have an important bearing on the Clause and I hope that in Committee the Government will explain what they consider to be substantial and reasonable in this connection. Phraseology of this kind often gives rise to disputes in law.
In coming to the part of the Bill which concerns improvements grants, it is worth noting, first, that the Government policy of making improvements in improvement grants is slightly in contradiction with another Government policy. I refer to the Government having lowered the amount of money available for local 981 authority mortgages. A great many older properties depend on local authorities providing mortgages. The hon. Member for Salford, East (Mr. Frank Allaun) pointed out in a letter to The Times this morning that he wished to see a formula by which tenants could purchase property. He will be aware that mortgages of that type would need to come from local authorities.
Whereas the Government have substantially reduced the amount of money available for these mortgages—in practice, there has been a reduction in local authority mortgage money of about £140 million a year, which means that these mortgages are now running at about this amount less than they were when the Labour Party came to power—the finance which local authorities have provided for older property has assisted people greatly, and has also helped them to improve those properties.
It is worth noting the importance of this matter in connection with Section 43 of the Housing (Financial Provisions) Act, 1958, which enables mortgages to be made to the owners of twilight houses to cover that part of improvement costs which is not covered by improvement grants. A person buying one of these older properties and wishing to make improvements will seek that money not under the improvement grant provisions but under the provisions of the 1958 Act. By that means he can obtain a local authority mortgage which takes into consideration improvements of that kind. With local authorities being virtually denuded of funds, this important element of improvement is bound to suffer. I hope that the Government recognise that while improvements in improvement grants are important and will help the problem with which we are concerned, the lowering of the amount of money available for local authority mortgages only aggravates the problem which we are trying to solve.
There is obviously scope for improving improvement grants, bearing in mind Government policies like S.E.T., devaluation and the import surcharge. These and other Government actions have resulted in improvement grants needing to be improved. This improvement is welcomed and I hope that the grants will be used to the fullest extent. I agree with the right hon. Gentleman that as 982 much publicity as possible should be given to the availability of the grants and improvements.
Another difficulty in this matter is the question of the use of these grants by housing associations and housing societies. These organisations are making an important contribution to our housing problem. Both the non-profit-making housing societies and housing associations are doing a good job and hon. Members who have come in contact with their work will have been impressed by the spirit of the movement. Here again, however, they are in desperate need of mortgage money as well as the finances of improvement grants. I know of a successful cost-rent housing society in the North-West which is at present having to slow down its activities because it has found it impossible to obtain the long-term finance it requires.
This brings me to the most controversial part of the Bill—taking out of control a large number of rented properties. J listened to the right hon. Gentleman with great interest. The important and significant fact is that he clearly acknowledges that rent control has been and is a major cause of bad housing and housing decay. He clearly recognises, having held office for some time and having obviously studied all the reports he has received from differing political viewpoints on this topic, that rent control has been a major cause of housing decay. This is a significant factor.
There is a genuine Socialist solution to this problem. It is to take away the private landlord completely and have only publicly-owned rented property. [Interruption.] The right hon. Gentleman is a Leftwing Socialist and would no doubt like to take that course. That Socialist solution, however, is not, in the judgment of the Government, available. No matter how much hon. Gentlemen opposite might like to apply that solution—many of them would because they consider that no private profit should be made out at housing; I can understand how a dedicated Socialist would argue that way—they must accept the pronouncement of the leadership of their party that public funds are not available in the present circumstances to enable such a solution to be pursued.
That being the position, I plead with hon. Gentlemen opposite not to so adhere 983 to their Socialist principles, particularly since in this case they cannot be achieved, as to see that those who are living in the private rented sector will suffer by the constant decline and dilapidation of their homes. Here is an issue where hon. Members on both sides have the same object in mind. We want to see that people living in bad housing conditions have those conditions improved.
One of the greatest aggravations to the solution of this problem has been rent control at absurdly artificially low levels. Not an hon. Member does not know in his heart that many rents being paid to private landlords today are absurdly and ridiculously low, with the result that the landlord cannot possibly repair and maintain his property at a proper level.
The Minister gave an impressive figure when he said that of all the houses owned by landlords, between 60 per cent. and 70 per cent. of them represented landlords who owned only one house. That figure is bound to increase. We are reaching a phase when many people who purchased houses in the 'twenties and 'thirties will, over the next few years, die and leave their houses to members of their families who already own homes.
Matters should be so arranged that people inheriting property are able to let it to families at reasonable and fair rents. This would make an important contribution to our housing problem because it would make homes available for those who do not wish to buy or who cannot afford to buy. If the political atmosphere is such that landlords must rent at blatantly unreasonably low amounts, those houses will not become available.
§ Mr. Julius Silverman (Birmingham, Aston)
Surely where there is a change of tenancy—which is the sort of case the hon. Gentleman has in mind—the house passes from regulation to decontrol.
§ Mr. Walker
I may have misled the hon. Gentleman. I was putting the case where a person had left a house to his son or daughter. I was saying that I did not want the political atmosphere to be such against the private landlord that everyone would be terrified of taking on such a house and letting it.
984 Recently, I had discussions with a number of major financial institutions, such as pension funds and insurance companies. I asked, "What contribution could you make with your funds to assisting with a solution of this enormous problem?" I pointed out that about 6 million houses need these improvements. I added that no Government of either side were likely to have the money in the next few years to put what was necessary into solving the problem and that, therefore, I hoped that the great institutions would come in and help.
Surely we can agree across the Floor of the House that we do not want rented property to continue in an atmosphere that, because a person is a landlord, he must be deprived of a proper and decent return on the cost of maintaining that property. That is why I welcome the principles outlined by the right hon. Gentleman. I realise the predicament of hon. Members opposite who genuinely hold Socialist principles.
If such a political outlook continues in housing policy, and the Bill does not succeed because of that, the consequences will be terrible. The provisions designed to encourage improvements in privately rented houses—provisions genuinely put forward by the right hon. Gentleman—could fail, and fail badly, if the political atmosphere continues in which landlords, small or large, are treated badly. Hon. Members opposite will be doing a great deal to help solve the housing problem if they change their attitude on this.
§ Mr. Walker
Another weakness of the Bill—and here I have sympathy with the hon. Member for Salford, East—is that, as at present devised, it cannot do a great deal for the poorest tenants. The large family on the low wage is not going to get the benefit. The father will simply say, "I cannot afford increased rent and I do not want improvements made". In social terms, therefore, one of the great weaknesses of the Bill is that those among the poorest who are not on pension or National Assistance will not have their homes improved and the houses will continue to deteriorate.
985 This is where be believe that the great social problem of housing is largely concentrated. Many people pay low rents who could pay higher rents. Recently, I spent some time with one of the most famous and successful housing associations in Notting Hill Gate. I spent a day with the remarkable lady who is the manager—I am sure that the right hon. Gentleman knows her. She has been dedicated to this work for years and has converted the worst type of slum property into decent flats and homes for families of different colours. Indeed, if ever there was a successful experiment in multi-racialism, it is provided by some of these housing associations.
In these properties, many people are paying rents which hon. Members opposite might think very high. But the families are happy to pay economic rents in order to live in better property. Given the choice between the squalor in which they lived and paying an economic rent for decent accommodation, they were only too happy to pay an economic rent and bring their children up away from the filth and squalor in which they had to be reared before. A very large number of families can be helped upwards in this way, as the housing associations have proved.
But, of course, the Government are keeping rents artificially low in many cases under the prices and incomes policy, so that many families could not pay higher rent even if they wished. This is absurd. The Government are keeping rents artificially low and are encouraging deterioration. If they want to freeze rents as part of their policy, it is quite wrong to do it in such a way that those who have to manage and repair houses are prevented from doing so properly.
I want to see the general recognition that rent control at a low level only aggravates the housing problem. Having said that, we must also recognise that there is a sector of people who cannot afford to pay proper rents and must be helped, whether in private or in council accommodation. This is where I want to concentrate the assistance. I do not want to see some poor landlords—and there are many poor landlords—having to let their houses deteriorate into squalor because the tenants genuinely cannot afford to pay economic rents.
986 In Committee, I hope that we will discover an element of agreement. I hope that the Labour Party will at least agree that, in the foreseeable future its objective of having no private landlords and a completely socialist system of property is not obtainable for economic reasons and will agree that therefore we want to encourage as much private investment by institutions as possible in order to assist. I hope that we can create the climate in which both sides will want to help those who are genuinely in need. If we can reach that atmosphere, we shall be doing something which will help to eliminate one of the worst and nastiest social problems in the country.
§ 8.18 p.m.
§ Mr. W. S. Hilton (Bethnal Green)
I want to utter a note of caution about Parts I and II of the Bill which neither my right hon. Friend the Minister of Housing and Local Government nor the hon. Member for Worcester (Mr. Peter Walker) voiced. They have implied that there is genuine and overwhelming support for repairs and improvements to be done in the twilight areas and that most people are prepared to pay economic rents provided improvements are done.
I do not think that there has been any research to prove this. If my right hon. Friend can show me that any such research has been undertaken by the Ministry to show that most tenants are happy to pay for improvements to their property, I am prepared to accept it. Meanwhile, I can only relate my experience as Member for Bethnal Green, part of the Borough of Tower Hamlets, which has the worst slum housing problem in London.
Even under compulsory purchase orders when property is being cleared, the tenants do not wish rehousing by way of re-lets of council house properties. They generally insist that they want new accommodation. To say to many tenants that one is prepared to improve their present property and keep them there another 20 years or so will be far from welcome to them. No matter what one does with some of the houses in the kind of areas mentioned by my right hon. Friend, nothing can be done that will elevate the ceilings or extend the walls. The homes will still be cramped and small. I am not saying this in order to condemn this part of the Bill. Where 987 possible, we ought to improve accommodation which is worthy of improvement, but there seems to be no cautionary note so far sounded about the expenditure of this money, and if a Member of Parliament has a duty to the House, it is to bring to its attention matters about which he feels strongly.
It must be acknowledged that this Bill provides for up to £2,000 per house from private and public investment, and during this particular economic period, and that between 60 and 80 per cent. of it will be wasted. [HON. MEMBERS: "No."] At least it is clear that there is unanimity among hon. Members who are united in their disagreement with me. But it still remains true that bricks and other materials are to be put into houses which will have a life of 20 years. These materials used on new housing would be fully exploited over about 80 years.
Skilled craftsmen in the construction industry are extremely scarce, and this type of improvement work will draw upon skilled craftsmen more than anything else will. If the Minister injects large sums of money into improvement work one of the effects, therefore, will be to drive up the cost of improvements, repairs and maintenance.
It has also been suggested to me that if we do not control this kind of improvement, general development work in many of the older slum areas will be paralysed. Members of the Royal Institute of British Architects have reported to me that already people are objecting to compulsory purchase orders on the ground that the orders deal with areas which could benefit from the Bill. If these sums of money are to be spent on improving properties with a life of only 20 years, such objections will continue to be made and general redevelopment may be held up. I do not condemn this part of the Bill, but say only that the expenditure of this money will have to be carefully controlled and watched by the Ministry if it is not to reap less benefit than was anticipated.
§ Mr. E. Rowlands (Cardiff, North)
Is not my hon. Friend aware that surveys have shown that the vast majority of people who live in twilight areas want to remain in the areas, that the last thing they want is to have a new council house on the edge of town, but that 988 they want their houses to be improved? That is the purpose of the Bill.
§ Mr. Hilton
My own constituency has had surveys of this kind. What I am saying is that, while my constituents wish to remain in the area, they do not wish to remain in the kind of houses which they now inhabit. I am, therefore, sounding a note of caution rather than of condemnation, because I know that in general owner-occupiers, local authorities, co-ownership associations and cost-rent associations welcome the Bill.
However, I have also noted that the Bill has been welcomed by landlords and by the Opposition. When I see those interests united, I always pause to examine legislation with some suspicion. It is not possible for the two sides of the House to unite on an issue like this unless hon. Members opposite are fully aware that a Measure will be generous to landlords.
§ Mr. Hilton
The hon. Member disagrees, but on Thursday he was carrying on with the beligerence of an outraged Pekingese in a censure debate, and today he is hanging affectionately round my right hon. Friend's neck and saying what the rest of us should do with our Socialist principles.
The Bill will increase the improvement grant from £400 to £1,000, an increase of 150 per cent. Secondly, £100 may be spent by a local authority in general improvement work in each area, which will automatically improve the value of a property and any rent which may be charged. Thirdly, if a landlord does not have £1,000 to spend on his part of the bargain, the local authority will be asked to loan him the money, a loan on which he will have to pay only interest, the capital sum being assured by the property itself.
I accept that what the hon. Member for Worcester said about low-income families who might object to improvements was said with sincerity, but the Bill takes care of such families, whose landlords are to be given compulsory powers to make them accept repairs and consequent rent increase. The whole essence of the Bill is that property of this type should be made habitable 989 irrespective of the tenant's wishes, which means that the landlord will be given compulsory powers to walk in and undertake repairs.
In addition, the Bill waives certain conditions which have so far restricted the right of a landlord to claim an improvement grant. One of them has been that a house must have a life of at least 15 years. If this period is further reduced, we shall further reduce the amount by which we exploit the labour and material which is put into improving them.
As a reward to landlords for improving houses, rents will pass from 1957 control into 1965 regulation and many tenants will have the traumatic experience of facing rent increases of between 300 and 400 per cent. Finally, if the landlord is unable to take advantage of these opportunities himself, the local authority is to act as an agent to ensure that he loses none of these benefits.
I took part in the political battles on the 1954 and 1957 legislation with rent control. From that period I have found that landlords have tended to regard hon. Members opposite as their friends and to regard Labour Members as their enemies. After this Bill has been passed, landlords will know that they need have no Tory friends so long as they have Labour enemies who are as generous as we are being with the Bill.
What will it mean in financial terms to landlords who undertake improvement work to obtain a rent increase? My right hon. Friend dealt with my hon. Friend the Member for Salford, East (Mr. Frank Allaun) in a comment about the unrewarding aspects of putting a bath into a house. Let me deal with what would happen if a landlord were, with these opportunities, to increase his house up to the total £2,000 investment level, implying a contribution of £1,000 from himself. The present law allows a landlord to have an increase for any money invested in the house of 12½ per cent. per year. This means that he would be able to have a rent increase of £2 10s. a week under present legislation if he carried out improvement work costing him £1,000.
What is likely to be the sum which the landlord will receive if the Bill goes through? In the White Paper the Minister gives some indication of his opinion when he says: 990The rents chargeable, even with the increase permitted after improvement,"—that is the present 12½ per cent.—do not normally provide a sufficient return to encourage landlords to improve their houses.In other words, what we can be sure about is that the Minister expects that there must be a greater reward than £2 10s., or the landlord will not be willing to invest £1,000 in the house.
I suggest that the Minister is thinking in terms of £3 or £4 a week increase if landlords invest £1,000. What does this mean in detailed terms, as net extenditure to the landlord? If he does not have the £1,000 he can borrow it from the local authority. I do not know what the rate of interest will be in such cases, but supposing it was 8 per cent., the landlord would borrow £1,000 at 8 per cent. which would give him an interest debt payment of £80 a year. Tax relief is given on this, and at the standard rate, he would be able to claim that £80 interest against tax and he would end up paying £47 net a year or 18s. a week to get the loan. For that 18s. a week net outlay the landlord purchases £2,000 worth of improvements, and a rent increase of £3 or £4 a week.
§ Mr. Peter Walker
I have listened carefully to the hon. Gentleman's calculation. As he has deducted tax from the interest, he should now deduct tax from the rent and balance the two out. As he said, these houses will only last about 15 or 20 years. Would he now work out the depreciation from the total amount put in over that 15 years?
§ Mr. Hilton
The first point is that my calculation on tax is on the basis that the landlord would be able to draw £3 or £4 a week from his tenants to pay the tax.
§ Mr. Peter Walker
In that case he certainly would not get any rebate on the interest paid, if he is that poor.
§ Mr. Hilton
The hon. Gentleman's hypothetical point does not obscure the fact that for 18s. a week he gets £2,000 worth of improvements, plus a rent increase of £3 or £4. His next point was to do with depreciation of the house. I understand that the hon. Member has not long been in his housing post. It may be news to him to learn that houses, 991 far from decreasing in value in post-war years, are increasing at 6–10 per cent. a year, so that the landlord will also have the accrued capital gain from the house.
There is not an investment which the hon. Gentleman knows about, even with his city experience, that will buy for 18s. a week what the landlord will buy with the aid of this part of the Bill. The indignation we hear, even from the few hon. Members opposite who are present, is typical. In the past when Bills have come to the House for public money to be expended for the public good, we have had nothing but opposition from them. When it is public money spent to increase the yield from private investment, there is nothing but Tory approbation for it, and antagonism towards anyone who wishes to deny this.
Part III is rather more objectionable in that it is not only the landlord who carries out improvement work who will receive an increase, but even those who do no work. Under the Bill, they will also be given the facility of having their rents increased from the 1957 control level to the 1965 regulation level. The logic is that if we allow the regulated rent for those landlords who make improvements, we must also give it to those who have kept their houses in a reasonable state of repair. My own interpretation of the situation is that, having made a serious error in relation to one set of landlords who actually do improvement work, the Minister is trying to achieve equity by extending the error to the rest of the landlords. The fallacy of his thinking is that landlords who so far have improved their properties and kept them in a reasonable state of repair have drawn no reward. If they have improved their property they will have received the benefit of the rent increases which are already specified in legislation and in the Consolidation Act of 1968.
My right hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved) has suggested that people in rented accommodation who were likely to be dealt with under this Part of the Bill should be given the opportunity of becoming owner-occupiers. I said last Thursday that it would be a far more popular measure if the Government were to give tenants of controlled property the £1,000 grant which the landlord was 992 to have and allowed them to become owner-occupiers. The £1,000 would help to put the properties in a reasonable state of repair.
I do not know why that point was not dealt with by the hon. Member for Worcester because the Opposition have always said that they wish to stimulate owner-occupation. But the argument which we have heard is that it would not be right to give tenants a compulsory right to acquire property owned by their landlords. Yet both Front Bench spokesmen today have said that these properties are albatrosses around landlords' necks which are driving them to penury and that they have no means of getting rid of them. We should put forward a policy which will allow landlords to get rid of them at a reasonable price, and tenants who might have to pay more because they have taken over these properties would have tax relief on the rent which they would pay subsequently. They will have no tax relief if they remain tenants.
This is where I disagree with the hon. Member for Worcester. He spoke about an economic rent and people being glad to pay it. Private tenants are in the worst position of all when it comes to paying rent. They receive none of the subsidies which the tenant of a local authority receives. They receive none of the accrued capital which an owner-occupier receives, nor tax relief on the interest portion of the rent.
It is with a degree of sadness that I and, I believe, some of my colleagues oppose this part of a Bill which we believe will be welcomed, in many ways, by the various authorities which I have mentioned. But there is a lack of equity for tenants of private accommodation who are to be forced to have their properties improved and forced subsequently to pay an increased rent. For owner-occupiers, housing associations and local authorities, the financial provisions in the Bill should be accepted because these are not profit-making organisations and we should distinguish between nonprofit-making organisations and private capital.
But landlords should be given three alternatives. First, if their properties are burdens to them, they should be given the opportunity of selling them to their sitting tenants at a reasonable market 993 rate and the tenants should then be assisted by the Government's scheme as laid down in the Bill.
Secondly, if landlords wish to take advantage of the Government's scheme and retain control of their properties, they should be allowed only 12½ per cent. return as laid down in the 1968 Act. I would strongly oppose any suggestion that private landlords should benefit from the £1,000 which is contributed from the public purse and from the purse of the tenants in those houses in rates and taxes. That would be a new departure of principle for this House.
The third possibility I suggest to show that I understand the problems which are brought about by rent control and that I realise that it can lead to rents which are uneconomic in that they do not make repair and maintenance a reasonable proposition. In my third category I would say that if a landlord wishes to have his rents pass into regulation, he should accept the onus for improvement entirely on his own capital and that the public purse should not pay anything to help him in that way.
