INCREASE IN FINANCIAL ASSISTANCE

HC Deb 13 July 1971 vol 821 cc387-425

Amendment proposed : No. 15, in page 2, line 35, to leave out '75' and insert '90'.—[Dr. Dickson Mabon.]

Question again proposed, That the Amendment be made.

11.40 p.m.

Dr. J. Dickson Mabon (Greenock)

I remind hon. Members that with this Amendment we are discussing the following :

Amendment No. 16, in page 2, line 36, at end insert— Section 6(2) (Limit on amount of One half improvement grant payable in advance) '75 per cent.'.

Amendment No. 18, in page 2, line 37, leave out '75' and insert '90'.

Amendment No. 19, in page 2, line 40, leave out '75' and insert '90'.

Amendment No. 23, in page 4, line 13, leave out '75' and insert '90'.

Amendment No. 24, in page 4, line 15, leave out '75' and insert '90'.

Amendment No. 25, in page 4, line 24, leave out '75' and insert '90'.

The last three are consequential.

On Friday, I was in the middle of a most placatory passage asking the Minister to respond to our suggestions and that of his right hon. Friend the Secretary of State for the Environment.

Today's announcement about housing policy on top of the Bill means that we have much more to debate later with the Housing Bill which is to come next year. We shall be able to take up problems which we cannot remedy now. I am sure that after a rest at the weekend the Minister feels refreshed enough to reply.

The Minister for Housing and Construction (Mr. Julian Amery)

When we concluded our debate in the rising temperature of a Friday afternoon in July, a number of hon. Members wanted me to deal with further matters relating to the Amendment. I will do my best to meet their request for additional information as far as I can. I have studied what was said in the debate.

The purpose of the Amendment is to raise from 75 per cent. to 90 per cent. the amount of Exchequer contribution to the cost of the discretionary grants in the improvement areas. My argument on this similarly applies to later Amendments which will deal with standard and special grants.

I take it from what the hon. Member for Greenock (Dr. Dickson Mabon) said on Friday that this is essentially a probing Amendment. He asked whether the Government could spend all the money in the time available. I was asked how the estimate of £46 million was reached and how we expected it to be taken up. It may be useful if I explain what the figure—£31 million for England and Wales and £15 million for Scotland—represents.

It is not an estimate of Government expenditure. The £46 million mentioned in the Financial Memorandum is a forecast—there is a difference between a forecast and an estimate—of what additional capital expenditure might be incurred by local authorities on making capital grants to private owners and by local and other public authorities carrying out improvement works on houses they own. In the words of the Financial Memorandum, the figure is the best estimate that could be made of the effect of the Bill on capital expenditure of the kind I have described, assuming a good response by public authorities and private owners to the increased inducements. We will certainly do our best to encourage a good response, but whether the increase in public capital investment reaches it, or exceeds it, is no more within the direct control of the Government than are many other forecasts of public sector capital investment on other functions discharged not by Government, but by public bodies or private persons.

We hope that there will be an increase in improvement work to produce that level of additional investment. We shall encourage it in every way we can. We shall be happy if we have underestimated, but we cannot guarantee what the out-turn will be. I repeat, however, that we regard it as additional to the figures for public sector capital investment for housing as a whole contained in the January White Paper. Nor will there be any difficulty if the take-up of grants turns out to be better than estimated and the capital investment figure correspondingly higher.

11.45 p.m.

In considering the estimate, I think some misunderstanding may have arisen from a reference early in our debate to the £22 million as expenditure on improvement grants over the whole country in 1970. In fact, in broad terms, the total public capital expenditure of the kind I have described for grant-aided improvement work by all agencies approved in England and Wales in 1970 was about £75 to £80 million and about £13 million in Scotland. I have gone out of my way to describe what the £46 million relates to in terms of capital expenditure by the public authorities, but, of course, there will also be additional expenditure by the Government.

The Government contributions will increase because the grants on which they are calculated will increase ; because the proportion will increase, and because the local authorities will get higher contributions. Based on the same assumptions as to take-up of the special inducements, the extra Government vote-borne expenditure could amount to about £5 million a year by 1973–74—£3.5 million for England and Wales and £1.5 million for Scotland. That is a continuing annual payment for the period of payment of the contributions.

