HC Deb 23 July 1970 vol 804 cc916-34

1.0 a.m.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Paul Channon)

I beg to move, That the Housing Subsidies (Representative Rates of Interest) Order 1970, a draft of which was laid before this House on 6th July, be approved.

Mr. Deputy Speaker

I suggest that it would be for the convenience of the House to consider at the same time the Motion relating to Scotland, That the Housing Subsidies (Representative Rates of Interest) (Scotland) Order 1970, a draft of which was laid before this House on 6th July, be approved.

Mr. Channon

Yes, Mr. Deputy Speaker. These Orders arise under the Housing Subsidies Act, 1967, for England and Wales and the Housing (Financial Provisions) (Scotland) Act, 1968. My hon. Friend the Under-Secretary of State for Scotland will deal with any Scottish points which may arise during the debate.

During the course of today I have sometimes regretted the success I had in Standing Committee on the Housing Subsidies Bill when I managed to persuade the then Government to make this an Order subject to affirmative Resolution. None the less, these important matters should be debated.

The Acts provide for Orders to be presented to the House annually specifying the representative rates of interest on which basic subsidy is to be calculated for each dwelling completed during the year. The basic subsidy accounts for much the largest part of the subsidies payable under the current Acts for dwellings completed. There are also supplementary subsidies, which are not affected by these Orders, into which I shall not go now. Similar Orders were approved by the House in the previous Parliament on three occasions. They are of great importance to the recipient authorities as authorities cannot calculate the amount of basic subsidy which they will receive for 1970–71 until the representative interest rates are determined.

The formula laid down provides, in effect, that the basic subsidies shall represent the difference between the loan charges on the aggregate approved cost of dwellings in each financial year at the representative borrowing rate and the loan charges which would have been incurred at a fixed borrowing rate of 4 per cent. The rate must be representative of the interest rates paid on loans raised by recipient authorities in the financial year immediately preceding that in which the dwellings are completed. I remember well the considerable discussion, in which my hon. Friend the Member for North-ants, South (Mr. Arthur Jones) took part, during the passage of the Housing Subsidies Bill about the method of calculating this rate. There were two main reasons for basing the representative rate on interest rates in the year preceding completion. I am sure that hon. Members recall the arguments at that time.

As required by the Acts, the recipient authorities or their representative bodies have been consulted about the method of calculating the representative rates and about the rates themselves. They have accepted both.

As in previous years, because of the different patterns of borrowing, separate rates have been specified for local authorities and housing associations, on the one hand, and the new town development corporations and the Commission for the New Towns on the other.

Local authority borrowing is a complex mixture of short-term and long-term borrowing. Complicated calculations based on extensive financial data are, therefore, needed to arrive at the representative rate. Copies of memoranda explaining the method of calculation adopted for England and Wales and for Scotland have been placed in the Library of the House.

My right hon. Friend has considered whether there should be a separate rate for housing associations, but so far no evidence has been supplied by the representative bodies of the housing associations in support of a separate rate. So my right hon. Friend has concluded that it would be reasonable to use the local authority rate as in previous years.

For new towns a separate rate is necessary since they are wholly financed from one source, that is, Government loans carrying interest at the Government lending rate. As previously, this year's rate has been calculated by reference to the weighted average rate charged on borrowings during the year 1969–70. The resulting rates in England and Wales are 9.23 per cent. for local authorities and housing associations and 9.03 per cent. for new towns, as against last year's rates of 7.93 per cent. and 8.21 per cent. respectively.

The Scottish rates vary slightly. They are 9.29 per cent. for local authorities and housing associations and 9.02 per cent. for new towns. The slight difference is due to the different patterns of borrowing. In addition, there is a third rate of 8.84 per cent. for the Scottish Special Housing Association, which has no counterpart in England and Wales.

The House will wish to know what these rates mean in terms of subsidy payments. As an example, a typical local authority house would this year attract a basic subsidy of £202 a year in England and Wales. The comparable figure for last year was £148 a year.

The cost towards which the subsidy is payable in the all-in cost of dwellings, including erection and such items as land, roads, sewers and professional fees or salaries. The cost yardsticks, which set the upper limit to which erection costs may count for subsidy, have been reviewed and increased in England and Wales with effect from 15th April this year. This will in due course be reflected in the subsidy paid for houses completed.