I hope that my right hon. Friend the Minister will accept that for my part there is a great deal in the Bill that I would gladly support, and which, I know, other organisations support, but that if we have Socialist principles, as were referred to by the hon. Member for Worcester, we have to have regard to these tenants, who are our people, and try to defend them. Unless we do that by adopting these suggestions, we shall have betrayed our interests. I therefore ask my right hon. Friend seriously to consider what I have said, and possibly in Committee he may be able to help us, as we wish to help him, by taking action along the lines I have suggested.
§ 8.41 p.m.
§ Mr. J. Enoch Powell (Wolverhampton, South-West)
My experience differs from that of which the House has just been told by the hon. Member for Bethnal Green (Mr. Hilton) in that I find a good many tenants who are not only willing but anxious, if it could be arranged, to pay the economic cost of the improvement of the property which they occupy.
I felt that the hon. Member was, perhaps, suffering from two contradictory anxieties: he was anxious at the prospect 994 of money being expended on property which had only a 15-year life, and anxious also about the profit that would accrue to the landlord, in whose hands the property had, apparently, suddenly become of unlimited life. It must be one anxiety or the other for which the hon. Member settles. Nevertheless, one point of resemblance between the hon. Member and myself is that I, too, am substantially critical of the Bill. Indeed, my objections to it are even more radical and thoroughgoing than his.
First, however, I should like to except from my general disapproval particularly Part V of the Bill, which reforms the compensation for compulsory acquisition of owner-occupied property. Indeed, I congratulate the Minister on having had the good fortune to persuade his colleagues, and, presumably, the Treasury in particular, to allow him to enact this Part of the Bill, which carries forward the improvement in terms for the owner-occupier whose property is compulsorily acquired which was brought about many years ago by my right hon. Friend the Member for Streatham (Mr. Sandys).
But, apart from Part V and certain minor provisions, I feel that the Bill only adds one stone more to that Tower of Babel which our housing legislation has been over the last 50 years, or, to change the metaphor, that with the Bill the House is taking yet another jar and pour-it into the sieve in the attempt to—what is called—"solve the housing problem".
The legislation of the last 50 years has been accompanied inseparably by the twin phenomena of shortage and squalor. In the debate last Thursday, the Minister for Planning and Land was looking forward to a year not very far distant—1973—when, in his wordsthe crude national housing shortage should … be over".—[OFFICIAL REPORT, 6th February, 1969; Vol. 777, c. 625.]Alas for such hopes. It was in 1955 that P.E.P. calculated that only another three-quarters of a million additional houses would bring about a balance between demand and supply, and the party opposite, in its pamphlet Homes for the Future, built on that insecure foundation.
Shortage undiminished has been the permanent accompaniment of our experience in these last 50 years. As we have built, and the more we have built, shortage still seems to have pursued us and 995 been protracted. As for squalor, some of the basic facts are set out in paragraph 4 of the Government's White Paper, and unpleasant reading it is—the paradox of a nation whose standards of living in almost every other conceivable respect have risen in recent decades faster than they had ever risen before but which is still housed in the kind of conditions that the statistics in paragraph 4 reflect.
We talk about housing as if it were one thing; but for the last 50 years housing in this country has been two things. There have been two housing markets and two commodities. There has been the market for houses for owner-occupation, where for practical purposes the market price has ruled for the greater part of the period. There has been the market for housing to let, where the market price has only exceptionally ruled and where rent control and, latterly increasingly, subsidy and public provision have created an entirely artificial market. We have, therefore, two markets and two commodities; and the Bill deals differently with them.
The owner-occupier, under the Bill, receives public money, a grant for the repair and improvement of his property. I must say that, although there is, to put it mildly, precedent for this, I do not believe that there is justification for it. I do not believe that if the owner of property is able to dispose of it at the market price, if there is a free market for the article which he owns in its present state and in its improved condition, there is any justification for the use of public money—which means an imposition, a compulsion, upon the citizens at large—to make it cheaper than it would otherwise be for that owner to enhance the value of his property.
Indeed, I was surprised that this seemed to be one of the features of the Bill which received the support of the hon. Member for Bethnal Green, for here indeed the public is invited to put money into a private pocket to enhance the value of an article which this House by its legislation has never depreciated. It is using the power of legislation to determine the free choice of private individuals as to the way in which they will lay out their resources. It seems to me, in short, to be grandmotherly legislation 996 of the worst description. I do not believe that it can be justifiable to lay the public at large under contribution to make it cheaper than it otherwise would be for owner-occupiers of houses to improve their assets. Let them take their own decision on whether and to what extent they will improve what they own, and accordingly be rewarded by the rise in its market value.
When we come to the other houses, the houses which are rented, the scene is completely different. For 50 years, by rent law and by subsidy, they have been controlled at prices—that is to say, rents—at which for most of the time it was not worth while to add to the total stock, or to improve them, or even, in many cases, to maintain them in repair. We in this House, over these 50 years, by out legislation—and this has been candidly recognised already by all three speakers so far in the debate—have made it difficult, if not impossible, for houses to be repaired, improved, or added to in number, if they were within the rented sector. This is the work of our own hands.
In the White Paper there is a most instructive sentence which throws into sharp relief the paradox of our behaviour. It is in paragraph 25, where the Government are talking about standard amenities. The sentence I have in mind is this:The Government now take the view that in the age of the refrigerator a ventilated food-store is no longer a basic amenity.Hon. Members who have been concerned with housing over the years will remember how a ventilated foodstore was one of the characteristics for the fitness or unfitness of a house for which the medical officer of health looked. It was one of the basic characteristics in accordance with which a house was judged fit or unfit for human occupation. Now in 1969, after all these years, the Government say that "in the age of the refrigerator" we need no longer look for that minimum miserable space with the minimum draught blowing through it which has hitherto been regarded as indispensable to the minimum house.
Why has this come about? It has come about, say the Government, because this is "the age of the refrigerator". So into the unimproved house, along with all the other gadgetry of modern times, 997 there has come the refrigerator. This is "the age of the refrigerator". How fortunate that this House has not legislated in regard to refrigeration as it has legislated in regard to the provision of the house to rent where the refrigerator has now found its place. There would be no question of our living "in the age of the refrigerator"; we should still be living in the age of the ventilated foodstore.
In refrigeration, as throughout the greater part of the standard of living, we have allowed the market price and profit to work together for the benefit of the community at large. The result has been one which would not merely have astonished those 50 and more years ago who drew up the basic specifications for the minimum house, but would have seemed too optimistic to expect 20 or even 15 years ago. The contrast speaks for itself.
Having over so many years made it not worth while to repair or to improve, the Government now come back and prescribe another dose of the very same medicine as has made the patient ill, like "Palmer the Poisoner" coming back with a further dose of strychnine to see the patient into the grave.
§ Mr. Lubbock
Is my memory at fault, or was the right hon. Gentleman not a member of the previous Government which passed the 1959 Act?
§ Mr. Powell
I was reasonably sure that some hon. Member would be quick enough to make that point and I have made provision for a section in my speech in which I shall deal with it comprehensively. Meanwhile I am looking at this poison which we are once again having prescribed in this Bill for the umpteenth time—the three elements, subsidy, control and compulsion. They hang together. If one controls the price, one must subsidise new provision. If control and subsidy together do not provide the results one expects, one is drawn on to compulsion.
In this Bill, we have the substantially higher subsidies. Perhaps again the hon. Member for Bethnal Green may be surprised to learn that I am not commending this. I am not approving of improvement grants and subsidies even for the landlords. Not at all. They are as unjustified, though for different reasons, for the landlord of rented houses as they 998 are for the owner of an owner-occupied house.
Then we come to rents. The rents are to be those which by definition are lower, though no one can say how much lower, than the rents at which supply and demand would balance, even when that which so many hon. Members opposite seem to fear like the plague—the substitution of regulated for controlled rents—has taken place. The rents will be rents assessed upon the conundrum in the 1965 Act. They will be assessed on the assumption that there is no excess of demand over supply on a hypothetical condition such that supply and demand cannot balance, namely, the ignoring of the factor of price altogether. The whole object of the legislation which prescribed them was to ensure that they are less than those at which supply and demand for the accommodation would balance.
Finally, the Government resort, though tentatively, to compulsion. One was glad to hear from the Minister how tentative initially it was to be. However, we have learned from this Government that their tentative compulsion is often rapidly succeeded by less tentative compulsion. This is the extension of the slum clearance principle of compulsory acquisition. Local authorities are given compulsory powers to ensure the doing of that which the rest of our legislation has tended to prevent from being done and make it unprofitable to do.
There is no mystery about the cause of the shortage of housing and the squalor of housing which has been our experience through so many years and which makes housing such a contrast with the rest of the conditions of our people. The cause lies in this House. It lies in the legislation which we and our predecessors have passed through this House for what is now nearly two generations. We and our predecessors have preferred to deceive the electors by pretending to them that they could have that which they needed better if the price of it were controlled below the market price, the price at which the supply and demand for it balanced. Instead of telling them the elementary truth, we have preferred to follow our own interests over those 50 years, and use the housing of our people as an area for the buying of votes. Indeed, it might be said that we and our predecessors in 999 this House have been supremely selfish in our housing legislation.
The hon. Member for Orpington (Mr. Lubbock) put a question to me which is a fair one. It is one which addresses itself not only to me but to many other right hon. and hon. Members. The question is this: "You yourself have been a member of Administrations which have to their charge legislation in this same tradition. You yourself, if you have not actually proposed it, have, at any rate, acquiesced in it being passed. How can you now come forward in the year 1969 and say that this whole course, which has taken rented housing outside the market, has been a mistake for which the public have been the sufferers?"
I could, if I cared, put together a certain personal defence against that charge. First, I could say that for many years past I have been arguing that rent control and subsidy was a haphazard form of subsidy of wages—"Speenhamland in modern dress", I once remember calling it. Secondly, I could remind the House that I played a minor part in the enactment in 1956–7 of the only comprehensive attempt to raise rents generally towards the market level.
§ Mr. Powell
One thing which can be asserted with absolute certainty about Rachmanism, which I take to mean the bullying of tenants to get them out when they cannot be got out by lawful process, is that it depends upon control. It is a black market phenomenon which cannot exist in the absence of control and of rents which are below market level. For Rachmanism I take no responsibility whatsoever.
Thirdly, I could say that for years in my own constituency, both in public and in private, at election time and between election time, I have denounced the two giant evils of housing: rent control and subsidy—the one giant admittedly now shrivelling, but the other still growing in strength and in danger.
I say I could put together some such case in my own defence. But I prefer 1000 not to do so. I prefer to plead guilty, along with the rest, but to ask: just because Parliament and parties for a period of years have been engaged upon a course which has wrought havoc with the interests of those whom they represent, is it impossible, because of that continuing hardened precedent, that they should ever change? I do not believe that it is. I do not believe that, however long a mistaken course is persevered in, it is ever therefore necessarily too late to change it. I believe that we can, because I believe that we should, change. But if we change, we must change not gradually or imperceptibly. The movement from error to truth cannot be a slurred, imperceptible glide. There has to be a definitely marked turning point, at which we acknowledge that one series of policies has failed and must be replaced by another.
We are coming to the end of the time when in this respect, as in many others, the public prefer their politicians to tell them fairy tales. I believe that the public are becoming impatient with their representatives pretending to them that by the enactment of legislation they can make goods and services cheaper than they really are.
§ Mr. Winnick
The right hon. Gentleman seems to argue the case, which is a well-known Powellite argument, that there should be no security of tenure. Can the right hon. Gentleman explain how private tenants could protect themselves in areas of housing shortage against landlords who wish to evict them, in many cases to sell the property, unless there is security of tenure?
§ Mr. Powell
The hon. Gentleman evidently does not realise the reason why a landlord wants to get rid of a tenant to sell the property. It is, as I mentioned at the beginning of my speech, because we have made two separate markets in housing: one for houses to own and the other for houses to rent. We are denying the people who want to rent houses the opportunity to get what they want and we are deliberately, as we have been for the best part of 50 years, distorting the market in which people can demand and obtain at its market price—the only way to do so—that which they want. There is no such security of possession of an article as the fact that the article is rented at the market rent.
§ Mr. Powell
What the hon. Gentleman, like many others, still does not understand is that the greatest security is to be buying or renting at the market price. One cannot have a greater security than that, since there can be no interest on anyone's part in his dispossession.
§ Mr. Hilton
Is the right hon. Gentleman saying that housing, like any other commodity, such as books and shoes, should be sold at the level of the price of supply and demand? For 50 years all Governments and political parties have said that the difference is that housing is a social necessity, and the hon. Member for Worcester (Mr. Peter Walker) said so tonight. Is the right hon. Gentleman now saying categorically that housing is no more a social necessity than any other item which is bought and sold?
§ Mr. Powell
Our social duty is to people. It is to ensure that in respect of this requirement, as of any other, they have the income, and if they do not possess it, have it made up, to secure at the market price the decent minimum.
§ Mr. E. Rowlands rose—
§ Mr. Powell
Perhaps the hon. Gentleman will allow me to continue; I was asked the question. I say that is where social conscience and community obligation come in: to ensure that there is income to purchase whatever we regard as being the minimum standard of living which should be secured to all in this country.
The hon. Member for Bethnal Green said that for 50 years rented housing had been taken out, or partly taken out, of the market. Look at the consequences. The consequences are that in this one great respect we have lagged behind. While all the other elements in the standard of living have gone leaping ahead with variety, opportunities, and developments which nobody could have forecast or imagined, housing has remained always short, always on the ration, always a potential black market, always with the conditions of squalor which are described in this White Paper. That is the reward, 1002 that is the result, that is the curse, if one likes, which we have brought about by this policy which we have pursued these 50 years, of taking rented housing out of the market.
I believe that the time is coming when people no longer wish to be deceived. It is when they insist on being told the truth that they will have found the only condition upon which they can keep their freedom and regain their self-respect
§ 9.9 p.m.
§ Mr. Arthur Blenkinsop (South Shields)
We have listened to an interesting speech from the right hon. Member for Wolverhampton, South-West (Mr. Powell). Unlike the right hon. Gentleman, and, I suspect, the voters in Wolverhampton, I have no desire to go back to the principles to which the right hon. Gentleman adheres, to a world which created the very conditions of squalor from which we have been battling to emerge. Nor do I wish to live in a refrigerator for my future. Unlike the right hon. Gentleman, I have no mistaken view that every household in this country has a refrigerator, or many of the other valuable additions to the pleasure of our lives.
Unlike the right hon. Gentleman I take a more human view, and welcome the great advances that our communities have made over the years under different Governments. Unlike him, I do not derogate from the real achievements which have resulted in vast numbers of people being able to live in houses in decent conditions which they would not have been able to do had we continued in the kind of society into which the right hon. Gentleman apparently wants to thrust us back—the society that existed in the last century.
§ Mr. Powell
I ask the right hon. Gentleman to allow me one intervention. Let us go back in imagination to the conditions which prevailed before rent control and housing subsidies were introduced. Let us see how every one of the conditions of life which existed in those times—food, clothing and all the amenities of life—have improved out of all recognition, and let us contrast that with the sluggish improvement in this one factor—the conditions of housing.
§ Mr. Blenkinsop
The right hon. Gentleman does not convince me, nor will he convince the vast majority of hon. and right hon. Members on either side of the House. We are conscious of the large part played by public provision and public subsidy in ensuring that, difficult as conditions still are for a number of our people who are still anxious to solve their housing problem—and that is what the Bill is about—vast improvements have been made in this field, which have been denied to us had Governments over the last half-century followed the kind of rôle that the right hon. Gentleman apparently now advocates.
I suspect that he knows that in his kind of society the rich and the more powerful would win through and those who, for one reason or another, were weaker, would go to the wall. Although he would make provision through the social services for allowances for some of those in the worst conditions he would impose a rigid demarcation between the two societies—a demarcation from which we are at last struggling to emerge, and from which I hope some right hon. and hon. Gentlemen opposite also wish to emerge.
I welcome the general tenor of the Bill. Unlike the right hon. Gentleman, I have no desire to break with my past in this matter. I was associated with the introduction of the first Measure for the improvement grant procedure. That was a real benefit. Going about the country I can see houses that, over the years, have benefited from it. I am happy that that should be so because I know that not only the houses but the people living in them have benefited.
I am glad that we are to make the great move forward that is provided for in the Bill. I do not agree with my hon. Friend the Member for Bethnal Green (Mr. Hilton), who is worried about the balance between the resources we put respectively into new house building and improvement. I realise that there is a problem, but my hon. Friend is mistaken in thinking that we do not need to go forward with improvements—
§ Mr. Hilton
Does not my hon. Friend agree that what I said was not to condemn the expenditure but to urge great caution in the use of this money, in order to ensure that we exploited those areas 1004 which could most profitably be improved by this grant?
§ Mr. Blenkinsop
I realise that, but my hon. Friend put his anxieties in such sharp terms as to give the impression to most of us that he opposed the kind of balance which the Bill would strike. That, also, I think was the point of his intervention.
There is a vast field—I am sure that this is a majority view—in which improvements are urgently needed to old property. The fact that houses are old does not necessarily mean that they cannot be effectively and usefully made available as homes for large numbers of our people—not only older people who do not want to move, but also for younger families, for whom a wider range of choice is needed. It is not true that everyone wants to move into a new house. Rather the opposite: I think that a large proportion of both younger and older people would prefer to have the choice between staying in an area they know at a somewhat reduced price and the high cost of obtaining a completely new home. We should ensure that those choices are available: that is one reason why I welcome the Bill.
It is surely wasteful to clear away property which can be made into good, habitable homes, provided, of course, that improvements are effectively done, not only to the property itself but—I am delighted that the Bill makes this provision—also to its environment. This is the first time that we have considered that problem. I doubt whether the provision of £100 per house is adequate for the kind of changes which I hope that we will try to make in the environment, but I welcome the fact that, for the first time, this provision has been made.
I accept that there are dangers. One is lest we should stop important comprehensive redevelopment schemes in the older parts of some of our towns where they are clearly needed, and that, if we concentrate too fully on improvement work, some of these schemes may be shelved for too long.
I accept, too, that we must be careful not to waste money on bad property and I take my hon. Friend's point that, if we allow—as the Bill would—provision for improvement of property which 1005 may not have a 15-year life, this could be dangerous, but I am sure that it is right to give greater flexibility in the use of grants. There has been a rather absurd position in the past of our not being absolutely sure whether the period of life will be 15 years or a little more or less. How often can a local authority or planning authority be sure precisely what the period of life is? It cannot, so this flexibility is right. But we must be careful.
The third point, which he did not make so clearly, but which must be considered, is that we must be sure to have some check on the quality of the improvement work which is done. We can be proud—certainly the builders and others can—that, with the development of the National House Builders' Registration Council and the Government's encouragement in its development, we are getting a higher standard of new house building. It is absolutely right that guarantees should be given here. This has made a great difference to many people buying a new house, but we have no provision of this kind for improvements.
Yet we are moving into a field in which improvements can be considerable. We are not talking about minor improvements, so it is vital to ensure that the improvements done are of as high a quality of workmanship as we are now demanding for new house building.
§ Mr. Lubbock
May I draw the hon. Gentleman's attention to Clause 6(3) which states:The payment of an improvement grant or of any part thereof shall be conditional upon the works or the corresponding part of the works being executed to the satisfaction of the local authority.The Minister is saying that he is trying to give local authorities greater freedom and flexibility. Is not that what the hon. Gentleman is asking for?
§ Mr. Blenkinsop
I welcome this provision. But I am anxious whether, with the inspectors that the local authorities have available at the moment, it will be possible to supervise this work, knowing as I do the number of firms involved. I do not want to make an unjustified attack on the jobbing builder generally, but there is a danger that we shall have employed in this kind of work people whose quality of work may not be of 1006 the highest kind. We must be careful to avoid that danger. It may be easier to supervise a large new building construction job than to supervise the kind of detailed work which will be involved in all these improvement schemes. These are dangers that we have got to consider carefully as we go along.