It might be useful to set all these figures against a background of progress in 1970. I take up here a point raised by the hon. Member for Willesden, East (Mr. Freeson). In that year, there were about 157,000 approvals in England and Wales. About 42,000—or 27 per cent.—went to local authorities for converting and improving their own properties. About 33,400 were for improvement contributions, which are for conversions and improvements to a comparatively high standard. About 8,500 were for standard contributions to local authorities for providing the basic amenities. Local authorities have also approved about 114,000 grants to private owners—about 54,000 discretionary grants, 60,000 standard grants and 300 special grants. Out of the total of 114,000, over 4,000 were for housing associations.

Hon. Members have expressed interest in the breakdown of the private grants between owner-occupied houses and other houses. The answer here is that about 73,300 of the private grants approved in 1970 were for owner-occupiers and about 37,300 for rented houses—about 33 per cent. excluding the housing association houses. In Scotland, grant-aided improvements of 23,400 houses were approved in 1970. Of these, about 17,500 were for improvement of local authority houses, about 5,850 for private owners, and 46 for housing associations. Of the grants to private owners, about 4,300—or 81 per cent.—were for owner-occupied houses. Taking standard grants alone, the proportion of owner occupation was about 89 per cent.

The hon. Member for Shoreditch and Finsbury (Mr. Ronald Brown) also asked if the increase from 50 per cent. to 75 per cent. was a straightforward financial incentive, and why we had chosen that figure. The answer is that we wanted to encourage more improvement work in the development and intermediate areas over the next two years.

I can claim no more scientific authority for the 75 per cent. than the noble Lord, Lord Greenwood, could claim for his 50 per cent., introduced in 1969. It has no more special merit than that it is significantly higher than the present figure ; that it reduces the amount the owner has to find out of his own pocket ; but that it leaves him with a reasonable stake in the financing of the work.

Hon. Members may also have had in mind the question, why not a differential level grant for different categories of applicant? I think the answer to this is simply that we wanted more improvement, and the whole aim of the improvement grant scheme is to improve the condition of the whole housing stock.

From the beginning of the scheme, through successive Acts by successive Governments, grant has been determined by reference to the same maximum proportion of cost and the same cash limit, whether the house being improved was owner-occupied or rented. Equally, since standard grants were introduced in 1959, the 50 per cent. maximum proportion of cost has applied in all cases. We want more improvement by all agencies and of all categories. We certainly want to see more improvement of rented houses. But we believe that an increase in grant across the board is the answer. We are offering increased inducements to landlords, owner-occupiers and public authorities alike.

Dr. Dickson Mabon

Does the right hon. Gentleman's remark that he has no scientific evidence one way or the other mean that the Department and the Scottish Office did not carry out any samples of possible repercussions if the grant was raised to our figure instead of the Government's figure? Local authorities behave differently from private individuals and owner-occupiers behave differently from private landlords. If there is no evidence, I rest content ; I am only sorry that there is not. But if there is evidence I should like to know about it.

Mr. Amery

As much evidence as is available to us in the housing statistics is available to the hon. Gentleman. But in arriving at the figure of 75 per cent., I do not think we had anything more scientific than the hon. Gentleman's right hon. and noble Friend, Lord Greenwood, had when he proclaimed the figure of 50 per cent. in 1969, and that was, after all, a development of housing improvements Acts which were introduced by Mr. Aneurin Bevan as far back as 1949.

Reference was made by the hon. Member for Shoreditch and Finsbury to the rising costs of improvement and to whether the size of the grant took account of this. He also referred to what he said was an answer to a recent Parliamentary Question to the effect that the cost of building a house had risen in the last 12 months by £1,180 and to the implications of this for the estimated extra public capital expenditure of £46 million, which is, of course, calculated at present prices.

On the best figures at present available, the average cost of construction of all dwellings in tenders approved for local authorities rose from £3,012 in the last quarter of 1969 to £3,136 in the last quarter of 1970—an increase, not of £1,100, but of £124. However, the grant is calculated as a percentage of the cost of the work, so no problem arises on this point. The amount of the cash limits is relevant but these are to be raised by administrative action by £1,500 and £1,800 respectively. This can be done for particular cases or particular classes of case under Section 5(3) of the 1969 Act. The average discretionary improvement grant for applications approved for private owners during the first quarter of 1971 was only £517 compared with the maximum of £1,000.