The provisional estimate of expenditure in Great Britain on the 1967 Act subsidies in 1969–70, including supplementary subsidies, is £57 million, of which £10 million is in Scotland. The estimate for 1970–71, including supplementary subsidies, is £100 million, of which £19 million applies to Scotland, an increase of £43 million, or over 75 per cent. This is partially due to the extraordinary and unprecedented levels of interest rates in the previous year.

The total cost of Exchequer housing subsidies under the current and previous Acts is expected to be £207 million in 1970–71. Rather under half of this total arises from 1967 Act subsidies and rather over half from subsidies payable under earlier legislation. This total compares with £163 million in 1969–70.

It has frequently been pointed out that there are various defects in this subsidy. One is that it may not permit local authorities to borrow at a 4 per cent. rate of interest. At a time of rising interest rates the fact that the representative rate is based on the previous year's borrowing rates means that it does not fully reflect the current year's borrowing rates if they are higher. This situation is much less likely to arise in 1970–71. Borrowing rates in 1969–70 were very high, and as a result the representative rate for 1970–71 is higher than the borrowing rate has been for much of this year so far. If it does, local authorities will gain this year on the swings some of what they lost in previous years on the roundabouts. I hope that local authorities which are pressing ahead with necessary building programmes will in particular note that.

There are other difficulties arising from the refinancing of maturing debt, which on another occasion I should have dwelt on at some length, but perhaps the House will forgive me for not doing so tonight.

I imagine that discussion on the whole system of housing subsidies would be out of order tonight. But I must stress that in asking the House to approve the Order we are only asking it to approve the rate of basic subsidy for dwellings completed in this financial year. We are not asking it to endorse the present subsidy system. Indeed, we are committed to refashioning the subsidy system to give most help to those local authorities and individuals who most need it, and that is what we shall do when we have worked out our plans and consulted the local authority associations. The House will not expect me to go further this evening. This will require a great deal of work and consultation.

Tonight I hope that the House will pass the Order so as to enable the representative rate of interest to be fixed.

1.7 a.m.

Mr. Reginald Freeson (Willesden, East)

It is my pleasant duty to offer my congratulations to the Parliamentary Secretary. Although we have crossed swords once at Question Time since the change of Government, this is the first occasion on which I can properly congratulate him on his appointment. I wish him well in what I know is a very difficult task. I do not wish him long tenure of his office, of course. There will be occasions when we shall be rather abrasive with one another, but I believe that we shall never be led to be personally abrasive. I have a personal regard for the hon. Gentleman, and, apart from basic policy differences, I shall be glad to co-operate in trying to tackle the housing problems in all their complexity that fact our urban areas and that people living in them. I welcome the hon. Gentleman's appointment and congratulate him.

The Orders with which we are dealing must be welcomed by my side of the House. They were in preparation under the previous Government. I do not propose to emulate the Parliamentary Secretary's hon. Friend the Member for Crosby (Mr. Graham Page), now Minister of State, who, when on this side of the House, used to make a practice of explaining the Government's own Orders, usually at somewhat greater length than the Minister presenting them to the House.

I should like to take the opportunity to put one or two relevant questions, to put the background to some of the hon. Gentleman's observations. I have no questions or comments on the details of the order because, as I have said, it was in preparation by the Labour Government.

Whatever the future may be, in welcoming the Order it is right to say that the legislation under which it is made has proved itself in local government housing efforts. But what of some of the criticisms which the Conservatives have made and to which the hon. Gentleman referred only fleetingly tonight? Those criticisms have been made when the House has discussed Orders virtually identical with this and different only in respect of the amounts involved.

There have been three main criticisms. It has been argued that the average representative rate of interest was unfair to local authorities borrowing at above that rate. It has been argued that the previous average representative rate was an unfair figure to take. It has been said that there should be a subsidy for people instead of local authority house building. Already I have detected some changes in the phraseology used about this subject by the Conservatives. Those are the criticisms which used to be made when the Labour Government made such Orders. Perhaps we shall hear something of them tonight.

I do not suggest that a housing subsidy system at any one point in time is immutable. When there is a changing situation nationally, regionally and locally, one must be prepared to review the ways in which one is achieving one's objectives and be prepared to consider the use of other financial methods of tackling the problems. For this reason, a housing finance review was put in hand by the last Government. The present Government have inherited it, and can improve the effectiveness of the investment and subsidy for dealing with the housing problem. As there has been much talk of a review by Conservative spokesmen, including the Minister himself and the hon. Gentleman, one would have thought that tonight there would have been at least some indication of what the future might hold for us.