Some hon. Members have put their finger on the main anxiety that we all have about this Bill. In spite of all the careful adjustments and efforts that have been made to make this provision for moving from controlled to regulated rent a matter not of one or two years but spread over a period of years so that the problem will not be so severe in its impact on the tenant, it is true, as has been said by the right hon. Member for Worcester (Mr. Peter Walker), that there are many low-paid wage-earners who can be seriously affected. I take the point that this House has to consider whether there is any justification for saying that the elderly and retired person on National Assistance would be able to claim allowances to help pay the increased cost of rent, whereas a man on a low wage and possibly with a family may not be able to make such a claim. This is a matter which we have to consider very seriously—whether some form of housing allowance should not be paid to those with lower earnings to make sure that undue hardship is not imposed on them.
In the past we have rejected this, certainly on this side of the House, as paying public money into the hands of the landlord without any check at all on the rent that the private landlord was able to charge. But today it is slightly misleading to many people if we say that we are proposing to remove control. As was pointed out by the right hon. Gentleman, control is retained, even if in another form. By the regulated rent which was provided for under the 1965 Act, however much some of my colleagues may dislike its operation in London, Birmingham and certain other parts of the country, a limitation is placed on the rent which otherwise the landlord could charge. I welcome that fact. If it were not for that, the sky would be the limit. The right hon. Gentleman would welcome it, but I am sure that few other people would welcome it.
§ Mr. Blenkinsop
Our experience in the past under the 1957 Act, for which the right hon. Gentleman holds some responsibility, has taught us that this meant severe hardship to many people who were driven out of their homes because of the operation of the market. I am not a believer in the operation of the market. I know too well of the hardship and tyranny that it can impose on people. I am delighted that my hon. Friends do not accept that thesis and that we reject the sort of demands that are made by some hon. Gentlemen opposite.
We have rightly provided in the Bill for a new improvement area procedure to speed up the operation of improvement works. However, I am not altogether happy about the way in which we have thrown overboard the means that were available under the 1964 Act for local authorities to carry out work and charge it afterwards to the landlord. I would have preferred an alternative procedure which local authorities could have applied if they wished.
I naturally share my right hon. Friend's desire that local authorities should use their compulsory purchase powers in suitable circumstances. There are cases, however, where the old provisions of the 1964 Act could have been made more fully operative. I share with some of my hon. Friends a desire to provide tenants who wish to do so an opportunity to buy. I should be happy to see a provision of this sort on the Statute Book, although I recognise that if a tenant were given this opportunity and had the necessary grants provided for him, we might find ourselves back in the same position; the tenant could become the new landlord and so realise the capital value of the grants he had received.
We in the North of England have a large problem resulting from what we call upstairs-downstairs flats. Frequently the owner lives in one part of the premises and lets off the other part to a tenant. Many of these owners need the sort of assistance that the Bill will provide to improve the quality of the property. I believe that the Bill will make a real improvement for these small landlords who suffer similar problems to those of 1008 their tenants. For that reason and others I have explained I welcome the Bill.
§ 9.28 p.m.
§ Mr. Paul Hawkins (Norfolk, Southwest)
I warmly welcome the principle of the Bill. I was particularly glad to hear the Minister, I think for the first time, speak of the need to improve environment. I pointed this out in a debate some time ago. I also agree with the hon. Member for South Shields (Mr. Blenkinsop) that the amount of money allowed under the Bill will not enable this concept to be completely implemented.
It is important that people should live in a pleasant environment, for it can make all the difference in many areas. Too much has been spent on concrete and glass and too little on shrubs, flowers and the other things that make life worth while. I could not comprehend what lay behind the remarks of the hon. Member for Bethnal Green (Mr. Hilton), who seemed to suggest that landlords should not get a penny and that tenants should not have their conditions improved either. I raised the subject of the modernisation of older houses in an Adjournment debate in December, 1965. I am only sorry that it has taken so long to bring in this Bill.
My only other criticism of the Bill is that it appears to be rather long and somewhat complex to bring about a really speedy improvement in the standard of house improvements, but I hope that it will work speedily and do the job the Government have set out for it.
I am sure that the present Minister of Public Building and Works, who replied to my Adjournment debate in 1965, had quite a lot to do with this Bill's inception. He discussed it with me on several occasions and I believe that he, a very practical and humane person, realises that a Measure of this nature will do much to improve the living conditions of many people, and do so at a relatively low cost. But with the Bill being so overdue thousands of homes have been lost because not enough drive has been put into the improvement schemes. Nor have the grants ben attractive enough.
When an improvement in my part of the country cost £750 there was a grant of £400—just over half the cost—and a lot was done, therefore. But in 1965 the 1009 average cost of improvement was about £1,200, while the grant was still only £400. The proposal for a grant of about £1,000 or 50 per cent. of the cost is on the right lines.
The improvement of older, structurally sound houses has many obvious practical advantages. There is economy in land, materials and labour. The money goes much further when three or four houses can be modernised for the cost of one new house. But there are many less obvious reasons. For instance, smaller building firms cannot undertake the building of council houses in blocks of even 20 or so but they can be brought in to do this sort of work. Many jobbing firms of builders can do excellent conversion work and thus we can spread the load on the industry generally.
As the Minister said, there is a social advantage in leaving people in their own homes, where possible, among their own friends and neighbours and close to the shops and pubs they know. Very many people fear being uprooted from among their friends. Many of them dislike the idea of having to go to tower blocks or large council house estates on the outskirts of towns.
I do not believe that the Bill will cure the housing problem—it will not—but it will go some way to keeping going a large number of houses which would otherwise fall into disrepair but which are perfectly capable of being turned into good homes. I hope that the Government do not think that the Bill in any way takes the place of a house building programme, because house building for sale or rent will remain of paramount importance for a long time.
I was shocked last week to hear the Minister for Planning and Land say that our housing problem would be over by 1973. Even in my rural areas, it certainly will not be. Until an engaged couple, who have been engaged perhaps for 12 months, can go to the local council and get a house within another 12 months, I shall not consider the housing problem to be cured. At present in my area, engaged couples are not even allowed on the housing list. This is a very bad state of affairs. I cannot believe that our housing problem will be broken by 1973.
1010 I agree with the main provision of the Bill that the grant should be half of the cost up to a maximum of £1,000. I have some questions, however, about some of the provisions and some omissions. In 1965, all but one of the councils in my constituency had many unmodernisecl council houses. Now most of the councils have completed this work, but in Norwich, the capital of Norfolk, the position is extremely bad. I do not want to introduce party politics, but the Labour Party was in control of Norwich for 40 years until last year. Several thousand houses owned by the council are still unmodernised. In 1965, I was told that there were still about 500,000 unmodernised council houses in the whole country.
§ Mr. Hawkins
They are without bathrooms, lavatories or other amenities.
In the debate in which I received that information I urged that an immediate return from all councils should be called for so that the exact figures, council by council, would be known, and so that help could be given to those with the greatest problems. Has this return been demanded and completed and, if so, what has been revealed? With that information we should know what the problems were and where resources could best be used.
The Explanatory Memorandum says:The improvement contribution is to be a sum payable annually for 20 years equal to three-quarters of the annual loan charges referable to the allowable cost.I read that as an improvement on the Minister's remarks in 1965 when he said that the improvement worked out at three-eighths of the loan charges for 20 years, but I now understand that this is remaining the amount and that no greater allowance has been given for council-owned properties in this respect. However, I should like to know what that contribution comes to per week. In 1965, at the then interest rates, we were told that it represented about 10s. 9d. a week. What would the allowance mean in terms of rent for improved council houses with current interest rates and the improvement grant at the maximum?
In 1964, the number of grants for privately-owned houses totalled 121,000. 1011 What was last year's figure? In 1964 the Minister said that he was dissatisfied with the rate of progress, that it had gone down a few years previously but was gradually picking up and he hoped that it would pick up substantially. I wonder whether last year's figure is much higher than that for 1964.
In that debate I raised two further queries which do not seem to have been met. One is an important consideration in my district and it may affect others. We have many cottages in pairs, threes and fours which are structually sound, with good roofs, good walls, good foundations, and in pleasant areas, but much too small for each to be improved.
These houses are perhaps only two-up and two-down, and we cannot make a bathroom and lavatory and still house a family. We have always been refused permission to convert two into one, with one grant. This seems stupid. Lots of houses in my areas have been pulled down because no grants can be given to turn a block of four, for example, into two good dwellings, receiving only two grants.
This is a very small amendment which should be made. It was always said that one would lose a unit of accommodation, which is a dreadful word for a home. If the block of four is not occupied it will not provide any units of accommodation. Two units being lived in rather than four pulled down would be better. Will the Minister please look into this?
My next point concerns the fifteen-year period. The hon. Member for South Shields said that this was more flexible. I do not read the Bill in this way. It states quite clearly that… the dwelling is likely to remain fit for human habitation and in use as a dwelling for at least 15 years.The surveyors for the councils must read it in that sense. I am sure that local surveyors try to examine each house fairly, but there are sometimes glaring differences between one local authority and another.
In consequence some applicants turned down for this reasons, and backed by architects, feel a sense of grievance. The Minister previously promised to look into the suggestion of an appeal being made from the local surveyor, perhaps to the 1012 regional architect of the Minister, or to some small panel of architects. This would be a good thing, because it would give the applicant the feeling that he was being treated as fairly as someone else in another rural or urban district area. I may be wrong, and there may be some appeal procedure, but I hope that the Minister will investigate this.
There ought to be some appeal, because I have known cases where houses would last for 20 or 25 years. A large number of these improved houses will last a lot longer than some of the newer properties being built now. The hon. Member for South Shields quite rightly referred to the high standards which we must attain. In another context the grant for new houses for agricultural workers was refused, because the owner did his job too well. He built houses which cost something in the region of £5,000 each and was refused the £10 a year grant, because it was said that the average house for agricultural farm workers in that part of the country did not cost much more than £3,500. He wanted to provide a far higher standard, and yet he was refused his grant, which would have been the same if he had spent less money.
If someone wants to house his men to a higher standard he should not be refused a grant because those standards are higher than the average in the district. I hope that we can have an assurance on this point. There is a maximum of 50 per cent. of the cost, which again is qualified by the £1,000. This would seem to be a safeguard against the misuse of public money.
I very much welcome the Bill. It will meet the great need to rebuild houses which would otherwise be lost altogether. It will meet the need to keep many people in areas in which they have been born and brought up and have lived with their relatives and friends. I do not think, as the hon. Member for Bethnal Green seemed to think, that the Bill will allow a lot of substandard housing to remain. We cannot allow a lot of dilapidated, substandard housing to remain which would be improved merely for a few years. But if we can, as I believe, save thousands of houses which will last for 25 or 30 years, or even more, we shall have done a good job.
I hope that the practical points which I have raised will be considered and that 1013 the Bill has a speedy passage so that, from a practical point of view, some of these improvements can start this summer before the building season ends.
§ 9.46 p.m.
§ Mr. Julius Silverman (Birmingham, Aston)
I do not propose to take up the interesting and useful points of detail which the hon. Member for Norfolk, South-West (Mr. Hawkins) made. I should have thought that the flexibility of a local authority in making a grant was dealt with in Clause 9.
Broadly, like the hon. Member for Norfolk. South-West, I welcome the provisions and the purpose of the Bill. The renovation of old houses, when they are suitable, makes good housing sense and good economic sense. It keeps communities together and it diversifies the stock of housing, because it is a good thing to have old buildings, some of which have a certain amount of character, intermixed with modern estates.
The Bill deals with the question of environment. I know that £150 per house is not a lot, but it can do a good deal. In my constituency, while a house basically may be sound, I have seen an area deteriorate and go to pot because of the decay of the environment. In some cases, an environment was never created. The Bill can make a great difference in this respect, and I am glad that it deals with this matter.
I am glad also that the Bill provides additional powers, even if they are somewhat limited, to deal with the problem of multi-occupation. In addition, at last, the problem of compensation has been tackled. This has been one of the sorest political problems with many owner-occupiers throughout the country. What the Bill proposes will come as a relief. Perhaps the Minister will consider whether the provisions on compensation can be extended in one or two respects. Hundreds of owner-occupiers in clearance areas have been up in arms at the ridiculous compensation which they have received—originally on the basis of first site value and, more recently, on the basis of gross annual value, which is virtually a nominal payment.
Perhaps the Minister will consider whether 23rd February would be the appropriate date, not for the date of the 1014 council resolution, which means the initiation of the proceedings, but for the date of his confirmation, which will bring in a belt of people who are suffering hardship. This is a definable group. Perhaps what is proposed could be extended. I know of the powerful resentment which is felt by those who, in many cases, have used their life savings and virtually find themselves dispossessed.
§ Mr. Silverman
I am sorry, yes; 23rd April of last year. I notice that if a person buys after 23rd April, he does not benefit from these proposals. If an owner buys after 23rd April knowing that the property is likely to be condemned, he has only himself to blame. He buys, he takes a risk and it is his own responsibility.
In some cases, the purchaser or his solicitor makes proper inquires of the local council and the council tells him that it knows of no provision to clear the area or deal with the house. Within three or four years, the owner may be faced with part of a clearance order involving property in which he has invested the whole of his life savings. I think that something more could be done to deal with such cases.
The Law Society has provisions designed to ensure that a solicitor makes inquiries and informs his client. I should have thought that where a solicitor did not so inform his client—there ought to be provision to deal with this—he would be guilty of negligence. Otherwise, in cases where, at the time of purchase, the local council has no idea that the property is likely to be part of a clearance area, the compensation provisions might be extended. Perhaps my right hon. Friend the Minister will consider this.
I am sorry to say that, like other hon. Members, I am totally opposed to Part III, and I shall give my reasons. The private landlord of working-class accommodation has steadily disappeared from the scene. I have no regrets whatever. There are good landlords, there are bad landlords. Private landlordism, however, as an institution dealing with the houses of working-class people has failed steadily over the years. It has declined steadily in the face of owner-occupation, slum 1015 clearance and, occasionally, council purcase. From its former predominant position in the housing market, the private rented sector now represents only about 18 per cent. of houses.
The myth has been accepted over the years—and it has been set out again by the right hon. Member for Wolverhampton, South-West (Mr. Powell)—that the major reason for the decline of the private rented sector of housing was the control applied by the Rent Acts. That is quite untrue, as the fact which I am about to mention will show. Under the Housing Act, 1954, houses built to rent after 1954 were released from housing control. During the succeeding 12 years, until rent regulation was introduced in the Rent Act, how many houses were built for ordinary people to rent?
§ Mr. Walter Clegg (North Fylde)
Would not the hon. Member agree that during those years there was a constant threat from his own party about what they would do and about bringing these houses under control, and that as long as those threats existed nobody would invest in such projects?
§ Mr. Silverman
It is completely implausible to suggest that a landlord would have invested in such property but was afraid that a Labour Government would come to power and would apply control. I do not believe that for one moment. There are other reasons why the provision of houses for rent has diminished—entirely different reasons.
Then there is another myth which has been circulated and which is widely believed, and that is that the major factor in the prevention of repairs being done and the decay of houses is rent control. Again, I do not believe that. It may be a factor, but it is not a major factor. These houses were in decay long before rent control was introduced. Before the First World War they were in decay and repairs were not being done. Houses which came out of control before September, 1939, were in decay and repairs were not being done to them.
I know that the 1954 Act, as, indeed, the 1957 Act, proposed that landlords should do the repairs. I shall not go through the details of the 1954 Act, but I remember what was said by Mr. Aneurin Bevan in Committee on the then 1016 Bill. We were together in that Committee on that Bill. He described it as a mouldy turnip of the landlords. That turned out to be correct. He said—and how true it was is indicated today—that either we provided an incentive which would be inadequate to induce the landlord to do repairs, or we should make things intolerable for the tenant. That is the dilemma of the private landlord system, and it is as true today as when Mr. Aneurin Bevan said that in Committee then.
I do not know whether repairs will be done. It may be that they will be done in the first place to get grants, to get increased rents. Maybe. Whether they will continue to be done I do not know. In my view, the provisions in the Rent Act, 1968, to deal with the question of repairs are entirely inadequate, not even as good as those in the 1954 Act.
However, the main complaint of many hon. Members who are faced with the practical problems of the operation of the Rent Act is that the assessment of rents by rent committees fails to fulfil what, in my view, was the purpose of the Act. What in many cases has been decided is a rent very near to the market rent. This is evidenced by the fact that in the areas of greatest shortage, places like London and Birmingham, a rent decided by a rent assessment committee, in many cases overriding its own rent officer, amounts to about two and three-quarters to three times the old controlled rent under the 1957 Act. The 1957 Act was a product of the Government of hon. Members opposite, who were not unsympathetic to landlords, and one must assume that in their view that would be a fair rent.
It might be reasonable to say that today there has been an increase in the cost of repairs and an increase in the standard of living. Suppose that it amounts, as the Minister said, to two-thirds in the cost of repairs. It is one thing to put up the old controlled rent by two-thirds. It is another thing to charge two and three-quarters to three times the controlled rent. That is a very substantial increase indeed which will not be just about the increase in costs but will make intolerable inroads upon the income of people of modest means—not necessarily poor people, but 1017 people of modest means. I entirely agree with my hon. Friend the Member for Bethnal Green (Mr. Hilton) who said that it is quite intolerable that public funds should be used as the basis for the landlord's charging what I consider to be an extortionate rent in the circumstances. I should have thought that it would have been better for the Minister to reconsider the operation of the Rent Acts and—
§ It being Ten o'clock, the debate stood adjourned.
§ Question again proposed, That the Bill be now read a Second time.
§ Mr. Silverman
—put these proceedings right, ensure that rent assessment committees fulfil the formula—what an hon. Member described as "the conundrum"—and put into operation what I believe were the Minister's intentions at that time.
It was said by the Minister this afternoon that a large number of people who own these houses are in a small way of business, owning only one house. I am rather sceptical about his figures. I think that they were based on a sample survey in one or two areas. In Birmingham and London there are a large number of property companies which I would call twilight companies, not the highly respectable companies which do not go in for this sort of property. They buy property for a mere song, a large quantity of these properties, and rely for making a profit on two factors. The first is that the capital price they have invested in the properties is extremely small. The second is that at some stage—most of the tenants being very old, it may be an early stage—the tenancy will come to an end and they will get the property to sell at a very substantial profit, or for what used to be a decontrolled rent and is now a regulated rent.
On the whole these companies have not done badly because of the price they have paid. These people will get a bonanza under this Measure. I do not know whether there is any control over what they will get in terms of dividends 1018 under the prices and incomes policy of the Government. Nor do I know how rapid increases in the rents they get would be consistent with that policy. I ask the Government to look at this again. I hope it is not too late to do so. This part of the Bill has already overshadowed all its beneficient features. It is interesting to observe that in the Press this is the part which has received most publicity.
Clause 17 deals with premiums. I have had the opinion of one or two legal friends that the Clause goes too far and brings into the net abolition of premiums on a wide range of property, perhaps wider than the Government have considered. This is a point which perhaps we could look at in Committee.
For all its defects, I give my blessings to the Bill, and I hope that it will make many thousands of owner-occupiers and tenants happy.
§ 10.5 p.m.
§ Mr. Oscar Murton (Poole)
I desire, first, to observe the proprieties and declare my interest as a landlord, being a director of property investment companies. I am sure that that will endear me to certain hon. Members opposite.
I am sorry that the hon. Member for Bethnal Green (Mr. Hilton) has departed, but the hon. Member for Birmingham, Aston (Mr. Julius Silverman) has helped me in some way, because I would commend to those who have argued against any form of freeing of rents, the first example that I can find of a ceiling on rents. It is in chapter 25 of Magna Carta. It says:All Counties, Hundreds, Wapentakes, and tithings shall remain at the ancient rents, without any increase.I would commend that to hon. Members should they run out of arguments in the course of the ensuing hours. They can always fall back on that phrase.