The hon. Member for Shoreditch and Finsbury also raised the question whether the increase in the Government contribution to the costs of environmental improvement in a general improvement area represented an incentive value or a real attempt by me to look at the environmental grant, and he made the valid point that the success of housing improvement policy depends on a successful area improvement policy. He was in fact pressing that the existing limit of £100 a house to expenditure on environmental improvement in a general improvement area on which a Government contribution may be paid should be increased. This raises a much wider general issue.

We have not attempted in this Bill, limited to development and intermediate areas, to do more than increase the contribution to the costs of environmental improvement in parallel with the increased contribution made towards house improvement. The £100 per house cost limit is not a limit to which local authorities may spend on environmental improvement in a general improvement area ; it is in effect the formula on which the Government contribution is calculated.

Inquiries made by the Department earlier this year do not suggest that this limit is causing any general hold-up in progress with environmental improvement. But, as the hon. Member for Shoreditch and Finsbury has pointed out, the importance of improving the environment of residential areas is an integral part of Government policy and a close watch is being kept on the point. An increase in this last limit can, if required, be made by the Secretary of State by order.

The hon. Member for Greenock asked why, if the Government were conducting a publicity campaign about raising grants, they did not have a unit in the Department monitoring the rate at which these applications came in. The Department already keeps track of progress with house improvement through the returns of applications approved and the other statistical material about house improvement grants and contributions provided in returns by local authorities and published regularly in summary form in the housing statistics.

I shall seek to obtain separate returns from the local authorities to which the Bill applies in respect of the higher rates of grants. It is not claimed that these will show precisely the take-up, for reasons which I tried to explain at our last Sitting. They are, for example, based on numbers of applications approved and take no account of applications which are not proceeded with. But they will provide a reasonably good indication of what is happening, sufficient certainly to gauge whether the take-up in these areas has been materially increased following the provision of higher grants.

I do not know whether I have been able in these few words to answer all the points raised by hon. Gentlemen opposite on the last occasion, but I have done my best to clarify those points which I could.

Mr. Reginald Freeson (Willesden, East)

We appreciate the effort which has been put in by the Minister and his Department during the time lapse since our last debate in obtaining information in answer to points which were raised. There are one or two matters outstanding which I will put to the Minister to see whether it is yet possible to get the information we seek.

Before doing so, I make the general observation that the tone in which the Minister has referred to this general figure of £46 million forecast expenditure is somewhat different from the manner in which the whole issue was presented to the public and to the Press a few weeks ago, when Press correspondents were told that the Government were giving an extra £46 million to the development of the intermediate areas. A different tone has crept in this evening, and it now becomes a question of expressing hope rather than estimating what the Government will be spending.

The Minister has referred to the £46 million as the most accurate estimate the Government can make of the rise in Government expenditure as a result of the Bill. Will this be entirely Government expenditure, or will part of the £46 million be attributable to rate expenditure by local authorities? If so, what is that figure? There has been sufficient warning of this question. I have, I think, put it in Committee but, if not, I certainly put it on Second Reading.

I ask again a question I put on Second Reading and repeated last Friday. What is the current expenditure prior to the Bill becoming operative? When the 1969 Bill was going through Parliament the Financial Memorandum forecast that the annual public expenditure arising from that Bill would approach £40 million by 1972. We are half-way to 1972 now, and we should like to know whether this is still a realistic figure to which this £46 million spread over three years is to be added as the most accurate forecast that can be made, or is there a different figure? To what is the £46 million extra? This information is necessary if we are to be able fully to follow the effectiveness of the improvements policy. The Government have not so far published information on this matter and we are entitled to know.

12 midnight

My researches in the Library and elsewhere show that in 1971 the figure is expected to run at about £22 million, which is a good deal lower than the original £40 million forecast in 1969. Is this figure correct? Again we should know the answer to this question because this is the base on which the Bill is to operate.