Is this to be the last Order of its kind? This is an important question, not lust from a parliamentary point of view, because of the differences across the House, but for the many hundreds and thousands of people, both elected and officers, who are involved in local government housing. We are entitled to some indication, if not the detail, of future thinking.

I do not wish to be unfair. I do not expect any Government in office for a matter of only a few weeks to be able to make specific proposals, but at least they should be able to give some indication of the aims towards which they are working, especially in view of the tantalising references made by the hon. Gentleman towards the end of his speech.

The Government have had five years of opposition to think about these things as well as having the material of the finance review which they inherited, virtually complete in its workings. We are entitled to ask whether this is the last Order of its kind under the present Act. Are we to expect a reduction in total public investment in Government spending on housing, not just a refashioning, to use the hon. Gentleman's phrase, but a total reduction or holding of Government investment by way of subsidy to local authorities instead of a continued expansion of expenditure in this important area?

Are we to expect for example what I raised at Question Time recently, a national rent rebate scheme such as we were looking at in the Department before the change of Government? Is there to be a slum clearance subsidy, an urban renewal subsidy or are we to expect a subsidy for local authorities with above-average costs on their housing revenue accounts? These are germane points. There has been plenty of time for the Government to work out some of their ideas on these. Are we to have some way of assisting in the refinancing of old debts, which is one of the problems facing many authorities?

We must be particularly concerned for those in the housing priority areas who have, or should have, a continuous rolling programme of housing redevelopment? More immediately, referring to operations under the Act with which the Order is concerned, what of those authorities in priority areas for which the Act and this Order are particularly important, which are not building to their capacity and not just because of the difficulties which we know they face. It is not new for local authorities to face such financial difficulties with housing. But there are some which are cutting back because they have decided as a matter of general policy not to proceed. We know what impact this is having on slum clearance, the housing lists and urban renewal problems in these areas.

We do not have to go far from this House to some of the London Boroughs, let alone the rest of the country—to see what is happening. What of those authorities which, notwithstanding the prime intention of the subsidy granted under the Act and by the Order, are worsening rent rebate schemes rather than improving them, which are turning away from the model scheme recommended by the Ministry in 1967? The hon. Gentleman is probably learning some of the details and the appalling results arising from this kind of policy being pursued by certain authorities—I do not say a majority but some with the worst problems. In that connection what of the failure of a growing number of authorities to use the subsidy with which this Order is primarily concerned for rent rebate purposes, and rent rebates of a civilised and humane kind such as the 1967 model scheme?

We are entitled to ask these germane questions. Even though it is only a few weeks since the Government took office we ought to be able to get some idea of the thinking going on because these are important matters, causing growing concern to tenants, many members of local authorities and certainly to many of us on both sides who have taken a continuous interest in housing problems in all their complexities for many years, going back well before we were elected to this House.

The problem cannot be solved by adopting an immutable attitude to particular kinds of subsidy systems, but we should not be too quick to throw out a subsidy system which has been of considerably more help to local authorities in the last few years than any previous system without being sure that the new system, if there is to be one, and the new emphases, if there are to be new emphases, are directed at an expansion of housing activity and not a reduction.

Whatever differences and doubts there may be about the subsidy system covered by this Order and its predecessors, we are entitled to an answer to at least one question—and it is not a flippant but a very important question: Is it the intention to reduce the Government commitment below the projected expenditure under the present Act, not just in the coming year, but over the years ahead for which there is a broad pattern of housing need, even if it is only on the basis of the slum clearance returns which are with the Ministry, or is it to be maintained, even allowing for a re-fashioning of the use of public money so that we can more effectively achieve the objectives of urban renewal, slum clearance and the removal of obsolescence, about which we should be concerned in the House and in local government?

1.22 a.m.

Mr. Hugh Rossi (Hornsey)

I wish to take up only one point which the hon. Member for Willesden, East (Mr. Free-son) made, and that was when he congratulated my hon. Friend the Parliamentary Secretary on his appointment. Unlike the hon. Gentleman, I hope that my hon. Friend will fill the post for many months, and we know that he will fill it with distinction and very ably.