I was horrified to hear the hon. Member for Bethnal Green say that, instead of welcoming the Bill and its attempt to improve older housing, he would prefer to rub it out, cut it out, knock it down and start again from scratch. As a result of slum clearance over the past years, we have come to see what can only be described as gaping holes in some of our older cities. These wastelands have not yet been filled with new housing and, where they have been, it has been done 1019 in ways which I am sad to see, and tower blocks now stand up from nowhere altering the skyline and in many cases bringing a good deal of unhappiness to the tenants of them.
I remember seeing a television programme set in Liverpool which showed a devastated area and, standing by itself, was one little public house. The landlord said that his customers travelled between 10 and 25 miles every Friday and Saturday to come back and meet their friends. If such a Measure as this can avoid that sort of thing, it is to be commended.
By the very fact that the Industrial Revolution began in this country, our housing stock must be among the oldest in the world. It was said at one time that the boast went out from Britain that we had the finest artisans' dwellings in Europe. Many of those houses have gone. Possibly there are a million houses among the 80 million existing which are still substandard or slums. Certainly there are 3½ million which need repairs costing something in the region of £125 or more.
On the other hand, we can defend our housing in many ways. If cleanliness is next to Godliness, we are the most Godly race in the world. Even now we have more piped water and fixed baths than any other nation in Europe. Then again, privacy is vital, and, carrying the statistics further, in terms of persons per room there is only one country in Europe whose people have more room space than those who live in the United Kingdom. The figure in Bedgium is 0.62 whereas in the United Kingdom it is 0.68. In that great paragon of a Socialist State, Sweden, the figure is 0.83. Then one comes down to what I call below the line. In the U.S.S.R. and Poland, the figures are 1.5 and 1.66 respectively, although, surprisingly, one could defend those countries whose way of political thought is alien to ours by saying that they have very modern stocks of housing but that their concept is different in that they pay more attention to modernity and central heating while paying little or no attention to individual privacy. As a result, one finds many families grouped, almost crushed, into units of accommodation.
If I were to criticise anything in the Bill as regards the important seven standards 1020 of amenities there set out, it would be to say that there should also be an eighth standard. That eighth should be the provision of a damp-proof course, because from what I know of housing—and I come originally from an area where slum conditions were at their very worst and I have seen those substandard houses—the lack of a damp-proof course can cause more misery almost then a leaking roof. I hope that if it can be done within the money that is available, the Government will reconsider whether it will be possible to make a contribution to damp-proof coursing.
What worries me about the Bill is the effect of the Government's proposals on the house building programme generally. The Minister, according to the Financial Times of 31st January this year, said that the new Measure would involve the Government in spending on renovation some £40 million a year by 1972–73, but that this would be contained within a total public investment in housing kept at its current level. I should like to ask the Minister who is to reply how he thinks this will work out vis-à-vis what I can only call normal municipal housing; in other words, the provision of new council houses. I have a feeling that it will be a very tough business deciding how this money is to be spent.
I am also worried about the impact of the cuts in local authority mortgage lending. This has already been referred to by my hon. Friend the Member for Worcester (Mr. Peter Walker). There is to be only £30 million available in 1969–70. That will be the fourth successive cut which has been made. I think that local authority mortgages are of vital importance, because they are normally the first step in a newly married couple's move towards home ownership. If local authority mortgage lending is to be cut, it will be a very serious matter because it militates against the effects of the Bill.
I am also worried about the impact of the provisions concerning local authorities. If there is to be a cut-back in the annual rate of growth of the rate support grant for the next two financial years, as we know there is to be, part of the financial burden, although the Government admittedly provide the greater part of the contribution in what 1021 is envisaged, will nevertheless have a very large effect upon the finances of local authorities, particularly the large city authorities where these general improvement areas are concentrated. I believe that the Association of Municipal Corporations has already voiced its concern about this point.
One of the most excellent things about the Bill is the suggestion of environmental improvement in Clause 40, but I wonder whether £100 per dwelling of approved expenditure is sufficient for good environmental improvement. I know that it will possibly be thrown at my head that the Deeplish study at Rochdale proves that it can be done; but, after all, this is the only exercise so far which has been carried out, and the adequacy of the grant will obviously depend on the extent of the acquisition involved in any one scheme. I know that that is a truism, but I hope that it might be possible for the Government to think very seriously about this matter.
We have seen an excellent exhibition in the Ministry's own building of what can be done about environmental improvement. It will be a great tragedy, if money is to be made available, that it should be restricted to the sum of £100 per dwelling. I think that another £25 or possibly another £50 would be better. The hon. Member for Aston mentioned £150. I do not know whether he meant that, but perhaps he will agree that £150 would be better in the circumstances.
At long last something is being done about the problem of slum clearance compensation. The Bill gives full market value to the owner-occupier, but it is unfair to the owner of tenanted property. The danger of having this differential is that we may well run into what can only be described as a black market in unfit houses, by devising means for sale to tenants by landlords. I think that this needs to be looked into again. What would be the cost to the Exchequer of treating both categories alike?
The hon. Member for Aston has already touched on the point which I wish to raise, namely, what should be done about the timing of this compensation. The A.M.C. is exercised about this matter, and I believe that it has recently decided to press the view, which 1022 I believe the Birmingham City Council has put forward, that the principle of site value should not apply under any circumstances, and that the full market value ought to be paid in respect of tenanted properties as well as those which are owner-occupied.
The question of the qualifying event is an important one for the operation of the new compensation provisions. The suggestion is that this should be the date of the confirmation of an Order, rather than the date of the commencement of relative proceedings. I believe that the G.L.C. has raised a similar point. The G.L.C. would tackle it in a different way. I should prefer to leave this to a London Member to discuss, but there is in both the A.M.C. and the G.L.C. some anxiety about this, and I hope that when the Minister replies to the debate he will deal with this, or, alternatively, that he will accept an Amendment in Committee to make this more equitable, otherwise hardships are likely to arise, and, secondly, a racket might develop.
What is the advantage of using local authority valuers in this general question of compensation? I am not suggesting that a local authority valuer would be better than any other valuer, or indeed any worse, but there will always be in the minds of those who are involved a suspicion that when a local authority acquires a property compulsorily it is acquiring it for its own use, and I commend what was said on a previous occasion by my right hon. and learned Friend the Member for Hexham (Mr. Rippon), that the valuation courts would be a much better vehicle for dealing with this problem.
I come now to the great problem of the transfer to the fair rent system. I know that hon. Gentlemen opposite hold sincere views about this. I hold equally sincere views. It has been said that the landlord should consider himself lucky if he can receive a grant sufficient to improve his property. Under the present Government, he will be extremely lucky to get that, but I suggest that landlords fall into two categories. I am speaking about reputable landlords, not those involved in acquiring rundown accommodation, because here I agree with the hon. Member for Aston. This is not something which I should ever countenance 1023 As I said, there are two kinds of landlord. There is the landlord by inheritance who would willingly deprive herself of himself of the ownership of a property if he, or she, were able to obtain vacant possession so that it could be sold. This is a very important point, because many people who have inherited property find that it is a liability.
Others who have inherited property do not want to part with it, but find that compensation merely for repairs is not enough. Surely a landlord ought to receive some return on his investment whether he has bought it or inherited it. It is easy to become sentimental over these questions, but I am sure that hon. and right hon. Members on both sides of the House have had many pathetic letters, often from widows whose late husbands, cautiously and after working hard all their lives, have put money into bricks and mortar in the belief that this was a safe and secure investment, only to leave these little ladies landed with one or possibly two houses for which they receive a ridiculous rent which does not cover their outgoings.
The Bill will do something to help these people, but they need more help, because most of them are not wealthy by any standards. Surely it is wrong that they will receive compensation only for repairs, in respect of which they will have to put their hands into their purses again although they have had no return from their properties for many years—certainly not since their husbands died.
Over the last three years the Minister and his predecessor have had the statutory power to bring into regulation certain controlled tenancies. I appreciate that such a move possibly could not have been made in respect of the great cities but it could easily have been carried out, had the Minister and the Government been so minded, in such areas as market towns and smaller towns with up to 100,000 inhabitants, where the same crying pressure for housing does not exist. It is surely wrong that that was not done. There is an old proverb which says that'"Hope deferred maketh the heart sick.People have written to all of us and asked, "When will this happen?". Right hon. and hon. Gentlemen on this side of the House have said to them, "The Government 1024 will not do it". What hon. Members opposite have said to them I do not know, because I have not seen their replies. But even now, when we are moving towards a fair rents system, the question of deferment still arises. I appreciate the problem of houses with lower rateable values, because the people concerned would be hit by an increase in their rent, but it does not make sense in respect of rateable values of £60 in the provinces. I see no reason why the people concerned there should have to wait two years for this to be done.
§ Mr. Lubbock
Does the hon. Gentleman realise that the Minister is creating a new problem in that if he made such an order he would remove the incentive given to landlords under the Bill to improve their properties? They could get fair rents without doing so.
§ Mr. Murton
The hon. Member may have a chance, eventually, to give the House his views on the matter. What worries me is that there is not much incentive by a landlord to put any more capital into a house in order to have it moved towards rent regulation. It may be argued that he is merely moving money from one investment into another and he is losing the interest on the money that he brings in. This is a problem which must be sorted out.
Then we come to the question of the poorest tenants. My right hon. Friend the Member for Wolverhampton, Southwest (Mr. Powell) mentioned this vital point. These poor tenants cannot afford any more rent and they will appeal to the county court to prevent their houses being improved. They would rather live in misery than pay the extra rent, and I can understand that problem. How much better is the Conservative plan of subsidising tenants as individuals rather than the housing stock, so that they can pay for the improved accommodation. That would make them happy, the houses would be better and the Government would help those who cannot help themselves.
Clause 73 will give local authorities new powers to secure repairs with regard to "age, character and locality", This could be of great value in assisting the improvement of an area of special architectural significance, but there is a warning here. The Clause gives considerable 1025 powers to local authorities, and one hopes that they will be used exceptionally. The power of a local authority to carry out improvements by agreement and at the expense of the owner in Clause 75 also needs a word of caution from a Conservative Member of Parliament. I would say simply, no direct labour please. I hope that small independent builders will be used for this type of work.
I am equally worried about the payment of the improvement grant and wonder whether it would not be a good idea to follow the system adopted under the War Damage Regulations, whereby the improvement grant was paid in the first place to the local authority which was responsible for paying the builder for the work done. This would have two beneficial effects in the present case. It would control the work done and see that it is done properly and well and would also prevent the grantee spending the money on something other than the work for which the builder was employed, and the builder not being paid—which is not unusual.
With regard to leasehold premiums in Clause 78, the Minister has been shamefully slow in putting this matter right and more delay is obviously inevitable. I am worried by the right hon. Gentleman's assurance that anyone can now go ahead with a sale on the basis that we are going to legislate. Strange things happen to prevent legislation and I would much rather commend to the House the Bill of my hon. Friend the Member for Crosby (Mr. Graham Page), the Rent Act 1968 (Amendment) Bill, which is 1026 already off the printing press and which could go through unopposed. My hon. Friend has drafted it well; it would be quick legislation and would avoid the need to spend the summer months on this Bill.
I make one final plea—that we should not forget that there is a housing shortage. I do not believe the story that we will have a sufficiency of houses at the right price in six years or ten years. There will always be a shortage of houses. The population is growing and houses are falling into disrepair. Even those which will be improved will have a life of perhaps only 15 years. We should not become a nation of council house tenants. If it is not possible for all people to buy their own houses when they want them and if, because of taxation, they must wait until they can save up to buy them, let us encourage private building for rent. Private builders at present will not build for rent, because they claim that the political situation is such that they will not risk their capital and that of their shareholders. Some hon. Members opposite have already reinforced the doubt in their minds. This is not the Conservative Party's attitude. We would give depreciation allowances to help the builders to build to rent. This is what used to happen. If there were sufficient rented houses, the market for rented houses would be wide enough for the rents to be reasonable so that everyone could afford them according to the standard of house they wished to rent. This is what we have got to go back to. It is vital. Until we do that, we shall never solve this problem.
§ 10.31 p.m.
§ Mr. Frank Allaun (Salford, East)
I deeply regret to have to say that this Bill, which aims to accelerate the improvement of old houses, unless amended, will have the reverse effect. It will bring the whole process to a halt. Its good features—and there are many—will be vitiated by that provision which will take 400,000 houses out of their present rent control. This will mean an increase in rent of up to 300 per cent. or 400 per cent., as I shall show.
For 13 years some Labour Members—Mrs. Harriet Slater, the Member for Stoke-on-Trent, who is now retired, was a pioneer in this field—pressed for this particular kind of help for old houses. It pains a number of my hon. Friends that this great opportunity is being lost. The hearts of the Cabinet Ministers and Conservative leaders are bleeding for the poor old landlords. Should they not be bleeding for the poor old tenants? For every poor old landlord there are a dozen poor old tenants. There are breadwinners taking home to their families £14 a week after stoppages, who will have their rents trebled and quadrupled.
There is an unholy alliance here tonight between the two Front Benches. They say in remarkable chorus, "Rents must go up." Naturally the landlords and the property owners support them. There are too many alleged housing experts whose solution to the housing problem can be summed up in two words—"higher rents". [An HON. MEMBERS: "Rubbish."] The big property firms which are hiding behind the skirts of the small landlords are jubilant. Somebody said "Rubbish". May I refer to the Financial Times for the day after the White Paper was announced? It was exultant and announced that one company alone, London and Westcliffe Properties, estimated it would enjoy a £100,000 increase in the value of its properties if the White Paper were put into legislation.
There is one basic point which must be met. Whilst the improvement of old houses is vital, it must be in addition to new building and not in substitution for it. The installation of bathrooms, lavatories and hot water systems is very close to my heart, but it must not be made an excuse for slowing down the new 1028 house building programme. The housing need is so great that we must have both—new building and improvement. I beg of the Secretary of State for Wales, who I believe is to wind up the debate, to make it clear that there will be no lowering of our building targets because of this Bill.
Generous grants for property owners already exist for the improvement of property. They receive half the cost of installing new bathrooms, hot water and inside lavatories. These additions must mean a considerable rise in the value of their houses, and they can raise their rents by 12½ per cent. of their half of the cost of these improvements. Under the new proposals landlords will be entitled to receive up to £1,250 per dwelling—a vast hand-out from public funds—and also take their rents out of the present control system and through the "fair rent" machinery.
According to the Ministry—I am quoting Departmental figures—this will mean an average increase in rents throughout the country of 2.6 times; in other words, an increase of 260 per cent. In London, Birmingham, Southampton and similar areas, however, I estimate the increase will be more than 300 per cent.
That is not all. As these houses will be greatly improved by the addition of bathrooms and so on, the rent increases will be above these percentages, since the increased value of the houses will be taken into account when the new rents are assessed. That is why the rent increases will in many cases be over 400 per cent.
My experience is that tenants are happy to take advantage of the existing system. They do not mind paying 7s. or 8s. a week extra for a bathroom, or perhaps 15s. more for an extension built at the back of the property. If, however, they are told that their rents will be raised by 300 per cent. or even 400 per cent. they will refuse to pay. The resistance will be so great that I doubt whether an attempt will be made by local authorities to enforce such increases through the county court.
I recently visited a row of houses in my constituency where the landlord has, under the present procedure, put in bathroom conversions. The tenants are paying an extra 7s. a week rent, and they 1029 are delighted to do so. Am I now to tell them, "Sorry, folk, but because you now have bathrooms, your rents are to be trebled"? The Tories might be prepared to say that. It should not be the responsibility of Labour hon. Members to say it.
In this case the landlord used the existing procedure and obtained the current grant. I am not suggesting that he made a fortune out of the exercise. On the other hand, he certainly did not make a loss. He would not have gone in for it if he would have lost money on the deal. His tenants are now paying an additional 7s. a week. Under the Bill they can be asked to pay an enormous increase.
Increases in rent are rent increases, even if they are phased. Many of these phased annual increases will be more than the 7s. 6d. per year allowed yearly for council rents under the procedure being followed by the Minister. I give no secret away when I say that, with few exceptions, my hon. Friends who are present tonight and who are particularly expert in housing problems share my criticisms of the Bill. I wish that while being prepared to listen to us at length, the Minister would sometimes act on our advice.
I am indebted to my hon. Friend the Member for Bassetlaw (Mr. Ashton) for drawing an important fact to my attention. There are 141,000 National Coal Board houses, vast numbers of which—whole villages and townships—will be taken out of their present rent control as a result of the Bill, including those in areas where pits have been closed. It is obvious that my right hon. Friend has not fully considered all the repercussions of the Bill.
My right hon. Friend will no doubt want to know my alternative proposals. There are several. In the City of Leeds, using existing powers, the local authority has gone ahead with area improvement schemes. Whole parts of the city have been improved, not only by the addition of bathrooms but in other ways as well. Twelve thousand houses have been transformed. The local authority used existing powers and grants. If Leeds could do this, why could not other authorities do it without the new liabilities?
1030 Secondly, there are many valuable suggestions in other parts of the Bill which will be most helpful. Thirdly, a number of my hon. Friends, right, left and centre, have put forward an alternative—and when the proposal is supported by Labour Members of such varying political views as my hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved), and my hon. Friend the Member for Tottenham (Mr. Atkinson), or my hon. and learned Friend the Member for Northampton (Mr. Paget) and myself, I would say that it is almost a unique occasion. It must be a remarkably good idea.
The alternative we suggest is that, instead of taking rents out of control, tenants should be given an opportunity of becoming owner-occupiers. The landlord would have to offer the house for sale to the sitting tenant. He would have to do this before taking the rent out of control, whether a bathroom already existed or whether he intended to install one. There are five great advantages to this proposal.
First, it would ensure that the houses were improved in huge numbers. Note how, last year—and these are the Minister's own figures—five owner-occupiers improved their homes with standard grants for every two private landlords. Owner-occupiers have sensibly taken advantage of the grants, whereas the landlords, with some honourable exceptions, have not. If one goes down any street in a working-class area, one finds that most of the houses which have had bathrooms put in or have been well maintained are owner-occupied. If my right hon. Friend really wants to improve the stock of houses, this is the way to do it.
Secondly, this proposal would meet the argument which we have heard constantly, that the small landlords cannot afford to repair and improve. If they cannot afford to do so let them sell their houses. These houses—some of them 100 years old—have been paid for over and over again in rent, and I do not see why the public should rush to their assistance any more than it rushed to the assistance of cotton shareholders who were on a bad investment. These landlords, unlike other capitalists, do not put aside for depreciation as they should.
1031 Thirdly, this proposal would take away the false Conservative charge that Labour is not interested in helping owner-occupiers. Fourth, it would be immensely popular. Fifth, it would be a real alternative to raising rents as is proposed in the Bill. Far better for the Government to provide funds to owner-occupiers to improve their houses rather than allow a trebling of rents, often with no improvements at all. Clearly, the houses would have to be sold at their present value, which means at rent control values and not trebled values, which we would get if rents were similarly trebled.
§ Mr. Peter Walker
The Minister explained that 60 per cent. of these houses were owned by landlords and that 40 per cent. of the landlords were pensioners. Why does the hon. Gentleman believe that a pensioner with only a single house should sell that house for £1,500 at a controlled rent, whereas the tenant in the following week should be able to sell it for £3,000? Why should that pensioner not obtain the benefit while the tenant should?
§ Mr. Allaun
There is no reason why control should not be placed on the new owner-occupier selling the house again within a short time. This is a perfectly reasonable alternative.
§ Mr. Julius Silverman
Do not councils, even Tory councils, impose similar conditions when they sell houses?
§ Mr. Allaun
Certainly. In Birmingham and elsewhere a five-year limit within which the new owner is not allowed to sell has been imposed.
§ Mr. Peter Walker
Will the hon. Gentleman now explain why, even after five years, £1,500 should go to the tenant and not the pensioner?
§ Mr. Allaun
Five years is a long time under any system. My hon. Friend said that he doubted whether as many as 61 per cent. of landlords were the owners of only one house. It may be true of Lancaster, where an inquiry was conducted, but it certainly does not apply everywhere. It would be intolerable if the selling price of such a house were to be trebled, and that is certainly what would happen if we proceeded with the idea which is so popular with the hon. Member for Worcester.