It is important when examining these large amounts of public expenditure to try to get clearly in mind in what way this sum is extra to existing forecast expenditure generally on housing, because improvements are only one element in the public expenditure figure. In January the White Paper forecast public expenditure on housing in all its various forms to be £1,144.4 million. That figure was not broken down into its various elements. May we be told whether current expenditure is running on this pattern, or are there any indications of a fall-back? Will we be current spending at the rate of £1,144.4 million in 1971, or will we be under-spending in the public sector of housing? Is the £46 million spread out over three years additional to the £1,144.4 million, or is it part of that figure within the original ceiling?

The Minister has said that in terms of forecasting there will be no difficulty about the share of £46 million being in addition to the January figure. But that is not the answer to my question. That only tells us what could be the position. We want to know the actual position. We do not ask this only out of idle curiosity. This question is fundamental to the whole sphere of housing policy in the public sector. It bears on whether that policy is operating effectively and whether the take-up is as planned by the Government.

The Minister touched on the question of the general expenditure limits for grant purposes, and he said that there was no evidence that the present limits in the 1969 Act held back expenditure on improvements. He quoted an average figure of £500 on the basis of experience gained, but I do not accept an average figure of that sort as an answer to the main point. The main point is that, if the Act envisages applicants being entitled to a certain level of assistance in real terms, then from time to time we should look at the effectiveness of the figures in the Act to see whether people are benefiting as Parliament intended.

The Minister referred to rising costs. I did not understand the figures which he gave, because they did not seem to tie up with the figures which we are receiving from the National Federation of Building Trades Employers and the Building Materials Producers' Council. They give different figures of rising costs month by month which do not tie up with the Minister's figures.

It is clear that there is a sharp rise in costs, which means that there is a drop in real terms in the value of the grant limits. The question is not whether a person who applies for only £500 or so can come well within the Act and not suffer from it, but whether a person who wished to apply for something at the lop level is, as it were, being squeezed because of the drop in real value of the grants in the Act.

We shall inevitably come back to that point later, but I hope that, in the light of the answers which we had to a whole series of points which were raised on Friday, the Minister will answer these points, which are of central importance to our understanding of what is going on in housing in the public sector. If further time is required while inevitably information passes between the Box and the Front Bench, so be it ; but at some stage tonight—preferably now—these specific points of information on the projected financial take-up should be given to the House.

The Under-Secretary of State for the Environment (Mr. Paul Channon)

I will attempt to answer some of the questions raised by the hon. Member for Willesden, East (Mr. Freeson). If I do not answer all of them, perhaps he will remind me of any particular point and I will endeavour to answer it. If I cannot supply the answer straight away, I shall have a further opportunity on the Question, That Clause 2 stand part of the Bill.

I will take the last point first which concerned the general limits. The short answer—we shall have a further opportunity to debate the matter when we come to the relevant Amendments—is that a general power to raise the limits exists in the Housing Act, 1969. If there were sufficient evidence, my right hon. Friend would have no hesitation in raising the top limit of grant ; but, as he endeavoured to show earlier, so far there is no evidence that a general increase is necessary and there is no evidence that improvements are being held up because the top level of grant is too low. Should such general evidence be produced, powers exist which enable my right hon. Friend to raise the limit, and in such circumstances he certainly would do so. However, there is no general evidence that that is necessary.

The hon. Member for Willesden, East may be able to produce isolated examples I know of very few. However, if he has any evidence that the general limits are too low, we should be delighted to consider it not only during the passage of the Bill, but at any later date.

Mr. Freeson

Perhaps I might raise two points. First, we are not concerned with the immediate past or the current position, but with projecting forward. We should learn from experience. There is clear evidence of sharply rising costs and that they are likely to continue.

Secondly, the hon. Gentleman repeated what his right hon. Friend said about the existence of a general power to increase the grant levels. This is not so, as we shall show when we come to new Clause 2. I must place on record that the Minister, no doubt unintentionally, misstated the position. There is no general power.

Mr. Channon

My right hon. Friend will seek to answer the hon. Gentleman when we come to new Clause 2 and show that there is such a general power. I suspect that I shall be out of order if I try to develop that now. I assert that there is such a general power, but perhaps the hon. Gentleman will be able to convince my right hon. Friend that it does not exist. We believe that it does, and my right hon. Friend will seek to show how it is applied.