There is one matter which strikes one immediately about the Order almost like a hard slap in the face, and that is the extremely high representative interest rate of 9.23 per cent. which has to be paid as an average by local authorities undertaking house building. When the subsidy was first brought forward in 1965–66, the representative rate was 6.19 per cent. There has therefore been a considerable rise in the rate in a few years.

Reference has been made to the criticisms of this type of subsidy. One is that the representative rate is based on the preceding year's average, and, on an annual rising scale from 6.19 per cent. in 1965–66 to 9.23 per cent. today, there has been an additional burden on the local authorities borrowing today and receiving a subsidy based on an average of the preceding year when the rate was lower. I feel sure that local authorities will be most gratified that the situation seems to be levelling out, and this year they will perhaps benefit more from this subsidy than they have done in the past.

The other defect which has rightly been mentioned is that the representative rate is based on an average, and some local authorities are, therefore, borrowing at much higher than the representative rate. For these two reasons, it is, clearly, misleading to suggest, as was suggested by hon. Members opposite when in Government, that local authorities were receiving a subsidy of anything they had to pay by way of interest above 4 per cent. In many cases they had to pay much more than 4 per cent. Therefore, the subsidy is not as helpful as would appear on the face of it.

There is, however, a third criticism of this kind of subsidy, which has not been mentioned but is, I feel, the most important criticism of all. The subsidy applies only as and when the buildings, the houses and the flats, have been constructed and are let. From the inception of any redevelopment scheme, however, from acquisition of the land and buildings upon it, from demolition of those buildings to the construction of new blocks of flats and their letting, periods of two to three years elapse, and during those periods local authorities have to borrow and pay interest at the full rate. They do not receive this subsidy. As they borrow at between 9 and 10 per cent. for two to three years, they have to bear the whole burden of that interest rate. This has been one of the greatest disincentives against local authorities proceeding with house-building programmes. This is one of the reasons why there has been a shortfall in building programmes in recent months.

Mr. Freeson

The hon. Member speaks with experience of local government. So do I. He must know that so far from its being a disincentive, it should be an incentive to get the land used as quickly as possible, because the sooner it is built on and completed the sooner the subsidy operates.

Mr. Rossi

When local authorities appreciate the cost in which they will involve themselves in embarking on the scheme, there is a disincentive against embarking on it, buying the land and going forward with redevelopment. They think twice when they realise what will be the cost to the ratepayer at interest rates of 9 to 10 per cent. over two to three years before the subsidy begins to operate. This is the fundamental weakness of the subsidy.

I hope that in the review which is to be carried out and which my hon. Friend has mentioned the closest attention will be paid to this matter as it is on of the most important matters influencing the minds of local authorities when deciding whether they can afford to go ahead with a housing scheme.

One other matter which is an equal disincentive is the continual rises in the cost of construction. Since 1964 the rise in the cost of houses has been phenomenal. Borrowing has to be undertaken on the capital cost. That is the relevance of these subsidies. Possibly my hon. Friend, when he replies, can give an indication of the amount by which the cost of housing has increased since 1964. Unless we know this, it is difficult to balance in their right context questions of the kind that we have to consider in an Order of this kind.

One welcomes any kind of help to local authorities in carrying forward housing schemes, but let us not be misled, as the hon. Member for Willesden, East would mislead us, into believing that this scheme, which he and his hon. Friends introduced, was the complete answer to local authorities' housing problems. There are many serious defects in this type of subsidy, and we are very glad to learn that the whole system is being looked at closely and that we shall see radical changes in it.

1.30 a.m.

Dr. J. Dickson Mabon (Greenock)

It has been my privilege to take part in all these debates on such Orders as this since the system was introduced. I should like to congratulate the hon. Member for Hornsey (Mr. Rossi) on making this year the same speech as he has made every year, but I do not think the criticisms which he uttered when in Opposition are made any better by being made on the Government side. I will join with him in this, that I also congratulate the Parliamentary Secretary on his appointment, and also the Under-Secretary of State for Scotland on his. I hope their terms of office will be measured in months but I hope they will be enjoyable ones.