1032 While I support the aim, I condemn this part of the plan and I appeal to my right hon. Friends to be big enough to have second thoughts in Committee.
§ 10.47. p.m.
§ Mr. Eric Lubbock (Orpington)
I am entirely in sympathy in principle with the suggestion of the hon. Member for Salford, East (Mr. Frank Allaun) that these tenants should be permitted to buy their own houses, but the problem bristles with the most formidable difficulties some of which were outlined by the Minister when he posed a number of questions to the hon. Member for Erith and Cray-ford (Mr. Wellbeloved), questions which I have not yet heard answered by those hon. Members who have supported this proposal.
This afternoon I had a "green card" sent into me by a constituent of mine who owns property in London. He lets it to an old lady and her daughter at a gross rent of £1 13s. 3d. out of which he has to pay more than £1 a week in rates and water rates, leaving less than 13s. 3d. a week out of which to pay management charges and repairs and the rest of the outgoings. Unfortunately, the water main burst recently, doing about £300 worth of damage which the tenant is now asking him to put right. How can he do so with an income of 13s. 3d. a week?
What price is it suggested this old lady and her daughter should pay if they have the right to enfranchisement, as is proposed? If they pay the amount which an investor would pay for an income of 13s. 3d. a week, my constituent will not do very well out of the deal. However, as the hon. Member for Worcester (Mr. Peter Walker) has pointed out, the old lady, or, more likely, her daughter, would have an absolute bonanza in a few years' time when the house was sold, no doubt with vacant possession, when it would be worth £3,000 or £4,000. The hon. Member and his friends would do well to think a great deal about the mechanism of their scheme before we reach Committee. I shall certainly not turn it down out of hand, but, like the leasehold enfranchisement scheme, it requires careful thought for a number of years—and we have made mistakes with the leasehold scheme, as the Minister has recognised by Clause 78 of the Bill.
§ Mr. John Page (Harrow, West)
I have done some mental arithmetic and I make that a gross rateable value of £18. There cannot be many houses in the London area with a gross rateable value of £18.
§ Mr. Lubbock
The property is not in my constituency. The landlord lives in my constituency, but I am not sure where this property is. It is somewhere else in Greater London. I did not make a note of the address. The hon. Gentleman must be wrong, because the rates and water rates of the property were just over £1 a week, making £52 a year. These are the figures given to me.
The second theme of the speech of the hon. Member for Salford, East and other hon. Members opposite, was that it boiled down to our giving vast hand-outs to landlords from public funds in making these grants available under the Bill. My point of view is quite simple, not in the pejorative sense, but simply in that the Minister's figures showing how many of these properties in the controlled sector are unfit for human occupation tell their own story. Over a period of years, by keeping the rent of these properties down to an artificially low level, we have ensured that they were allowed to become slums or unfit for human habitation.
The hon. Member must fact this problem squarely. Does he want the remaining one-third of those properties which can still be salvaged, to be restored to a fit condition for human occupation, or should we continue with the present system and allow them to degenerate to such an extent that 400,000 properties still salvageable, according to the Minister, have to be replaced by new local authority building? If that is the hon. Member's choice it will be a lot more expensive than the £40 million a year which is ultimately to be spent under the Bill. It means that those houses will have to be demolished, for the new skyscrapers talked about by the hon. Member for Poole (Mr. Murton). Not only will money have to be spent, but the social upheaval resulting from the dispersal of families from an old and well-loved area of a city will lead to more human misery than is caused even by the poorer housing conditions which these people have to endure.
Although landlords will receive a certain amount of money under the Bill I 1034 look at this pragmatically, if that is an adjective which one can still use in this House, and I say "Good luck to them"—let them have the money if it means salvaging a few houses which would otherwise need to be demolished by the local authorities to make way for some new glass and concrete skyscraper, which would probably be condemned as unfit in a few years' time. Will the landlord really make as much money out of the scheme as the hon. Gentleman seems to think? I rather doubt it. If one looks at the most recent thorough survey of the matter, the Milner Holland Report, we see that on page 39 it says:… when the long-term cost of finance is 6½ per cent."—a very modest amount by today's standards, but I suppose that that was the going rate in 1965—the net income to the landlord after annual outgoings on repairs etc. (but before tax) ought to provide a minimum rent of 9 per cent.We are talking of interest rates, long-term finance, if it can be got of 8½ per cent. to 9 per cent. The hon. Member for Salford, East can see that 12½ per cent., which has been provided hitherto for landlords to make improvements to their properties, will not even allow them to break even, let alone make a profit.
The arithmetic done earlier by the hon. Member for Bethnal Green (Mr. Hilton) must be mistaken. I did not take his figures down but if he looks at page 38 of the Report he will see clearly how to calculate the amount of return necessary for a landlord to break even, given a certain rate of interest on the money that he has to borrow. These figures in the Report give a very different picture from that painted by the hon. Gentleman.
The other interesting thing to which I want to refer from the Milner Holland Report is the table on page 42, which compares the rents which have to be charged by a local authority, a housing association and a private landlord to recoup their expenditure for two different types of property. One is a house costing £5,500, including land, and the other is a house costing £3,750. I shall give only the first example to illustrate the point. The local authority charges 1035 £3 3s. 8d., the housing association would have to charge £7 14s. 1d. for the same accommodation and the private landlord would have to charge £10 1s. 8d.
The reason for these enormous differences is fairly clearly understood. The private landlord cannot borrow over as long a term as the local authority, for which the period is 60 years. It may be only 10 or 15 years for the private landlord. He has to pay much higher interest because he is not such a secure borrower as the local authority, and, of course, he has to make a profit. We can argue what the exact rate of that profit should be, but the private landlord is in a different position from a local authority, which has only to recover its total expenditure over a period of 60 years.
Therefore, if the private landlord is to make any contribution to meeting the need for rented accommodation, he must charge something like three times the local authority rent. We are not suggesting that under the Bill, by the transfer of properties from old control into regulation, we will allow the landlord to go that far. It is true that there are to be increases over a period of years, but not to the level of three times the amount which a local authority would charge for similar accommodation.
§ Mr. Joseph Ashton (Bassetlaw)
In assessing the cost, do those figures take into account the fact that the private landlord may gain tax relief on the money he borrows, whereas a local authority does not?
§ Mr. Lubbock
The figures in the Milner Holland Report take into account the tax position of the landlord.
The point is made that because certain items of expenditure are not allowable for tax purposes, the landlord must charge a higher rent than he would otherwise need to charge. This is a point which we should have looked at some time ago. Like certain hon. Members opposite, however, I am not at all optimistic about the contribution that the private landlord can make in the long term to the supply of private rented accommodation in total.
How one should judge the Bill is to see whether it will diminish the rate at 1036 which properties disappear from the rented sector and into owner-occupation. To the extent that we can arrest this decline, we will relieve the burden on the local authorities for the building of new properties. I hope that hon. Members opposite agree that this is a matter of some importance.
I am not all that sceptical about the Minister's claim of an accrued surplus of houses, as he put it, in the early 1970s, although I do not think that it will necessarily be as large as the figure given by the Minister for Planning and Land the other day. This depends upon not having too rapidly declining a private sector, which would throw an additional burden of new building on local authorities.
I have been following the figures over a period of years with interest, because they are crucial to any study of our housing problem. It is interesting to see that between August, 1957, and April, 1959, the rate of decline in controlled properties after the Rent Act, 1957, was at about the same rate of 10 per cent. as, the Minister says, applies today. We have come down to figures, which the Joint Parliamentary Secretary gave me in an Answer at the end of last week, of 350,000 controlled properties in London and 1,550,000 in total in England and Wales. If one wants to know what it will be at any time in future, the Minister said, one can apply this 10 per cent. rate of reduction.
One of the interesting things is that, as a result of the survey which was conducted in 1967, the figures have had to be revised slightly upwards. The Ministry of Housing ought to make sure that we have continuous knowledge of the state of housing, and not merely undertake these surveys at intervals of a few years, when they may show that assumptions on which we had been working for some time were mistaken. The Minister himself, in his speech today, said that the 1967 survey demonstrated that the state of housing was much worse than the local authorities had led us to believe.
In the first speech I made in this House on housing—I do not very often quote myself—I said:Top priority should be given to a definitive survey of the long-term housing needs of the nation.1037 The then Minister, now Lord Hill, in reply, said he did not think that was a particularly good idea. He said thatit is not my idea of a top priority that it should be given to statistics and definitive surveys. Rather should the top priority be the immediate problem of housing."—[OFFICIAL REPORT, 2nd May, 1962; Vol. 658, c. 1078, 1141.]Of course, one would agree with him, if that had been done by the Conservative Government.
However, the point I am making to the Secretary of State for Wales is that unless we have knowledge of what the housing situation actually is we are not able to make the type of plans necessary to meet the circumstances of the next few years. So I would urge that the survey undertaken in 1967 is not used as a guide to what is going to happen for the next five or JO years, but that a continuing survey is done, either by the Ministry of Housing itself or, if the right hon. Gentleman likes, by the Ministry of Employment and Productivity, which did this one. There should be continuing survey work throughout the country on a sample basis so that we know what the condition of housing is. Then we can see in which direction we are going.
One or two words about the rest of the provisions of the Bill. I have dealt with the controversial aspects. I should like to join in the general welcome which has been given by all hon. Members, I think, to the other provisions.
The idea of general improvement is an extremely good one. There is just one question I should like to ask about that. I see at the beginning of this Part, Part II, that any person who appears to be suitably qualified may submit a recommendation that a particular area should be designated a general improvement area. I ask this question of the Secretary of State for Wales, and I hope he will deal with it when he replies to the debate. Suppose a very suitably qualified body makes a recommendation that an area be designated a general improvement area and that the local authority declines for no particularly good reason. I endorse and approve what the Minister said about the minimum of interference being exercised by him with this function of local authorities, but I am just wondering whether there should not be a right of appeal against a local 1038 authority in a case where a perfectly good recommendation is turned down.
Part IV, about houses in multiple occupation, I think is a good little provision, although the Minister said it would probably not be particularly extensively used. The Part on slum clearance is welcome and I join in the approbation of that Part.
The Minister has satisfied a lot of people by including in Part VI this amendment of the provisions of the Leasehold Reform Act. I hope that it is true that it will be borne in mind that solicitors who are in great difficulty can carry on as though this Clause had already become law. I think it was the hon. Member for Poole who said he was not sure whether solicitors behaved in this way, but I can assure him that this is a matter which has caused very considerable difficulty. I am not just depending on what the Law Society has said. I have had in my constituency three or four cases of people who have entered into negotiations to sell property, and who have found, partly because of the negligence of their solicitors, that, having proceeded so far, they then have had to come to a stop. It amazes me. I hope that the hon. Member for Crosby (Mr. Graham Page) who, I understand, is a solicitor, will not mind my saying that many in his profession do not bother to read not only Acts of Parliament but even newspapers in which the matter has been extensively discussed. They proceed so far on the road to negotiations that their clients have incurred substantial expense before they discover snags such as these which will be rectified by Clause 28.
I declare an interest as a director of a small building company. We have had some difficulty in the last few years in getting the finance needed in my business, and I believe in the building trade generally, to carry out our operations. The Government say that builders will join this scheme to make improvements in properties whether they are owned by local authorities, private landlords, or owner-occupiers. Of course the building industry would be delighted to assist in carrying out this operation, but builders will need some working capital if they are to add this to the tasks they undertake. I agree with some hon. Members who have said that it would be a mistake 1039 to put this £40 million of new work on to the industry. If we continue in the credit squeeze which we are suffering and the banks are debarred from lending additional money to companies willing to undertake this work, it will not be carried out at all.
I hope that the Minister of Housing and Local Government and the Secretary of State for Wales will represent strongly to the Chancellor of the Exchequer that there should be some relaxation in policy concerning central construction. If the finance is not made available the Bill will not be implemented simply because builders will not be able to undertake the work.
§ 11.8 p.m.
§ Mr. E. Rowlands (Cardiff, North)
I should like to follow the hon. Member for Orpington (Mr. Lubbock) in some of the things he said, but I find myself somewhat restricted by reason of the fact that I am serving on a Parliamentary sub-committee which is investigating the housing services. I therefore feel unable to comment on some of the general points made by the hon. Member because I believe it is protocol not to make statements about such matters during an inquiry on which one is engaged.
As the Minister of Housing and Local Government and the Secretary of State for Wales have emphasised over and over again, this is essentially an improvements Bill as well as an important Measure giving new compensation for people with properties affected by slum clearance. We have been waiting for decent compensation to be offered to people with unfit houses. The inequities of the 1957 Act are well known. My right hon. Friend the Secretary of State for Wales knows of cases in his constituency, as there are in mine, poignant cases of people being paid a mere pittance for improvements. Thousands will owe the Minister a debt of gratitude for this formula. I fear, however, that hundreds will feel cheated because they will be excluded from the new compensation provisions of the Bill.
As hon. Members on both sides of the House have said, the new compensation terms apply only to households affected by clearance orders which have begun after 23rd April, 1968. They will 1040 leave out thousands at present affected by orders started before that date. They will still be living in those houses and not be paid a penny in compensation under the Bill. They will get only the old compensation terms, which we recognise as unjust.
This will be the position in Cardiff. In a section of my own constituency, we have a large clearance order affecting no fewer than 228 houses in Plasnewydd. Of those, 159 have been declared unfit, and 43 of them belong to owner-occupiers. A lengthy public inquiry has resulted in many objections to the clearance order, generally on grounds of compensation. These people, who have not been paid a penny and are still living in their homes, will not enjoy the advantages of the new compensation terms in the Bill. The same will apply to all cases where clearance orders are not yet confirmed, unless the Bill is amended.
People will have an additional sense of grievance in cases where the old system of compensation is found to run alongside the new one. Under clearance orders dated after 23rd April, proper compensation will be paid to people affected by them. At the same time, the old site value compensation will be paid to people affected by earlier orders who have not yet moved out of their premises.
I cannot see the difficulty of amending the Bill in this respect. It cannot be difficult to identify the people who could be given a fair deal under the provisions of the Bill. I can see the misfortune of those who have been compensated under orders which have been confirmed and completed, but that is no argument for saying that people who have not yet been paid should not get the new terms of compensation. In the Bill, we recognise that the old terms are unjust, yet we continue to apply them to thousands of people.
The general aim of and spirit behind the Bill is to deal with the improvement of old houses and the regeneration or rejuvenation of our older communities. I think that most hon. Members will support it. However, if it is to achieve its purpose, it must be carried through with care, imagination and humanity by the authorities in charge of implementing 1041 the policy. Its success will depend enormously on the way in which Clauses 34, 35 and 75 work.
Clause 75 establishes the right of local authorities to act as agents on behalf of owner-occupiers—individuals or groups of people. This is a valuable additional responsibility. Clauses 34 and 35, which potentially are by far the most important, lay the duty upon local authorities to make known their proposals for general improvement areas. That is most important, but it does not go far enough. Clause 35 says that the proposals of a local authority ought to be made known to the community. Surely it should be more. If the purpose of the Bill is to be achieved, surely we have to involve the whole community in the process. The local authority must find what its people want. Sometimes the response will be semi-coherent, but people should be able to make known their ideas about how to improve their community.
In this respect, I cannot do better than quote what I consider to be the treatise on the regeneration or rejuvenation of old communities. It is a study conducted by an American, Miss Jane Jacobs, entitled "The Death and Life of Great American Cities". She says at one stage:Conventional planning approaches to slums and slum dwellers are thoroughly paternalistic. The trouble with paternalists is that they want to make impossibly profound changes, and they choose impossibly superficial means for doing so. To overcome slums, we must regard slum dwellers as people capable of understanding and acting upon their own self-interests, which they certainly are. We need to discern, respect, and build upon the forces for regeneration that exist in slums themselves, and that demonstrably work in real cities. This is far from trying to patronise people into a better life, and it is far from what is done today.This should be the spirit with which local authorities dealing with the powers in the Bill should handle the regeneration of our twilight areas. The success of the Bill will depend on the imagination and humanity of the authorities. It will not be sufficient for local authorities to put out the odd pamphlet or notice on a desk at city hall or produce forms which are incomprehensible to the majority of those whom they are trying to help.
I should like to see more provisions included. I suggest that the Bill should 1042 include a provision to establish a new type of officer called an area improvement officer whose specific job would be to explain to people, to act as a go-between the communities and city hall. He would probably become known as Jones the Improvements in South Wales. But he could live in the area and have an office locally. He could help in a more successful way to sell these provisions by example. There is no better way than selling by example. One or two local authorities have bought the odd house here and there in different areas and have done them up to show what can be done with the grants. These are not in museums, but in the areas concerned. In one case 25,000 people went to see one house. It was not Longleat or Blenheim, but 25,000 people went to see it. This is one simple method which should be included in the provisions of the Bill to sell the idea and explain to the community what can be done so that they might be encouraged to carry out improvements.
I should also like to see stronger provisions for compelling local authorities to take action. Clause 71 is the only one which obliges local authorities to take action. I should like to see a provision that local authorities, within a specified period, should submit area improvement schemes or, if not, explain why they have not got areas to improve. It is necessary, in my opinion, to impress upon local authorities that they should act under these provisions.
The Bill is a major instrument in housing policy and town planning, rather like our town planning legislation, because in many cases we have had enlightened legislation, but it will not achieve its purpose or be effective unless it accepts the reality of the situation in many towns and cities.
The aim of the Bill is to restore, regenerate and rescue certain areas of twilight housing. However, it could be frustrated and contradicted by policies pulling in opposite directions—by decisions taken by local authorities, sometimes approved by the Ministry, aimed to destroy and break up these communities.
Here, on the one hand, we have a Bill going through the House to deal with a rescue operation—the regeneration of twilight areas. On the other hand, we 1043 have a number of major local authorities planning massive urban motorway schemes through the areas we are trying to recover and rescue.
It is not only in Cardiff that we are faced with the London type of motorway box. The same sort of thing is to be found in Salford, and in almost every large city. Major highway schemes are being proposed to go through the very twilight areas which we are attempting to rescue. What are we to do about this? Does the Minister intend to tell local authorities that he wants them to reconsider any proposed schemes of that kind? Will he tell them to take into account the new factors introduced by the Bill?
Every hon. Member who considers the Bill has in his mind's eye the areas that he knows very well, perhaps parts of his constituency. There are two wards in my constituency which I think should automatically be designated as areas for improvement—Cathays and Plasnewydd. They are two very large wards, which stand to lose 1,600 to 2,000 houses because of the highway authority's proposals. These houses will be lost, as will others close to the motorway routes. Where is the incentive and encouragement to carry out improvements to a house if it is next to an urban motorway which acts as a Chinese wall and carves its way through the very communities that we are trying to improve?
I do not want to elaborate on this, but it is important that we should recognise the state of affairs in so many of the areas about which we are thinking. My plea is that the Bill should be seen not merely as part of the housing programme, but as part of the whole process of town planning, a process which we began with the new ideas in the Town and Country Planning Act, and which is now to be continued by means of the tools and instruments provided by the Bill for the regeneration of our old communities.
There must be a combination between the housing and planning authorities in any programme of restoration, and, what is more important, in any programme of rebuilding. I should like these authorities to combine area improvement scheme with schemes for the building of 1044 new houses in the twilight areas. If I am right, Clause 33 is contrary to the aims I have in mind.
That Clause says that no land included in a clearance area can be included in a general improvement area. The houses in clearance areas are to be removed under clearance orders. But often these areas are both clearance areas and improvement areas, and ought to be looked at as one, and not as separate entities.
Under this Clause residential property will be cleared away, and in its place there will be non-residential development which will impinge on the areas which we are trying to improve and preserve. As proof of that, perhaps I might refer to what is happening in my constituency. Under the terms of a clearance order, 228 houses are to be knocked down. Under the new proposals, which are intrinsically a part of a potential improvement area, not one new house is to be built. Instead, there are to be warehouses, motorcar showrooms, and the like.