Perhaps for the purposes of the Amendment the hon. Gentleman will accept for the time being that I am right in saying that such a power exists, and that my right hon. Friend would have no hesitation in raising the limit if there were any evidence that it was proving a handicap. The hon. Gentleman does not think that such a power exists. Perhaps I could leave the question whether it does until we come to new Clause 2, and invite the hon. Gentleman to look at Sections 5(3) and 37(5) of the 1969 Act.

On the question of the £46 million, my right hon. Friend has tried to show that this is the most accurate forecast that we can make, but it is a forecast rather than an estimate. The Explanatory and Financial Memorandum says : On the best estimate that can be made, the Bill will result in increased public capital expenditure … of the order of £46 million … My right hon. Friend was careful during the Second Reading debate to make it clear that this was the best estimate that could be made. It may turn out to be an under-estimate. I hope, as I am sure the House does, that it will. It may be an over-estimate, but I hope that that will not be the case.

The sum of £46 million represents capital grants by local authorities to owners and expenditure by local authorities on improving their own houses. It is impossible to be precise about what proportion of the £46 million will come out of the rates, and what proportion out of Exchequer expenditure, but it will inevitably be a comparatively small proportion that is borne by anything other than Exchequer expenditure, because under the Bill 7½ per cent. of the grants to owner-occupiers will be borne by local authorities, and 25 per cent. of the work in their own houses, and the remainder will be borne by the Exchequer.

I shall attempt to show what proportion of the £46 million will be spent by local authorities on their own houses as opposed to the forecast of expenditure on owner-occupiers, or rented accommodation. We can try to break it down further, but whether it will have much meaning, or be more than an informed guess, I do not know. It is a small proportion that is borne out of the rate-borne expenditure rather than the Exchequer burden, because it is 7½ per cent. of that grant, and 25 per cent. of the work on their own houses.

The hon. Gentleman also raised, very correctly, as he did on Second Reading, the question of the whole expenditure on housing, and whether this was a substitute for, or an addition to, an existing figure. He asked how this extra £46 million was arrived at. I repeat the assurance that I gave on Second Reading, and I hope that I can satisfy the hon. Gentleman, that this is an extra amount. This figure of £46 million over this period is the extra amount that will be spent, if we can arrive at that figure. Nothing is taken out of the Housing Estimates to make up for this extra £46 million. There is no cut-back, if I dare to be controversial, in local authority mortgages. There is no cut-back of any other housing expenditure to make room for this figure of £46 million which it is our hope will be spent during this period.

This is extra expenditure.

12.15 a.m.

Mr. Freeson

I was choosing my words carefully. The point that the hon. Gentleman makes is that there has been no cut-back and that implies a Government decision. This was not what I was asking. I was asking whether, not because of a Government decision, but because of the operation of the policy generally in the country, there was an under-spending indicated on current estimates for 1971–72. I do not say that it is because of a decision to cut hack but is it the case that the original figure of £1,144.4 million shows an indication of being taken up during the course of the year?

Mr. Channon

I would like to be able to give the hon. Member a conclusive answer, but I do not think that I can because it is too early to tell. The short answer is that, whether or not there is an under-spending and I have no evidence to assume that there will be—I hesitate to say either way at this point—it is irrelevant to the decision to introduce the Bill. It is not because we believe that there will be an under-spending on housing expenditure that we suddenly thought "Let us see what we can pop in."

That is not what happened. There may be an over or under-spending or we may have it right. At the moment we see no reason to assume that there will be an over-spending or anything else. I assure the hon. Member that this is a genuine extra sum, to be added to the estimates made by my right hon. Friend.

Since the hon. Member raised the point on Second Reading I have been advised that what I told him then is in accordance with the practice of both governments. They have not broken down expenditure in the way the hon. Member would like me to do. I am tempted to do so, but I am advised that this is the practice followed by all previous Governments. It would be extremely rash of me to try to break this practice.

[Mr. BREWIS in the Chair]

Mr. Freeson

I assure the hon. Gentleman that I would not consider it rash of him. I am not making a party point on this. If I may be a little rash, when I was in the position now held by the minister I held the view—maybe I had false hopes—that we should try to give a more accurate breakdown of figures of this kind within and outside the Department. May I urge the hon. Gentleman not to accept the present position just because it has always been the practice.