No one has pretended that the present system is perfect. There are defects in it, and attempts were made by hon. Members opposite when in Opposition to remedy some of those defects, and now that they have brought forward their first Order under the system it is not unreasonable for us on this side of the House to ask the Government why they have not remedied the defects. If the answer is that they have not had time, I pray them to read again the speeches they have made in the past—hostages to fortune, I agree.

There were some by the hon. Member for Crosby (Mr. Graham Page), who is not here now. [HON. MEMBERS: "He is."] I beg the hon. Member's pardon, but I had not seen him sitting there. I do not think I have seen a flower so modestly cringing to one side. The hon. Member made the point in 1968 that it was time to remedy these defects, and he argued about the representative rate of interest and said it was always one year behind, and that point has been confirmed again tonight. Why, then, has there been no attempt to anticipate what the rate is to be next year or what, as it were, the gains will be on the swings as distinct from the losses on the roundabouts? Is there to be any change in interest rates at all? But now it seems that hon. Gentlemen opposite are converted to this method of the average. Or are they?

It was my misfortune last year not to be able to make a speech in the debate then because I was helping the Under-Secretary of State and was concerned in another matter entirely divorced from the business of the House—

The Under-Secretary of State for Scotland (Mr. George Younger)

The hon. Member did a good job.

Dr. Dickson Mabon

I did a good job. The hon. Gentleman is quite right. At that time my right hon. Friend the then Secretary of State mentioned that point which concerns this Order we are discussing tonight. He said: I do not want to instance one or two particular cases, but I have been fairly generous in respect of Glasgow's costs, when the hon. Gentleman might have asked us on other occasions why we allowed such costs to be supported by subsidy. … There was a discussion with Glasgow on the form of the subsidy. Glasgow has suggested that there should be a new form of pool subsidy based on a notional deficit on housing revenue accounts. It admitted it had not worked it out. We are always willing to listen to suggestions, and we are associated with the Ministry"— of Housing and Local Government— in a long-term look at the matter."—[OFFICIAL REPORT, 21st July 1969; Vol. 787, c. 1445.] One would have imagined that after this period it would have been possible for the hon. Gentleman to comment on that. We would have felt obliged, at the behest of the hon. Gentleman, to make a comment on that, or at least see how far we had taken the position with respect to the great City of Glasgow. In case it is thought to be a narrow parochial point of concern only to the great City of Glasgow, I would point out that it affects the rest of the United Kingdom. No less a person than the present Prime Minister made a specific promise in June this year in the City of Glasgow that there would be urgent special help to the city itself, and yet on the first occasion that an Order is brought before the House it lacks any reference to the Glasgow problem. Yet the previous Administration solemnly promised that the position of Glasgow would be fairly considered.

My complaint is that we have not been told why the Glasgow position has not been rectified, why no attempt has been made in the Order to adjust the position to give—and I quote the Prime Minister—" special aid to the city". If this item were included in the Order, other hon. Members would complain that their cities were not being given special aid, and the singular criteria that apply to Glasgow would have to be shown to be so singular that Glasgow alone should benefit. I would basically question that. Aberdeen and Dundee might be able to sustain as good a case as Glasgow, and there may even be large cities in England able to do so.

But that is not my position. I do not have to justify that; the Under-Secretary of State has to. He was the one who endorsed this and supported his leader, the present Prime Minister, in this claim for special aid for Glasgow, and he has just completed discussions, as a result of our past efforts to get in order the city's housing programme, which is sadly behind, on grounds that it is financially difficult so to do. This is the case of the present governing body in the city. He will tell us tonight, I hope, what is the alternative, outwith this Order, for special aid. Otherwise we are right to complain about the omission from the Order of a reference to the City of Glasgow.

Another matter, perhaps not so significant, is the absence of a separate rate for housing associations. As an ex-Minister, I fully appreciate why the hon. Gentleman is unable to provide for this in an Order of this kind, be it in reference to England and Wales or to Scotland. But it was hon. Gentlemen opposite and the Secretary of State for Scotland who insisted that it was possible to have a separate rate for housing associations. I am talking not of the Scottish Special Housing Association, which is provided for in the Order, but of housing associations generally. The Under-Secretary of State has on occasion complained—and I have agreed with him—that housing associations in Scotland have not been developing at the same pace as in England and Wales. Why have the present Administration, despite their past championing, found themselves unable to include this in the Order?