The reason for that—and this is a situation in which local authorities and planners often find themselves—is that when a twilight area is cleared the land becomes extremely valuable, and the last thing that many authorities think of doing is building houses there. I suggest that Clause 33 should be amended, and that clearance areas and improvement areas should be considered as a whole.
What greater faith could we show in the twilight areas than to get local authorities to build new houses while at the same time improving the existing houses in those areas? For this reason I should like us to consider what the Bill can do in the wider concept of town planning and the regeneration, renovation and rebuilding of our twilight areas.
The Bill could be one of the most important features in the regeneration of Welsh valley towns and communities. In Wales a recent survey showed that whereas we thought that we had about 40,000 houses which were in need of immediate financial assistance the number was no less than 92,000. The Bill could help the valley towns and city neighbourhoods in Cardiff to bloom again. It could bring greater comfort to many people who already share the 1045 joy and happiness that goes with a good neighbourhood, and the feeling of kinship which they and their ancestors have experienced for countless years.
All that we can do is to add these extra comforts to an environment which is already happy. In this respect the Bill could make a wonderful improvement in the planning and redevelopment processes of our town.
§ 11.26 p.m.
§ Mr. Walter Clegg (North Fylde)
First, I apologise for not being so assiduous in my attendance in this debate as I normally am in respect of debates in which I wish to take part. My arrangements were upset by the three-hour pantomime which preceded this debate. It was a strange commentary on our procedures that for that debate we had a full House and Press Gallery whereas for this one we have only a tithe of the attendance.
This has been a fascinating debate. To me it has also been a tragic one, because on both sides of the House are men of good will, all wanting to solve our housing problems. I do not think that any of my hon. Friends has suggested anything other than that this is what all hon. Members want to do. The tragedy is that so different are our ideas for solving the problems that we make them worse instead of better. I was fascinated by the arguments put forward by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). He argued very forcibly for a free market, and his arguments were compelling to any Conservative. I could not go all the way with him in his suggestion for a return to conditions which formerly operated, because I do not think that we can have a free market so long as there is a division between the parties—so long as there is a threat that a future Socialist Government will upset any free market that a Conservative Government might set up. Therefore, in reality we cannot have a free market, because the market is distorted by that future threat.
In an intervention in the speech of the hon. Member for Birmingham, Aston (Mr. Julius Silverman) I said that the threat that has come from hon. Members opposite has affected our housing position and has prevented private capital from coming forward to help solve our difficult problems. I look upon this as 1046 a tragedy, because in many other Western countries, including Socialist countries, private capital has not been denied the chance to help solve housing problems. In many such countries private capital has been helped by the Government to achieve a solution of the housing problem in the great cities, but here that has not been the case.
§ Mr. John Fraser
Where? What happens, surely, in Scandinavia is that private capital is not used to make profits on housing but is pumped into housing associations at a reasonable rate of interest: they then control it themselves without making large profits. That is the difference, surely.
§ Mr. Clegg
I disagree with the hon. Member. In certain Socialist countries—Norway is possibly an example; certainly in Scandinavia—private capital is used. It has been used with tremendous effect in West Germany and the United States. I agree that these last two are capitalist countries but tremendous strides have been made.
My hon. Friend the Member for Worcester (Mr. Peter Walker) talked about attracting the great funds of the insurance companies and pension funds for investment. This above all is when we need them. Possibly for the first time, hon. Gentlemen opposite are realising that the public purse has a bottom and that taxation will not allow this Government to solve the housing problem by Government money. So it would be ideal to get this private money into the housing field.
My hon. Friend the Member for Worcester implied that, on this Measure, a bridge could be built between the parties to allow this money to be used. Regretfully, I do not believe that this will happen, because the interests which will read the Report of this debate and see the enmity of hon. Gentlemen opposite for the private landlords will say that the bridge has not yet been built. This is a great tragedy. If we could agree on some method of attracting capital and giving a good return, we should get a good flow of money and a new direction for housing.
The present stock of rented housing is decreasing and many reasons have been given for that this evening. Another is that it is clear from the statistics that the 1047 least mobile section of our community—we need a mobile community because mobility in itself creates extra room—are the council tenants. This is not their fault: it is the system. It is very difficult for a council tenant to transfer from house to house, even more difficult to transfer from estate to estate and almost impossible to transfer from town to town. The most mobile section are the tenants of private landlords.
But hon. Gentlemen opposite want to create two types—council tenants and owner-occupiers. They want to be rid of the intervening privately rented sector. This does not apply to all of them, but it was said by the hon. Member for Sal-ford, East (Mr. Allaun)—and the hon. Member for Erith and Crayford (Mr. Wellbeloved) is all for getting tenants to buy their landlords out. So this seems to be part of the pattern of the thinking of hon. Gentlemen opposite.
If that is done, the council tenant section of the community will be a "frozen society", immobile. This is one of the heavy prices they are paying for subsidy.
§ Mr. James Wellbeloved (Erith and Crayford)
I am following the hon. Gentleman's argument with great interest, because I agree that private landlords who are investing money in houses should get a fair return. Has he considered the fact that, since 1965, there has been a fair rent system, and that, on new property built for renting, the landlord and the investor could get a fair return through the rent officer's assessment? Yet we have seen no dramatic increase in private rented property. The hon. Member's friends do not seem to want to invest their money.
§ Mr. Clegg
I think I can answer the hon. Gentleman. First, the fair rent system has worked far better than I ever thought it would. I was not in the House at that time, but if the hon. Gentleman had been here earlier he would have seen how inimical that system was to some of his hon. Friends. But he has taken only part of the argument. If we could agree between the parties some system based on fair rentals, we should have gone a long way towards solving the problem. But for the small investors, the 60 per cent. who own one house, we have also the problem of protected 1048 tenancies, the inability to give a tenant notice to quit.
I will explain to the hon. Gentleman the sort of practical difficulties that this causes. I am a solicitor. Very often when a tenanted house becomes vacant the landlord comes to me and says "What shall I do with it? Shall I put it back on the market and sell it with vacant possession, or shall I let it?" I say "If you let it you can now get a fair rent assessed and may get a reasonable return. Immediately you let it you will lose the vacant possession value, which will be many hundreds of pounds, and you may not get possession of the property for another 20 or 30 years. Then, if you need liquid capital in five or six years' time, you will not be able to get it." What nearly always happens is that the person sells the house, and it means one fewer rented house. In the creeping decontrol time under the old Act I had many clients who were prepared to give a five or six years' lease at a rent agreed with the tenant and not sell with vacant possession because they knew that at the end if circumstances changed they could do something about realising their property.
I turn to the question of compensation. I usually try to knock hell out of the Minister on every possible occasion, but he has done a good job in the compensation provisions. However, like Oliver Twist and like his hon. Friend the Member for Cardiff, North (Mr. E. Rowlands), I should like to ask for more. Coming from the north of England, the Minister knows as well as anybody in the House the bitterness which the present compensation arrangements have caused. There was a programme on Granada recently called "On Site" devoted to compensation cases, and all the cases showed the bitterness of the people. There was a tremendous post afterwards.
I ask the Minister to reconsider the retrospective provisions. I know his difficulties; they are real. But, as the hon. Member for Cardiff, North said, there will be people whose claims are not settled still living in houses which will receive the old compensation when houses in another part of the town receive the new compensation, and this will cause even more bitterness.
I draw attention to a problem which is not dealt with in the Bill but perhaps 1049 it will be if the Minister will make it possible in Committee. I refer to the plight of small businessmen faced with the problem of good will and the difficulty with district valuers on this point.
I again say that I think that this has been one of the best debates on housing that I have ever listened to in the House, and it has been a privilege to take part in it.
§ 11.39 p.m.
§ Mr. John Forrester (Stoke-on-Trent, North)
As the hon. Member for North Fylde (Mr. Clegg) said, there is a division of opinion between the two sides of the House about the type of rented property that we think there should be in this country. I do not propose to get into an argument with him now, but I think that we should agree strongly that we both desire a great extension of owner-occupation.
I agree with the hon. Gentleman very much about the immobility of council house tenants. I think he has a very fair point there. I am sure that many council housing managers look upon transfers as an intrusion which they ought not to have to bear. Anything that the Minister can do to get more mobility of council house tenants in an area or between areas would be welcomed by council house tenants.
Most of the points have been dealt with adequately in the debate and, therefore, I shall content myself with a few brief remarks on some of the contents of the Bill. Like so many other hon. Members, I give a general welcome to the Bill because I believe that it can produce a great improvement for controlled tenants. In many of our industrial cities they have been the Cinderellas of housing for far too long. Many of these houses have been occupied by their present tenants for more than 30 years and, as the hon. Member for Worcester (Mr. Peter Walker) said earlier, so many of these houses are now occupied by pensioners and others who have no earning capacity.
In addition, as one might expect, the people who occupy these houses usually have incomes which are lower than those of people in other types of accommodation. Therefore, because of their earning capacity, they have throughout their lives been denied the opportunity of 1050 enjoying the modern amenities which other members of the community have had. Because they are householders, they have in most cases been denied the opportunity of council accommodation. In Stoke-on-Trent we have at the moment 2,865 applicants on the council housing list, of whom 1,291 are householders. The number of householders who are seeking better accommodation is an indication of their great desire to have modern amenities and environments, and also indicates a willingness on their part, as the right hon. Member for Wolverhampton, South-West (Mr. Powell) said, to pay more for the better type of conditions.
By improving the grants which local authorities may pay and also by allowing landlords to claim for repairs and replacements, this Bill will bring hope to many people who had probably despaired of ever getting modern amenities. The greater powers which the Bill provides for general improvement areas are to be welcomed, and the local authorities should be encouraged to proceed with all reasonable speed to put these powers into force.
It has often been said that many people do not wish to leave the area in which they now live. This is true. Some people never settle on new housing estates. They wish to return to their former houses. But it is also true that many of the people who vowed and declared that they would leave and go to new housing estates only when the bulldozers and the bailiffs came, would not return to those old areas if one paid them to do so. However, this is not really an argument against the Bill, and this provision is very important indeed.
We hear a lot about participation in the affairs of government. Both central and local government have been particularly lax in this respect and have caused themselves many unnecessary headaches as a consequence. It has been my experience that people are vitally interested in affairs which affect them directly, although one could hope that sometimes they would be equally vitally interested in affairs which affect them but which appear perhaps a little more remote.
The provisions involving householders and landlords in prior consultations about improvement areas are some of the most 1051 important in the Bill. There is nothing more maddening than to receive an official pronouncement, then to hear nothing else, then to have one's house inspected, followed by silence, interrupted perhaps only by rumours which circulate for months. Such procedures were never defensible and in today's world they are totally unacceptable. Community cooperation should not be just a slogan but something put into operation wherever possible in all spheres of life.
The additional powers for dealing with multiple occupation are also to be welcomed. Many houses in multiple occupation are proper in every respect, but in many cities some large, old houses have been taken over by landlords, white as well as coloured, with the sole aim of making a large profit in the shortest possible time. By trading on the misery of those who are having difficulty in finding accommodation, they charge exorbitant rents, and when the rent officer is called in the tenants quickly receive notices to quit. This type of multiple accommodation is distressing to both the tenants and the neighbourhoods in which this type of property is situated. I would like to see local authorities using the extra powers they have quickly, making sure that this sort of accommodation is brought up to standard and seeing that the number of occupants in these houses is restricted in accordance with the new provisions.
Like many hon. Members, I have for some time been disturbed by the confusion surrounding slum clearance compensation and by the anomolies and injustices in the old arrangements. I welcome the increased payments for well maintained houses and for owner-occupiers. I echo the sentiments expressed by hon. Members on this subject and urge my right hon. Friend to look again at the question of retrospective compensation for those who have not yet been moved from their houses, some of whose houses have been declared unfit or will be so declared in the coming two years. They will feel very sore indeed if those whose houses are now declared unfit are removed before them and if their compensation is not as high.
Now that such inroads have been made into slum clearance, at any rate in some areas, it might be possible for local health 1052 authorities to give more accurate assessments of the likely length of life of houses. If property prices are to rise as a result of the Bill, which seems likely, the effect of the Measure—I refer to both its good and bad provisions—should not result in people having to pay exorbitant prices for short-life property. More accurate information should be available for prospective buyers, and perhaps some sort of warning issued to them.
Those who are least able to assess the situation are those who are the least able to suffer financial loss. However, these are the very people who always seem to cop out. Society should do all it can to protect these people from unnecessary heartbreak.
Delay is often experienced in slum clearance compensation payments. Those who are waiting for compensation often have no other savings, particularly the old. I hope that my right hon. Friend will ensure that there is no delay on the part of his Department in granting loan sanction so that these people, often old-age pensioners, do not have to wait for perhaps two or three years to be paid out.
In Stoke, we have had 6,979 applications for improvement grants and we feel that this is quite a good achievement. But, if we omit the Housing Trust and some public bodies, only 440 of the applicants have been owners other than owner-occupiers. We are approving now about 600 grants a year. At this rate, it would take more than 25 years in order to modernise the 15,000 houses we have which have a life of more than 15 years but have not modern amenities.
The failure of the old Act lay in the fact that landlords were not permitted to get a return which was agreeable to them on their capital. Whilst interest rates remain high, and a person can perhaps double his capital on the Stock Exchange in four or five years, it is unlikely that landlords will do improvements for 12½ per cent. on their share of the cost. It is true that some owners can get more in interest rates if they sell their houses than they do in rent.
I have some sympathy with those who are left bad property and cannot dispose of it. I am almost tempted to join the consortium of some of my hon. Friends in the view "If you can't beat 'em, join 'em". But, as usual, there is another 1053 side to the story that we must take into account. Many of these old houses have been paid for eight or nine or more times over. Indeed, some of the long-term tenants—occupying for 30 years perhaps—have themselves paid in rent five or six times the purchase price paid by the owner.
Knowing this, there is often a psychological barrier to co-operation between landlord and tenant. Despite restrictions placed on tenants through shortage of money and through decay and design of the houses, many have transformed their homes and have enhanced the value of the property. If the landlord comes along and seeks a regulated tenancy, he should not have the benefit from the industry or home pride of the tenant. If such a regulated tenancy is going to reflect the Government's contribution through what, in effect, is a subsidy for improvement and for past neglect of repairs and replacements, it will work out into a weekly subscription from the tenant until the property is finally closed down.
In my city rateable values are low and rents comparatively low—much lower than in many other large towns. This is a reflection of our low-wage structure, and I know that many of my hon. Friends feel more concerned about this than I do because they can quote rents which would make my constituents turn white at the thought of paying them. Most people are prepared to pay for modern amenities and I believe that they should be prepared to do so. But they must also feel that their repayments are just. I ask my right hon. Friend to consider again this question of whether the controlled tenancy should become an open-ended regulated tenancy or whether it would not be more just to allow a percentage increase, perhaps 20 per cent. instead of 12½ per cent., of the landlords share of the improvement costs.
The last Act failed because it was unattractive to landlords. We do not want this Bill to fail because tenants feel that the increased rents would be unbearable. We should not be using a compulsion against tenants that we were not prepared to use against landlords.
§ 11.55 p.m.
§ Mr. Arnold Shaw (Ilford, South)
I have sat through the whole debate which I have found fascinating. It gives me 1054 tremendous pleasure to follow my hon. Friend the Member for Stoke-on-Trent, North (Mr. Forrester) who expressed the whole situation in such human terms. This is a human problem and I shall approach it in that way.
Like so many hon. Members, I welcome this as an imaginative Bill. It is designed to increase the stock of good houses and to provide for the general improvement of areas of old houses. We have always looked forward to this. I also welcome those provisions which give justice to owner-occupiers who in the past have been so abysmally treated in slum clearance schemes.
However, I was saddened to hear my right hon. Friend make a speech which could have been made by a right hon. Gentleman opposite. I find it completely impossible to support as it stands that part of the Bill which has caused so much controversy, which deals with the large-scale decontrol of existing tenancies which are to be turned into regulated tenancies. It is said that this is not a Rent Bill, but it will be difficult to persuade tenants in controlled tenancies who will be drastically affected that it is not a Rent Bill. Compared with this effect, the Bill's benefits will fade into oblivion.
The Minister hopes by huge public investment in rented properties and the bait of greatly increased rents, to persuade landlords to improve their houses. He may well succeed. However, I remind him of the words of the right hon. Member for Wolverhampton, South-West (Mr. Powell) on the Second Reading of the notorious Rent Act, 1957, when he said of that Measure:… it will arrest the deterioration of millions of houses for lack of maintenance … "—[OFFICIAL REPORT, 21st November, 1956; Vol. 560, c. 1775.]If it had done so, the Bill would not be necessary today.
On that occasion, my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) warned that most landlords would simply sell their properties, and that is what happened. In my constituency, mysteriously and almost for the first time for years, houses were given a lick of paint and sold at figures passing the wildest dreams of their owners. But still the percentage of rented properties declined. It is paradoxical that, whereas the execrated Tory Act, the 1957 Rent 1055 Act, helped to reduce the number of landlords, an enlightened Labour Measure will give a shot in the arm to private landlordism. As a Socialist, I cannot accept this.
I repeat the warning which was given to my right hon. Friend by my hon. Friend the Member for Bethnal Green (Mr. Hilton)—when the Minister was outlining these provisions, hon. Members opposite were smiling broadly.
In another place it was said that for the first time we have had landlords smiling broadly, and when that happens, when members of the Opposition smile broadly too, there is a catch in it somewhere. I sincerely hope that the Minister will take cognizance of this. Stress has been laid on the hardship and injustice suffered by owners of one or two properties. There is a certain amount of substance in this, but it is not impossible to devise some scheme whereby such houses could be acquired either by the municipality, or through the tenants being able to buy them.
Another complaint is that rent control leads to under-occupation. This may be so, but it is also a hazard in many other sectors of housing. I would commend to my right hon. Friend a scheme that we have in the Borough of Red-bridge, whereby we acquire properties belonging to elderly people who find them too much to manage. The council provides accommodation for the owners, and the property is then put to more economic use.
Having discussed the difficulties of the landlord, what about the tenant? What can one say to the tenant who, by a change from control to regulation, finds himself paying anything from two to four times a week more? There is some sort of palliative in the Bill, through the phasing of increases. It might not be so bad for the tenant who finds that extensive and expensive alterations and repairs have been made. He can understand the reason for the increase. What about the tenant whose property is already in a state which requires nothing more to be done to it?
Now the landlord has the right to apply for qualification for rent regulation. We have had widows flung at us from all angles today. I know a widow, who 1056 after the recent, tragic death of her husband, came to me and asked how she stood in the matter of her tenancy. I was able to reassure her, since she was a controlled tenant. What am I to say to her now? Am I to tell her that, through the kind agency of a Labour Government, she will have her rent increased by three or four times? In page 7, paragraph 31, the White Paper says:The Government have in the past been unwilling to pass controlled property into rent regulation under the Rent Act, 1965, until more experience has been gained of rent regulation. They are still unwilling to allow this to happen except where some countervailing advantage could be secured for the tenant.What countervailing advantage will this lady have? At the moment her property requires nothing to be done to it, yet she will have to pay three or four times more rent.
I must welcome, too, as many other hon. Members have done, the fact that Clause 78 remedies a deficiency in the Leasehold Reform Act. I wonder, however, whether a new Clause might be introduced in Committee to remedy a far greater defect in the Leasehold Reform Act which has been highlighted by the recent case before the Lands Tribunal. Already this is causing great disappointment. It came as a shock to many leaseholders who hoped to gain by enfranchisement. It is a matter which is becoming urgent and I hope that my right hon. Friend will take this opportunity to remedy the situation.
Like many other right hon. and hon. Members, I give qualified support to the Bill.
§ 12.6 a.m.
§ Mr. John Fraser (Norwood)
One of the themes running through the debate has been the problem of whether to charge market value, cost or subsidised value for accommodation. I listened with fascination to the speech of the right hon. Member for Wolverhampton, South-West (Mr. Powell). I always enjoy his speeches. I used to listen to him on the Third Programme before I was elected.
§ Mr. Fraser
May I say to my hon. Friend that I also listen to Ken Dodd, because of the quality of his language and not the difference which it makes to the organisation of human society.