No doubt there will be other opportunities to return to this, but I believe that this question of providing more accurate figures, of monitoring perhaps, is of central importance to the future evolution of housing policy. Perhaps Governments have been wrong in the past in giving these generalised figures. There is even less excuse today because there has been a build-up over recent years of statistical monitoring. With modern methods there is less reason for continuing the practice of putting out this type of figure. The figure which appeared in the White Paper—and I say the same thing of previous Governments—in terms of comparing the operation of one housing policy with another is meaningless.

The Temporary Chairman (Mr. John Brewis)

We must come to a decision on this Amendment.

Mr. Channon

The hon. Gentleman will appreciate that I am not in a position to answer the latter point.

The Financial Memorandum to the Housing Act, 1969, made a forecast for increased expenditure of about £40 million. In the event, the figure for last year turned out to be between £75 million and £80 million. I will give an approximate breakdown, but I trust that the Committee will forgive me if my statistics are not accurate. About £11.9 million was paid out in 1970 in discretionary grants to private owners, £7 million by way of standard grants, and a further £50 million was spent by local authorities on their own properties. A sum was also provided for housing associations. This amounted to about £75 million in all.

It is difficult to differentiate in a debate such as this between some of the items ; for example, between grants paid to owners and sums spent by local authorities on their own properties. I only hope that I have not made matters more complicated by giving this rough breakdown. If I have confused the issue or if I am wrong, I will take the opportunity later of correcting the figures.

Having given this explanation, I hope that hon. Gentlemen opposite will not press the Amendment. We have a number of interesting aspects of the subject to debate on later Amendments, when we will do our best to give further information.

Mr. Ronald Brown (Shoreditch and Finsbury)

I am grateful to the Minister for the courteous way in which he has dealt with the points I raised last Friday. However, I have been searching in the Library to find a figure which corresponds to the one he has given for increased house-building costs, and I cannot find such a figure.

He said that the cost yardstick was increasing annually by between 7 per cent. and 12 per cent. If that is the position, then the point I raised on Friday is relevant. Is there an element within the sum of £46 million which reflects this annual increase? If the yardstick is increasing by the amount he said, then there must be corresponding increases in the grant to cover it. I hope the Minister will bear in mind the need for the grant to reflect inflationary increases in the cost of repairs. Does the sum of £46 million reflect these increases?

Mr. Amery

I wish it were possible to forecast as accurately as the hon. Gentleman asks. I do not believe that the forecast of £46 million is accurate enough to take into account the kind of considerations he has raised.

Dr. Dickson Mabon

We are pleased with the amount of information we have been given, which it is not possible for us to digest without studying it in HANSARD.

It might be helpful if I were to indicate how we propose to discuss later issues. We do not intend to debate later Amendments dealing with the replacement of 75 per cent. by 90 per cent. We are taking this view to facilitate the progress of the Committee. We will listen to the case that is made in relation to Amendment No. 16 and we will probably wish to debate Amendment No. 17 and Clauses 2 and 3 stand part. This will enable my hon. Friends to raise a number of points without moving what I might call fractional Amendments which probe why one figure is designed to replace another.

Having said that, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Channon

I beg to move, Amendment No. 16 in page 2, line 36, at end insert :

Section 6(2) (Limit on amount of improvement grant payable in advance)

One half

'75 per cent'.

Section 6(1) of the Housing Act, 1969, allows an improvement grant to be paid in instalments as the works progress. The balance would then be paid on the completion of the works. Where a grant is paid by instalments, Section 6(2) of that Act provides that at no time may the aggregate of the instalments … exeed one half of the aggregate cost of the works executed up to that time.

I apologise to the Committee that the Amendment should be necessary. This should have been in the original Bill. The effect of the Amendment is to increase this limit from 50 per cent. to 75 per cent. of the total cost of the improvement works so far carried out. This means that the advance payments that may be made will reflect the increase in the proportion of improvement grant, from 50 per cent. to 75 per cent. of the approved cost, proposed in the Bill.