In view of what was said by the Parliamentary Secretary as he finished introducing the Order, can we be told how long the Order will last? Can we have an absolute assurance that it will go right through to the end of the financial year and will not be replaced in midstream by something else? Let us be fair. Local authorities which are embarking on developments are involved in building low rise houses that take 15 months in construction, which is longer than a financial year, or multi-storey development, which may take 22 months or even more, which is again longer than a financial year and is almost two financial years.

The hon. Member for Hornsey (Mr. Rossi) made a good point when he said that some developments in terms of financial assessment have to be regarded in terms of a quinquennium, a five-year stretch, rather than in terms of one financial year—what Nye Bevan described as the vaster aspect of budgetary appreciation. We should be looking at a period of longer than one year.

If the Minister can say he intends to change the system, surely, although we cannot ask him to tell us what the new system is, at least we can ask him to give us precise assurances on when the new system will take over from the old system. We are entitled to confirmation that the Order will absolutely be carried out to the end of the financial year. I press the Minister to say that the new system will not take over until the end of two financial years, at least to cover the position of building, if not of the acquisition of land. May we have information about how long this process changeover will take? How can we tell our burgh chamberlains and county treasurers the financial position unless we are able to get a precise assurance from the Government that we are to have a reasonable time with the present subsidy structure?

I finish by emphasising again the question put by my hon. Friend the Member for Willesden, East (Mr. Freeson): can we have an assurance that the new system taking over will see a net real gain in investment in public sector housing by the Government in the time that they are in power? Will there be a net real gain, irrespective of how the system is changed? Everyone is concerned to see that there is not a real reduction in housing investment. Like many of my hon. Friends, I have always believed that the private sector, especially in Scotland, should be expanded. But that should not take place at the cost of a reduction in the public sector by a single house.

I would like the hon. Gentleman to give a positive assurance, if he can, similar to that contained in the manifesto of the Conservatives in 1968, which itself was less precise than their manifesto of 1970, saying that they would aim to build 50,000 houses in the foreseeable future. Will that be the policy for Scotland in the next few years? Does the target of 50,000 remain unchanged—that on figures, that on money, that on the length of this Order, and that on the changeover of the system? These are all matters of importance.

The hon. Gentleman told us about Glasgow. The citizens of Glasgow want to hear whether there is to be a change on the rate support grant. If not on this Order, will it be added to an Order of this kind later in the Session, or will it be brought in in some other way? These are essential matters for discussion, even at this late hour.

1.42 a.m.

The Under-Secretary of State for Scotland (Mr. George Younger)

Perhaps I might comment briefly on the Scottish Order, which is made under Section 2 of the Housing (Financial Provisions) Scotland Act, 1968. It has the same background and serves the same purpose as the Order for England and Wales, with the addition of the reference to the Scottish Special Housing Association. As in England and Wales, the Order is required, and its content is largely determined by existing legislation on housing subsidies.

All the consultations required by the Act have taken place. The local authority associations, the Scottish branch of the National Federation of Housing Societies, the development corporations of the Scottish new towns, and the Scottish Special Housing Association have accepted the rates proposed.

As might be expected, the rates in the Scottish Order for houses completed in 1970–71 are also well above those for last year. The rate for local authorities, which applies also to housing associations, goes up by 1.35 per cent., which is the biggest jump so far. The S.S.H.A. and the new town rates go up by 1.32 and 0.87 per cent. respectively.

The calculation has been done on the same basis as before. In the Library there are copies of the memorandum prepared by the Scottish Development Department on the calculation of the local authority rate, and this gives full information about the amounts and sources of borrowing and the interest rates applying. The marginal differences between the rates specified for local authorities and new towns in Scotland and those for England and Wales reflect differences in the methods, amounts and timings of borrowing. There is no difference in principle.

The Order is necessary for the operation of the subsidy arrangements established by the Scottish 1967 Act and now consolidated in the 1968 Act. The calculations have been done on the same basis as in earlier years, and the representative rates have been agreed by all the associations and appropriate authorities, as I have said.

The hon. Member for Willesden, East (Mr. Freeson) raised one or two points on which I want to comment. First, he asked why the Government have not changed this year from using the previous year's interest rates. The answer is simple, and he, of all people, ought to know. The legislation was put through by him principally, and it requires that the rate should be representative of borrowing in the year before the year of completion of a house.