1057 In this glimpse of the ninteenth century, one can adopt the words of a nineteenth century playwright. I believe that the right hon. Member for Wolverhampton, South-West is like Oscar Wilde's cynic: he knows the market value of everything, but the human values of nothing.
The right hon. Member spoke, for instance, of a refrigerated society. What he seems to forget is that people do not rent refrigerators. There is an adequate provision for people to buy them.
§ Mr. Fraser
Because the capital is made available for them to purchase them. Secondly, there is an adequate supply of refrigerators. One can go to capitalist New York, or to other capitalist countries in Europe, and still see the fact of rent control and see that people and Governments, even capitalist Governments, have recognised that in the conurbations there will always be a shortage of rented accommodation and that humanity and control need to step in, because we are not fatalists controlled by market forces: we are Socialists who believe that we can control them for ourselves. That is the answer.
§ Mr. Fraser
All I can say is that the right hon. Gentleman has not even friends in New York.
It is not necessary to go to New York. One can go to my constituency and see the effects of market forces operating. One has had plenty of experience of seeing market forces operating since 1957. Of course they operated. People used this situation, as people will in a capitalist society, to make as much money as they could. This was no incentive to improve premises. In overcrowded areas where premises could have been improved and let, sometimes a house which could have been let as one unit was let as four or five units.
Then, along comes the right hon. Member for Wolverhampton, South-West. He looks at the market situation which was created by the 1957 Act and he uses it as material for his speech to the Eastbourne Rotary Club. The curious contradiction 1058 is that the right hon. Gentleman, with his belief in market forces, does not believe in the market forces of labour employment. When they operate, that is a quite different matter. When world market forces operate to bring people from underdeveloped to developed countries to work, then, because of the colour of their skin, market forces are out. Market forces are used by the right hon. Gentleman only when it happens to suit him.
The hon. Gentleman the Member for Worcester (Mr. Peter Walker), though not in such strident terms, also referred to the problems of the market, saying that the big investment companies were not willing to put their money into housing accommodation because there was not enough return for it. This was also the argument, I think, of the hon. Gentleman the Member for North Fylde (Mr. Clegg). The difference between the capitalist and Socialist approach is that Socialists recognise that one must look at the cost of a product, and not at the market value of the product, and there is a difference between the two.
Where I take issue with the hon. Member for North Fylde is this, that it is possible, and it is done in the Scandinavian countries, to provide housing accommodation at cost through co-ownership and housing associations, with money taken from the private market at a reasonable rate of interest. It does not have to be done in such a way that there are very large undulations in market forces, especially in conurbations, meaning a much higher return for the investor than is reasonable and what he would get for putting his money into a building society or into, say, a unit trust. This is the difference between us. I agree that a fair return on capital is needed to bring money into the housing market but one does not have to go the other extreme of the right hon. Gentleman and remove all control so that people have to pay extortionate sums for money they have to borrow. It is the cost which counts.
I would take issue with some of my hon. Friends who are concerned because some tenants will have their rents raised from what is below cost to something above cost because their controlled rent in many cases is below the cost of accommodation, and their regulated rents 1059 are something above the cost of accommodation. I include in cost reasonable return on capital. This is one of the difficulties and why people resist the Bill. From the practical point of view there is no great difficulty, and it will be five years before this happens, and if one were not to have some change in the rent structure on the terms of this Bill one would have to have some other change to take account of the increased cost of repairs.
I turn to the terms of the Bill which I approve and welcome. I welcome it because inside the crowded conurbations—and I represent part of one—some increase in housing standards can be brought about by increasing building by councils, though council house building in the conurbations is very much a matter of renewal and very little now a matter of new building. I give a great welcome to what the Government have done in speeding up council housing. Some help has been given to the conurbations through what goes on outside them—new towns, expanded towns, redistribution of employment, and the general increase in the amount of building which goes on. But statistics are never a cure of the housing problems. The only real cure for the housing problem is local action.
That is why I welcome this Bill so much, because inside the conurbations and the crowded areas it tackles a problem which so far has not really been tackled properly by any Government. I welcome particularly those provisions which deal with multiple occupation, which is almost entirely concentrated in Manchester, Birmingham and London. I think about 80 per cent. of it is London and Birmingham. I have listed in Motions in the House some of the things which cause great human misery.
This problem of multiple occupation is not known in every town, but in my area it brings about poor facilities such as lack of w.c.s and bathrooms. In my constituency it has caused tragic fires in which people have died—in multiple occupation houses. Noise is caused because in multiple occupation houses there is no sound proofing; there are common stairs; the radio from the floor below is heard on the floor above; the baby screaming is heard on the floor 1060 below by a person trying to listen to the television. There are no play facilities for the children, there is inadequate provision of dustbins, there are not places for hanging out washing. Cooking smells go from floor to floor. There is inadequate provision of light, gas and water services. There are the human conflicts which come about because people are inadequately housed in one dwelling. Outside the houses there is lack of parking facilities. It is a tribute to the adaptability and tolerance of our people that they have managed to bear this situation so well. This is why they will welcome so much the action which the Government are providing. I welcome the action promised by the Bill in relation to multiple occupation. Multiple occupation is like a disease cell which divides. One family is moved out and rehoused, but two families move in. By solving one housing problem, two fresh problems can be created.
I wish to say some words of constructive criticism about powers. They should apply to a house where more than one family is living because these problems of conflict and inadequate facilities can be as great when there are two families as when there are three or four. Prevention is better than cure but past legislation has dealt with symptoms and has not been preventive medicine. The provisions should be mandatory on local authorities in the big conurbations. Otherwise a problem is shifted from one area to another. They should also apply to houses occupied by more than one family.
The part of the Bill dealing with improvements will be much welcomed in conurbations where people are suffering from neglect and decay in housing and where they have a fixation about getting a council house because they believe that nothing can be done in the place in which they live. Some people come to advice bureaux resenting essential repairs being done to eliminate damp or to improve a roof because they believe that those repairs might diminish their chances of getting council accommodation. They want a wholesale improvement of their environment so that they can live in dignity and comfort and not have a fixation about getting a house from the local authority. This cannot be done under the 12½ per cent. provisions. If one 1061 works out the cost of amortisation and the cost of borrowing, as has been done by Mr. Needleman in "Economics of Housing", one finds that the net return is about 3 per cent. or 4 per cent.
Figures have been quoted of 61 per cent. to 78 per cent. of landlords being managers of single houses. These people have not the business acumen to manage a house or to understand legislation. I am worried about their ability to understand this legislation and to get the capital needed. They will have to be encouraged. Good public relations would help a little, but some of these people are not capable of appreciating the business opportunities available to them. Landlords with business acumen do not own this kind of house. They go for the furnished house and the large return available to them. The Minister should publicise much more the provisions of Section 19 of the 1964 Act which enable a tenant to require a landlord to carry out necessary improvements. I believe this is practically unknown to tenants who require improvements.
The real incentive to improvement comes from people who own their houses. This is why I am so attracted by the idea of my hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved) that there should be a pre-emptive right among tenants to be able to buy their houses and carry out their own improvements. They are prepared to invest more in their houses than are private tenants or, for that matter, private landlords. The Survey of Family Expenditure shows that the house buyer's housing expenditure is about twice as much as that of the private tenant. It has been shown statistically that the private tenant and council tenant spend more on such items as beer and cigarettes than on rent.
The real incentive lies in the fact that, if one owns one's house, the conflict between landlord and tenant is removed, and people are prepared to spend more on and devote more attention to their houses. It is good economic sense, too, in that the person who doubles his housing expenditure buys fewer consumer goods. Thus, it makes good economic sense to encourage people to buy their houses, and I regret very much the Minister's decision to cut down on council house lending.
1062 May I suggest a solution? It does not cost anything to buy a house, because, although a house purchaser pays 7 per cent. interest, he gets a 7 per cent. rise in value every year. It does not cost anything at the end of the day, because capital appreciation pays the interest. On the other hand, the investor in unit trusts gets a return of between 2 and 3 per cent., but his annual capital appreciation is much greater. Last year, for example, it was 40 per cent. If it were possible to pay people who save in building societies or put money into Government stock for housing purposes a capital appreciation after, say, seven years and thus encourage them to save, one could increase the capital premium at the end of the seven-year period and reduce the rate of interest, so making it more attractive to the investor and less expensive to the person wishing to buy a house.
§ Mr. Peter Walker
This is a very interesting idea. However, the Minister's projection is that, by 1973, there will be no shortage of housing. If that is correct, does not the hon. Gentleman agree that there may be a fall in the value of houses, and not an appreciation?
§ Mr. Fraser
I am being baited on that. Frankly, I do not agree with the idea that there will be a surplus of housing. My right hon. Friend the Minister of State referred to "a crude shortage" of housing. He meant by that that there would be an overall surplus of houses over the overall demand.
However, I do not think that statistics cure housing shortages. I believe that the more housing there is, the greater the demand for it. Certainly that is the experience of Sweden, where it even leads to more divorces. If a man knows that he can get another house, he tends to leave his wife.
For too long, we have suffered from contradictions in housing. With the 1965 Act and the Housing Subsidies Act, the Bill begins to remove the contradictions and makes for a better housing future. As an hon. Member representing an urban constituency, I welcome it, because it makes a great potential contribution to the improvement of houses in the big conurbations, where new houses cannot be built but where old houses can be made into new homes.
§ 12.29 a.m.
§ Mr. James Wellbeloved (Erith and Crayford)
I am sure that the House will be relieved to hear that my contribution will be fairly brief. My hon. Friends have informed me that I have been referred to a number of times in my unavoidable absence, and, in view of that, I thought it right to intervene, however briefly.
I agree wholeheartedly with the welcome to the provisions of the Bill dealing with multiple occupation. That which gives me the greatest pleasure is the part which brings in the need to provide against fire risk. I have been appalled, in many of the properties that I have been called to look at by anxious tenants, by the terrible fire risk which has existed. I hope that this section will go a long way to dealing with that aspect.
My hon. Friend the Member for Ilford, South (Mr. Arnold Shaw) touched on the provisions for slum clearance compensation. I welcome this as one more part of the piecemeal way in which the Government are dealing with the system of compensation. But I ought to warn my right hon. Friend that many Members on both sides will not be satisfied until he has dealt with the whole ambit of compulsory purchase compensation, including injurious affection. I am sure that I would be ruled out of order if I tried to develop that argument further.
The hon. Member for North Fylde (Mr. Clegg), as I understood him, was trying to indicate that if we could free rented property from the restrictions of rent control there would be an influx of private capital which would solve the problem of the lack of privately rented property. I think that I understood the hon. Gentleman fairly accurately. I would only add what I understand my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) has said. Under the 1954 Act decontrolled houses have been available. New houses have been built since 1964 at decontrolled rents. Under the 1965 Act a landlord can go to the rent officer and get a fair rent determination on new property, if he so wishes, which will give a proper return on investment in housing of that nature. But there has been no great influx of private capital into the rented property sector. Perhaps the hon. Member for Crosby (Mr. Graham Page), 1064 who is to wind up for the Opposition, might like to comment and say a few words of encouragement to his friends outside on the need to invest in the provision of new property for rent where a fair return can be obtained.
With the exception of Part III, the Bill is a first-class measure which I warmly welcome and support. But in Part III there is the difficulty that landlords will be in a position, if the Bill goes through unamended, to obtain a substantial increase in their income which is quite unjustified in a great number of cases.
To split the section up into its two parts and deal, first, with those houses which already have the standard amenities and will, over a phased period, be able to enter into the fair rent machinery, I can see no justification whatsoever for this. If a house, when first built, had the standard amenities the landlord has received a fair rent based on the value of that house at the time that it was built. If, in recent years, the facilities have been put in, the landlord has been able to obtain his 12½ per cent. increase. I take the point made by my hon. Friend the Member for Norwood (Mr. John Fraser), that the 12½ per cent. probably is not a worth-while return. I would not argue about that. It may need to be a slightly higher value where the landlord is providing, or has provided, these amenities. But there is no justification, in my mind, for those houses which already have standard amenities coming into the Rent Act provisions of regulated rents. I feel that in those cases, if the landlord applies for a qualification certificate under Part III there ought to be a new Clause inserted giving the tenant the right to opt to purchase that property. This would remove entirely the hostility that exists on these benches and will exist outside when the provisions of Part III become known, because it would say to the tenant of a house where the standard amenities already exist, "You have this opportunity. You can either purchase the house and all the expense involved in maintaining it hereafter, or you can pay a rent under the Rent Act system."
§ Mr. Murton
Does the hon. Gentleman think that any tenant will accept the option to purchase, bearing in mind how few of them accepted the option under the Leasehold Reform Act?
§ Mr. Wellbeloved
If I understand the position correctly, hon. Gentlemen opposite say that thousands of council house tenants are straining at the leash to buy their houses. From my experience in my constituency I know that a considerable number of private tenants would like the opportunity of acquiring the property in which they live. They do not wish to leave the houses in which they have lived all their lives. They do not wish to leave the area, for the reasons given by my hon. Friend the Member for Cardiff, North (Mr. E. Rowlands) in his moving speech. They want to remain where they are, and they are prepared to purchase the houses in which they live. The answer to hon. Gentlemen is to put the necessary provision into the Bill and see what the result is. There will be no injustice in doing that. It will give private tenants the option to purchase, as opposed to entering into fair rent schemes.
I propose to deal, now, with those houses in which the standard amenities do not exist. There is no justification for subsidising the private landlord for doing what he should have done in any case as a good landlord, and then forcing the tenant to pay an inflated rent. Again I feel that on the application for a qualification certificate a tenant should have the right to exercise an option to purchase.
I understand that a number of questions have been asked about this suggestion of the right to exercise an option to purchase. It was asked what guarantee there could be that a tenant who exercised his option would carry out the necessary repairs. Doing this could be made a condition of his exercising the option.
§ Mr. Wellbeloved
That is true. If someone exercised his right to the option, he would do so because he wanted to improve the property, and he felt that it will be worth while his doing so. We could lay it down in the Bill that a tenant who exercised this option would be under a legal liability to carry out repairs, with the help of the grant which will be available
§ Mr. Wellbeloved
A statutory responsibility could be laid on the local authority to see that the conditions of the Act were carried out. Alternatively, it could be made a condition of his mortgage. It would defeat the object of this Measure if people in houses without the standard amenities did not carry out the necessary improvements. There must be written into the Bill a clear requirement that the person concerned shall, within a stipulated period, say 12 months—carry out improvements and install the standard amenities.
I have also been asked what would happen about people who bought a house, put in standard amenities, and then quickly sold it and thus made a capital gain. I think that it will be necessary to write into the Bill a limiting period of time within which that cannot be done. We cannot say that such a person will never be allowed to sell the house, but I think that after a full investigation in Committee we can agree on what would be a reasonable time within which the house could not be sold.
I shall not develop all the arguments which I should like to put forward in support of the principle of private tenants exercising an option to purchase. I think that within the title of the Bill it will be possible for me to move suitable Amendments if I am fortunate enough to be a member of the Standing Committee which considers the Bill. If I am not, I am sure that some of my hon. Friends who are luckier than I will be happy to do so, to enable the idea to be aired and discussed.
This is a first-class Bill. It is a Bill which could make my right hon. Friend's name go down in the history of housing legislation, but this Measure will be marred by Part III, and I urge my right hon. Friend to think again about giving the private tenant the option to purchase. Let us set the private tenant free. Let him join the great area of owner-occupiers. One of my hon. Friends said that it is the owner-occupier's house which looks spick and span in any road, not because he is a better type of person than the private tenant, but because he owns the property and has an incentive to keep it that way. It is his house. As 1067 with many other speeches that I have heard from hon. Members opposite, I was appalled by their not jumping to their feet and acclaiming this idea as a great breakthrough in the move towards the property-owning democracy about which we used to hear so much not so long ago. My right hon. Friend must think about this point again. His name may go down in history as that of a great housing Minister, but it will do so only if he alters Part III and takes action along the lines that we are suggesting.
§ 12.35 a.m.
§ Mr. Graham Page (Crosby)
The Minister told the House that he had discarded the alternative put forward by the hon. Member for Erith and Cray-ford (Mr. Wellbeloved) although he was quite prepared to consider it further. The hon. Member for Erith and Crayford will forgive me If I say that I intend to wait until I see his Amendment on the Order Paper in Committee—when we shall be able to debate the matter fully—before making up my mind about it. As put forward at the moment I cannot promise him support from this side.
The Bill could have been a good one. It sets out to encourage improvements and repairs to dwellings by increasing the limit of grants. We warmly support that. It gives birth to a system of general improvement areas in which local authorities will be able to improve the environment. We shall help to bring this child to maturity. The Bill provides for compensation for the house as well as the plot in the event of the acquisition of property in clearance areas. My hon. Friends and I have pleaded for that for a considerable time. The Bill tries to cure the long leasehold flats market from the paralysis put upon it by the error of the Government in earlier legislation. For the last few months we have also demanded, with some vehemence, that that be done.
But these good intentions have been almost nullified by the Minister's action—despite his brave words in presenting the Bill—in looking over his shoulder—his right shoulder in this House but his left shoulder politically—to try to pacify those of his hon. Friends who still have a very deep-rooted prejudice gainst any private landlord who provides a dwelling to let.
1068 So, while trying to encourage investment in improvements and repairs to dwellings the Bill forbids a fair return to those who put their money into those improvements—forbids a fair return for a period which may run for as long as eight years before the full rent is payable. While reforming the law about improvement areas, the Bill fails to tackle what the hon. Member for Cardiff, North (Mr. E. Rowlands) expressed as a matter which needed care and humanity. Care and humanity is, indeed, needed when a local authority descends on an area rather like a storm of locusts, and clears it. It needs to be dealt with with more humanity than is expressed in the Bill.
While admitting that controlled rents should be fair, the Bill delays their implementation for so long that when they do come they will be less than fair. Again, while admitting that the owner of property which, for the good of the community, is taken by compulsory acquisition or the threat of compulsory acquisition, should be entitled to the market value in full, the Bill denies him that if he has been such a public-spirited criminal as to let the property.
While recognising that buyers and sellers of long leases are not really criminals if, in addition to their rent, they pay something towards services provided by the landlord, and in those circumstances they can buy and sell their leasehold property, the Bill insists that they are criminals if they do so and only the ground rent exceeds two-thirds of the rateable value.
The Bill's basic purpose is to save the existing stock of old houses rather than to bulldoze them down in clearance areas or leave them to fall down as a result of controlled rents. The Bill has been in the Ministry's pigeonhole for some time and its introduction now fits in rather neatly with the excuse put forward, in our debate on Thursday, by the Minister for Planning and Land for the abandonment of the pledge to build half a million houses a year by 1970.
My right hon. Friend the Member for Wolverhampton South-West (Mr. Powell) referred to the Minister's forecast that the end of the housing shortage was in sight and that by the end of 1973 we should have a margin of about 1 million more houses than households. This, of 1069 course, is good political stuff. I do not condemn party politics in housing, like my right hon. Friend the Member for Wolverhampton, South-West. Without party competition, we should not have achieved the success which both parties have achieved over the past few years. Of course, this sort of statement about a surplus of 1 million in 1973 gets the Government out of their immediate difficulties of dropping 100,000 houses a year from the promised target and probably provides a stick with which to beat the Conservative Government which will inevitably be in office in 1973.
Having regard to the demolitions and the wastage of houses, the stock cannot possibly increase by that figure over five years. The net increase is only 300,000 a year, if one builds 400,000 a year and takes into account demolitions and wastage. And 120,000 new families come on to the list for houses each year. When that is totted up, it only leaves 900,000 in those five years—not even one million—if every local authority were told not to fill any of those houses from its present waiting list.
So it is impossible. If the Government really are trying to operate their housing programme on the basis of a one million surplus in 1973, the Bill and the rest of their housing programme will fail—
§ Mr. Greenwood
The hon. Gentleman is being less than fair to the Minister for Planning and Land. He did not quote that part of my right hon. Friend's speech in which he went on to say:Of course, local housing shortages are bound to persist, particularly in London, and more than 1 million slums will have to be cleared. But the crude national housing shortage should then be over … "—[OFFICIAL REPORT, 6th February, 1969; Vol. 777, c. 625.]