Therefore, if the hon. Member's complaint is that we have not at this stage yet managed to put through a housing Bill altering the system he brought in some years ago, I plead guilty. We have not had time, and the simple answer to him is that it has not been changed because the legislation requires it to be done by this method.

Dr. Dickson Mabon

Since the power is by legislation and the hon. Gentleman intends to legislate, does the hon. Member still regard it as practicable to have adjustable representative interest rates in a current year?

Mr. Younger

The hon. Gentleman is putting words into my mouth. I have never said it was practicable to have such a thing, but if it is practicable, or it is suggested by anyone that it is practicable, I am very prepared to look at it. The position is that the legislation requires it. That is so.

The hon. Gentleman's second question was about Glasgow. He asked why there was not a separate reference to Glasgow in this Order. The answer is that no previous Order has referred to Glasgow, as he and the House know. The Act requires interest rates to be representative of authorities as a whole, and it would be a major departure to have in this system of housing subsidies a separate rate for Glasgow. But we have undertaken and pledged that we will consider Glasgow's problems specially. We intend to carry out that pledge, but we have no intention of rushing into action without conducting consultations with everyone involved, not least Glasgow Corporation. I am certain that Glasgow Corporation would not thank us for coming out with some new scheme if it had not had a chance of discussing it with us.

What we have said stands, and we intend to consult those concerned.

I am flattered that the hon. Member has spent much of his speech saying that we have not altered the present system. We have been in office, by my calculation, four weeks and five days, and it will take a bit longer to alter the system. The necessary consultations have to be carried out and we shall do that and we shall then come before the House.

Dr. Dickson Mabon

The Under-Secretary has not answered three questions of the five. He has touched on two mentioned. One common question of the five which my hon. Friend and I asked was whether there was any net real gain in the new system. The Under-Secretary is not doing himself justice by not answering that, at least.

On the second point about Glasgow, does the hon. Gentleman remember that the convenor of the housing committee of Glasgow Corporation, who is of the same political persuasion as him, wrote on 19th June to the Prime Minister asking for immediate implementation of the promise given during the election campaign—a very precise promise. He cannot shuffle off with the excuse that something has to be done and it cannot all be done at once. How is it to be done, under what Act, and in what way? Authorities may suffer if it is done in a way which means taking money from them. The hon. Gentleman must give an assurance, because other authorities will want to know that they are not affected by that pledge.

Mr. Younger

That is why it is essential to consult Glasgow and all other local authorities. It is impossible and wrong—and the hon. Gentleman would never have dreamt of it in office—to make a major change in the housing subsidy position without consulting the local authorities. I hope he would not have done so, and if he did, he should not have.

I have, of course, seen the letter sent by the convenor—

Dr. Dickson Mabon

To the Prime Minister.

Mr. Younger

—yes, to the Prime Minister, and, of course, the result will be close and detailed consultations with the Corporation to see how best to fulfil the pledge. The last thing Glasgow wants is for us to make up our minds without ever consulting it.

Mr. Freeson

I am sorry to press the hon. Gentleman. However, one question on which I laid much stress towards the end of my remarks, which was picked up again by my hon. Friend, has been totally ignored.

Are the Government committed to maintaining the projected total expenditure on housing subsidy and Exchequer help in housing, whatever the refashioning may be on the particular ways that that money shall be spent, or are we to expect a reduction in the total expenditure? There must be a known answer now, because it is a matter of general commitment on policy, whether the Government intend to maintain the projected expenditure or to reduce it.

Mr. Younger

I think that, on reflection, the hon. Gentleman will agree that if we are reviewing the entire housing programme and the methods of carrying out housing and housing subsidies, we cannot possibly start from the position of deciding whether it will cost more or less or just what sum. We have to start by assessing the needs and consulting those concerned to find out the best way of fulfilling those needs. If we do not start from that point we are certain to produce a nonsense at the end of the day. Therefore, I cannot give the hon. Gentleman an assurance in either direction. The criterion upon which we will judge housing policy is the needs of the country, and we will fit our policy to the needs of the country.

Question put and agreed to.

Resolved, That the Housing Subsidies (Representative Rates of Interest) Order 1970, a draft of which was laid before this House on 6th July, be approved.

Resolved, That the Housing Subsidies (Representative Rates of Interest) (Scotland) Order 1970, a draft of which was laid before this House on 6th July, be approved.—[Mr. Younger.]