§ Mr. Page
I do not think that the crude national shortage—whatever that may mean—will then be over: there will not be this surplus of 1 million, even on the figures which I gave. But they are worse. All the expenditure under the Bill is to be taken into account against the total housing expenditure. The number of new houses will thereby be reduced still further. It is impossible to reach that 1 million surplus in five years. This is one of the worrying things about the Bill. It warns us that we will have a further reduction in the building of new houses.
1070 At least, that is how I read that paragraph of the Explanatory Memorandum on page xiii, which says:It is estimated that public expenditure in consequence of the Bill … will be approaching £40 million annually by 1972–73. This expenditure will be contained within a total of public investment in housing at about the level it has now reached …If that means anything at all, it means that we are to lose £40 million expenditure on new housing. The Bill is not something additional to the housing programme, as it should be and as I hoped when I first read it. It is something to be taken out of the general housing programme if we are to believe that paragraph.
The Government have probably gone wrong in saying that there will be 1 million more houses than households by 1973 because they have fallen into the trap of the definition of "a household". In Ministry documents the definition is:A household comprises one person living alone or a group of people living at the same address having meals prepared together and with common housekeeping.That cuts out all the in-laws living with their parents and waiting to find a house, and all the elderly people living with their married daughter or married son and waiting for an elderly person's flat or bungalow. How many tens of thousands of those are there? They are not taken into account when the Government speak of 1 million more houses than households.
I repeat that what is certain is that the Government will never make a success of the Bill if they believe that there will be that surplus in housing in the short period of five years. Perhaps their complacent outlook explains the lack of imagination in the Bill. It is a patchwork upon a system which has failed up to the present. It has failed through what I thought the Local Government Chronicle expressed rather nicely:Apathy, ignorance or lack of incentive.If the incentive were there, the apathy and ignorance would soon disappear. This is what we should hope for from the Bill.
Discretionary grants originated in the Labour Government's legislation in 1949 and standard grants in the Conservative Government's legislation in 1964, and on 1071 both sides we are only too painfully aware that neither party when in power has achieved the success that it hoped to achieve from those Measures.
I do not go so far as to say that the Bill in another dose of the very same medicine which made the patient ill, as my right hon. Friend the Member for Wolverhampton, South-West said, but if we go on just patching up the system we shall not achieve any more success than previously. The Bill not only just patches it up, but increases its complexities. That is a very great disincentive. Take Part I, for example. It continues the system of discretionary grants and standard grants, but adds two more to them, a discretionary conversion grant and a multiple-occupation grant. I wonder whether we need all these divisions and distinctions between the various grants. The urgent job is to persuade owners of dwellings to take advantage of the grants, and they will not do so if they have to cut through a jungle of legislation to find their rights.
I wondered whether it would be more in keeping with the modern attitude towards local government merely to say, "Grants shall be payable by local authorities for repairs, replacements and improvements and for the provision of dwellings by conversion, limited to half the cost or £1,000, whichever is the greater" with an appeal perhaps against refusal "to an inspector appointed by the local authority who will recommend to the local authority". Then one could merely set out the things to which the local authority should have regard when making a grant.
We have, I think, to find a simple system—not a statutory tangle—of discretion to local authorities as they have in town planning, house building, provision of open spaces and many other spheres. After all, the Minister would have plenty of indirect control to ensure that local authorities were taking advantage of the terms of a discretion of that sort.
I am sure that the complexities of the Bill will be an obstacle to its success. Even in Part II the general improvement area scheme is a grafting of an additional procedure on to an existing procedure, and that existing procedure has not yet 1072 achieved its object. If the plan for general improvement areas is really successful—and I sincerely hope it will be—I wonder whether we still need the clearance area procedure.
The hon. Member for Cardiff, North raised the point of the overlap or confusion between general improvement areas and clearance areas. The general improvement area plus compulsory purchase could achieve everything, better than the clearance order can achieve it now and with greater flexibility. I think that is a subject that we might consider at a later stage. My hon. Friend the Member for Poole (Mr. Murton) questioned whether the allowance was sufficient. This, again, needs careful consideration, because we do not want to spoil the ship for a ha'p'orth of tar if we have got a good scheme in this idea of the general improvement area.
Then we come to Part III—what I would call the Alice in Wonderland part, or what my hon. Friend the Member for Poole would perhaps call the Wapentakes of Magna Carta, or something. It is not wonderland because it sets out to convert controlled tenancies to regulated tenancies, although that is something of a wonder coming from the present Government. As the Minister said, the intention here is that there should be a fair rent for a decent house with basic amenities, which is kept in good repair.
I think everyone, other than perhaps the hon. Member for Birmingham, Aston (Mr. Julius Silverman), realises that the shortage and the decay of houses to let has been due to control or the threat of control. If it is right to make this conversion from controlled to regulated tenancies, it cannot be right to delay its operation for so long. This is the wonderland part of it, that anyone could think that the carrot of this conversion from controlled tenancies to regulated tenancies really will be an incentive if someone has to wait between five and eight years to receive a fair rent from it.
I worked out a sort of timetable for the case of a man who read the White Paper in April, 1968, in which he was told "You put your property in good order; take a grant for it, and you will have a fair rent". We assume that he went off, got his grant and has just completed the improvements. What will happen to him now? He will not get that 1073 fair rent. He might think he will get it when the Bill goes through in July. He puts in his application for a qualification certificate. He may get it by the end of the year. Then he will find that the rateable value of his property delays him getting a regulated rent fixed for another two Christmases—say, 1st January, 1972.
So then, in 1972, he applies for a fair rent. How long will it take him to get that on the books of the rent officer?—three months or perhaps 12 months. When he does so, he gets one-fifth for the first year, two-fifths for the next year, and so on for five years. It is 1976 or 1977 before he gets a full return. Anybody asked to invest in improvements of this sort would laugh the Minister out of court. We must get this right in the later stages of the Bill if it is to be any incentive to carry out improvements.
Now I come to the subject of compensation on acquisition of houses within a clearance area. As the hon. Member for Cardiff, North said, we have been waiting for this for a long time. Unfortunately, it does not clear up much of the confusion. In fact, I think it puts even more confusion into this subject. There is no justification, other than pure prejudice, for restricting market value compensation to owner-occupiers.
§ Mr. Page
I will restrict my remarks to this Measure, although I would like to discuss the history of the matter. The hon. Gentleman may remember that I have always held this view, even if my party did not at that time.
There is no justification, certainly not in this case, for making a distinction between the owner-occupier and the man who has let the house he owns. Both have property which is being taken from them for the benefit of the community; for the clearance of the area and for the building of new houses. One might say that the landlord is more entitled to market value compensation because the owner-occupier is given another home and is assured of alternative accommodation by the local council.
1074 Nor is there any justification for dividing owner-occupiers and other owners into two categories by reason of the date of the White Paper. This is not a case of somebody being able to jump the gun between the date of the White Paper and the date of the Measure becoming operative. It has become an obsession with this Government to use White Papers to mark the coming into force of legislation. One can appreciate the need for that when there is some danger of people taking advantage of what is said in a White Paper and, based on what they have been told in the document, taking action before the legislation becomes operative. But that cannot apply in this case.
This is perpetuating the bitterness of which my hon. Friend the Member for North Fylde (Mr. Clegg) spoke. Many people will go on feeling that they have been cheated, as the hon. Member for Cardiff, North pointed out. How did the Minister think up this stupid niggle of who should be paid compensation and who should be cheated? I hope that he will amend this provision at a later stage.
My hon. Friend the Member for Worcester (Mr. Peter Walker) said that we would be constructive in Committee. The speeches made tonight have shown how constructive hon. Members can be in considering a Measure of this kind and it is obvious that the Committee stage will take a considerable time, certainly a few weeks.
This brings me to the question of Clause 78. My hon. Friend the Member for Worcester made an offer earlier. He asked for this Clause to be taken out of the Bill and put in a small Measure, in which case, he said, we would pass it on the nod. I wish to make it clear that Clause 78 does not go all the way to solving the problems which the Leasehold Reform Act set up in thise sphere. There are many properties, particularly in Kensington, North London, Northolt and some in the North-West where the ground rent, apart from services, is more than two-thirds the rateable value. These properties have changed hands at a premium in the past.
Will the Government now deprive the existing owners and bring down the axe saying, "We know you paid £2,000 for this property a few years ago. You must not recover that money when you sell 1075 it"? I am not quoting hypothetical cases. I know of instances where, leaving aside the question of services, the clear ground rent is over two-thirds the rateable value. These little houses were bought for £2,000 and the owners cannot now recover that if they sell.
The other mistake in the Clause—and I think that it is only a mistake—is that it is only retrospective to the consolidation Rent Act, 1968, and not to the mistake in the Leasehold Reform Act, 1967. Properties have changed hands between the two Acts. I hope that the Minister will accept our offer so that we can get this provision through and allow the market to work again for long leasehold flats.
In general, I hope that we, as the Opposition, will be able to improve the Bill. I hope, even more, that we shall have the opportunity soon, as a Government, to overhaul the whole system and to make it an effective system in itself, as an addition to a full housing programme and not, as this Bill has been put forward, as a substitute for part of the housing programme.
§ 1.0 a.m.
§ The Secretary of State for Wales (Mr. George Thomas)
The debate has been, as the hon. Member for Crosby (Mr. Graham Page) said, well informed, appreciative of the problem and sympathetic to the needs of the people living in unfit properties. I have been very interested in the constructive line that most hon. Members have taken.
The hon. Gentleman has once again invited Her Majesty's Government to add many millions of pounds a year to public expenditure. I find it something of a humbug to be lectured from the benches opposite about controlling public expenditure while, at every possible opportunity, being asked by them to add millions of pounds to it.
There is, of course, a serious inconsistency in the arguments which the hon. Gentleman used. He went on to talk about compensation terms and said, "Who shall be compensated and who shall be cheated?" If people are cheated it is under the terms of the legislation which his own party put on the Statute Book in 1957. The right hon. Member for Wolverhampton, South-West (Mr. Powell) was then a junior Minister at the 1076 Ministry of Housing and Local Government.
§ Mr. Graham Page
The Secretary of State knows that compensation is now paid under Statutes passed by the present Government. They had the opportunity to correct it.
§ Mr. Thomas
The hon. Gentleman cannot escape the fact that the real hardship caused by the 1957 Act has had to be cleared up by this Administration.
I hope to answer a great many questions which have been raised, but I feel, without injustice to the House, that I cannot answer them all tonight. I shall go with care through the OFFICIAL REPORT and will communicate to hon. Members my answers to those questions which I cannot deal with now.
It has been proved once again for us that few debates are likely to cause deeper feeling than one on the housing of our people. A basic human right for all our citizens is that they shall live in houses with modern, civilised amenities. This right has been denied for far too long to a great many in our community. The saving and improvement of our older houses and our older housing areas is not only economic sense; it is much more than that. When we are dealing with older people, with people who have formed themselves into a closely-knit community, something is destroyed when we move them from their friendly surroundings to an area where they are completely strange.
Some of my hon. Friends underestimate what it means to people to have improvements made to their homes. I do not suppose that I am the only Member who, for a very great part of his life, lived in a house without a bathroom. My father was a miner; and miners' houses needed bathrooms more than any, but they did not have them in the Rhondda Valley. I had been teaching for quite a while before we were able to put in a bathroom. I know the thrill that comes to people who have been living in a house without these amenities when they are eventually provided, and that is what some of my hon. Friends forget.
Some of my hon. Friends who have talked a lot about the fact that people 1077 will have to pay for having improved amenities underestimate the life of people who live in these conditions which not one of us would be willing to accept for his own family.
§ Mr. Wellbeloved
I am sure that my right hon. Friend has misunderstood the point that many of us have been making. We understand the deep appreciation when these amenities are provided; but we do not want to see people robbed when they are provided.
§ Mr. Thomas
Neither do the Government. My hon. Friend must not think that he has a monopoly of concern for people or the rent they pay. He must do justice to the proposals we have submitted to the House. I believe that the Bill offers a greater hope to people living in unfit houses, or houses which could be improved, than any single Measure which has yet come before the House. I shall deal with the issues which my hon. Friends have raised. I know their deep sincerity and their burning concern for these people. I ask them only to believe that we share it.
I want to give a few facts about Welsh housing. In a moving and informed speech, my hon. Friend the Member for Cardiff, North (Mr. E. Rowlands) reminded us of some of our major problems. More than half of all the houses in Wales were built before 1919. More than 50 per cent. of them are owner-occupied. The Welsh take a particular pride in home ownership, as I know. People in other parts of these islands do, but it is a special characteristic of the industrial valleys of Wales and more than 70 per cent. to 80 per cent. in the Rhondda, Aberdare and Merthyr Valleys is common. In these areas the proportion of people who have gone in for their own homes, to have security, is much higher than average.
While it is true that in Wales one family in every three is living in a lovely post-war house, with modern amenities, one family in three is living in older property. Almost one-third of the housing stock lacks at least one of the basic amenities—an internal lavatory, a fixed bath, a washbasin, or hot and cold water. In the mining valleys of South Wales, nearly two-thirds of the houses were built before 1919, and a great many date back to the 19th century.
1078 Here in these valleys, 45 per cent. of the houses lack at least one of the basic amenities. Yet the great majority of these houses are fit houses, lacking the necessities which we all accept ought to be in the homes of our people. They are fit houses built at a time when little consideration was given to the surroundings in which people lived. Both sides of the House ever since the war have concentrated their main attention on the building of new houses. It has been our main task, and an essential one. All the time, while we have been doing this, sometimes due to neglect, sometimes due to lack of resources, thousands of houses that could have been protected and maintained have been allowed to fall into slum condition. Without relaxing in the provision of new houses where they are needed, it is essential that we give greater care now to the improvement of these older properties.
The House has, understandably given a great welcome to the new grants system, with the exception of the right hon. Member for Wolverhampton, Southwest, who made a colourful speech, a speech that has not been supported by his own Front Bench—
§ Mr. Thomas
—or anyone else. The right hon. Gentleman did not bring a new idea to the House. There was nothing novel in what he said, when he wanted a free market. This is not something that has not happened before. The right hon. Gentleman ought to read Dickens, and he would know the results of the free market in houses.
§ Mr. Powell
There was then a free market in everything else, and look how everything else has improved.
§ Mr. Thomas
The right hon. Gentleman wants to take us back to an age that we are glad to forget. [Interruption.] The right hon. Gentleman points up there. He is never likely to get up there—and if he does he would not be happy, because I understand that there is no discrimination up there.
The new emphasis on environmental improvement provides a veritable charter for the restoration of our neglected industrial areas. This will be particularly true in the valleys of South Wales, whose 1079 scenery, prior to the Industrial Revolution, rivalled that of the Wye Valley today. Local authorities will now be able to remove the scars that industry has left, and improve whole areas, thus providing an incentive for those who live within the area to improve their property, too.
I had better answer some of the questions that I have been asked. It is only my concern for the House which takes me from the speech which I have prepared. The hon. Member for Worcester (Mr. Peter Walker) impressed me considerably. I have never before had the pleasure and privilege of hearing him in a restrained manner. He was restrained tonight. Of course, he has made the maximum mischief, turning the screw for my hon. Friends. I thought that he did it very well. The hon. Gentleman made a very able and provocative speech—provocative not to us. He set out to provoke other people and they were foolish enough to be provoked.
The hon. Member made an interesting and generous offer on behalf of his party. To take Clause 78 out of the Bill is something of a hostage to fortune, but we will certainly give the most careful consideration to what he suggested. If we did that, without being unkind, it would be an improvement on the Measure which the hon. Member for Crosby introduced, because although it is similar, there are important differences, of which the hon. Member, who is a skilful debater and an experienced Member of the House, is well aware.
§ Mr. John Fraser
This is a real problem. I wonder whether the Front Bench could organise the Committee so that Clause 78 comes on at the beginning rather than at the end.
§ Mr. Thomas
I have enough problems without trying to do the work of my right hon. Friend the Leader of the House or, indeed, of the Whips or anybody else concerned in this matter.
The hon. Member for Worcester referred to the difficulty caused by local authority mortgage finance not being as generous this year; indeed, hon. Members on both sides have referred to this fact. We are limited, it is true, in the extent to which public expenditure may be allowed under present conditions. The 1080 economic situation has made it necessary to restrict local authority mortgage finance, but the House should remember the local authority financing of house purchase is a very small part of the total of mortgage financing. Within the funds that are available, my right hon. Friend and I have impressed upon local authorities the need to concentrate their resources on older houses.
I turn to the question of compensation, a big question. First, there is the question of compensation in clearance areas. My hon. Friend the Member for Cardiff, North reminded me of the very grievous situation in my own constituency in the Riverside Ward of Cardiff, where considerable hardship was caused by the compensation which was paid when people had to leave their homes. He also reminded me that there are in the pipeline other cases in which they will not get the new rate of compensation, whereas they will see their neighbours get it. I realise that this is a problem and it is a very difficult one. Wherever we put the dividing date, there would be hardship.
Of course, local authorities had done their budgeting on the basis of the old rate of compensation; only when the White Paper came out were they aware of the new rates of compensation for which they would be liable. This is a difficulty which we cannot see our way to overcome. We want to get the maximum number of people able to benefit from our proposals, because local authorities have been reluctant to enter on clearance schemes because of the hardship they knew would be caused. An hon. Member asked: why not give it to the landlord as well as to the owner-occupier? There is a world of difference between the landlord and the owner-occupier in a case like this. The owner-occupier has to go elsewhere. He may not want to go to a local authority house.
As one hon. Member opposite said, we do not want to be a nation of council house dwellers. However, for council houses in Cardiff there is great competition. Wherever I have been I have found many people anxious to get council houses. But there are people who do not wish to have council houses, and who have to provide themselves with their homes and the landlords are not faced 1081 with that problem. The landlord is certainly getting benefits here he did not get before. He will get much greater benefit for a well maintained house and in many parts of the country it will be roughly equivalent to the compensation he would have been given had he been an owner-occupier. In addition, there is the new benefit of compensation if a house is partly well maintained, either inside or outside.
I am sorry that I cannot refer to all the speeches of all hon. Members who have taken part in what has been a good debate, but I want now to turn to the question which agitates my hon. Friend—controlled houses becoming regulated houses. I can understand why it agitates him. If we want to get improvements to these older properties there must be an inducement and an incentive. There is no doubt about it. The 12½ per cent. has not proved adequate to induce landlords to undertake improvements. That is why we have to take these further steps.
But what about allowing the tenant to buy the house? This is an attractive proposal. The hon. Member for Orpington (Mr. Lubbock) said it is a proposal he did not want to turn down out of hand. Nor does any one of us. Let us look at what the difficulties are, because in this there are some very real human problems. A man does not lose his human rights because he is a landlord. [HON. MEMBERS: "Hear, hear."] We have never believed that a man loses his human qualities because he is a landlord, but some landlords lack human qualities. How they can rest at night, knowing the condition under which some of their tenants live, amazes me.
But as to buying the house, my right hon. Friend gave a figure, that of 60 per cent. to 70 per cent. of the landlords owning either one or two houses. Many people buy a house to which they hope to retire, a house in a place they like. If a person keeps it with all the amenities are we to say to him, "You cannot go there because you will have to sell the house whether you want to or not"? There are lots of problems to be considered here, I say to my hon. Friends, who, I know, do not want to cause injustice while trying to cure injustice. There are people who have a house where a son or 1082 daughter may be able to come and live with the old folk; or who want the house to be near a son or daughter. Are we to say to them, "Because the house is in good condition you have to sell it"? I say to my hon. Friends that, attractive as the proposition is, it is one which has to be weighed very carefully indeed.
I think that I may with truth say that after this debate it is clear that there will be an interesting Committee stage. I hope that in giving a Second Reading to the Bill the House will realise that it is starting on its journey a Bill which is one of the best which the House has produced.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).