The Amendment will bring the provisions in the Bill relating to England and Wales into line with those already contained in Clause 3(1) in relation to Scotland. The authority is not obliged to pay by instalments, and if it decides to pay by instalments it will not be obliged to pay as much as three quarters. Indeed, perhaps towards the end of the period, it will be cautious about going so high. All that the Amendment does is to give it the power to go up to three-quarters to pay by instalment, if it wishes.

As the maximum grant is now three quarters, and as a number, but not an enormous number, pay by instalments, it seems only reasonable, if they wish, that they should have the power to pay by instalments up to 75 per cent. This is a very small point and I hope that the Committee will feel able to agree with it.

Amendment agreed to.

Mr. Freeson

I beg to move, Amendment No. 17, in page 2, line 36, at end insert : Section 5(2)(a) (Limit on improvement grant) £1,000 £1,250. Section 5(2)(b) (Limit on improvement grant) £1,200 £1,500. The general point of the Amendment is in pursuit of the observation made by a number of hon. Members in Committee and on Second Reading, and in pursuit of the point I made a few minutes ago, that account must be taken of rising costs in the projected operation of the Bill when it becomes an Act. It is not sufficient to take the present situation and say that it is satisfactory and leave it at that.

There is no quarrel about the improvements in percentage contribution which the Bill has at its heart. This has been quite clear during the proceedings. The effect of the Amendment would be that the increased percentage contributions which the Bill already proposes will be on a larger ceiling, should this ceiling be reached. In other words, whereas now there is an increase of up 75 per cent. contribution on a total expenditure of £2,000, instead of the present £1,000, or 50 per cent. of that £2,000 as a ceiling, to take the more general case in the first line of the Amendment, if the figure goes to £1,250, it is on the basis that the top expenditure for grant calculation purposes becomes £2,500, and not £2,000, and the 75 per cent., as proposed in the Bill, will be 75 per cent. of that.

I have not worked out exact fractions here, but this is based broadly, first, upon the rising costs of building works and materials which we have already experienced since the 1969 Act became operative and which are currently rising at an even sharper rate, and it also allows for the fact that there will be a continuation of this rise, although at this stage we do not know for how long it will continue at the present very sharp rate of increase.

As I indicated earlier—although it did not seem to tally with what the Minister indicated on the rising costs of completed houses—the building trades employers and the B.M.P.C., in the information which they circulate publicly and to members specifically, and no doubt to the Department, have indicated that costs are rising at a rate of about 1 per cent. per month or about 15 per cent. over the year. I believe that it is about 15 per cent. in the London area and in the South-East, and the industry calculates that it is rising by 12 per cent. annually.

12.30 a.m.

If this considerable rate of interest continues over the coming year—there is little indication of a slow-down in the rate of increase—we shall shortly reach a position where the real value of the grant ceilings prescribed in the 1969 Act will be about £80. If the rise in costs of building and building materials continues beyond the next 12 months at about the present level, there will be an even further depreciation in the value in real terms of the figures in the 1969 Act.

I appreciate the Minister's point that Section 5 of the 1969 Act empowers the Minister, on representations from local authorities, to agree to a higher ceiling in individual cases or in certain classes of case, but that is not the point. The Act deals with a general proposition for ceilings on grant aid, whether it be in terms of £1,000 or in terms of conversions. The fact that individual local authorities may give specific evidence in particular cases or groups of cases that there are difficulties which they have encountered or which housing associations have encountered or which private landlords have encountered does not meet the point

My point is that for the general run of people making use of this Act costs are rising so sharply currently and as projected into the next year or so that the real value is falling. That was not the intention of the Act. I accept that when the 1969 Bill was presented and the figures were looked into by the Department a factor was probably built into the figure, though it has never been clear to me what that figure was. I do not recall that on Second Reading or during the Committee proceedings on the 1969 Bill a specific figure was quoted as being the element that had been built into the figures to allow for a recognised rise in cost for a given number of years. It is certain that since the passage of that Act, in the past year or so and as currently projected the increase in costs in building has been so much sharper than it was at the time that the Bill was being prepared that we must now take account of it. The Act could not have foreseen a rise in costs of 12 per cent. to 15 per cent. annually.

These are the reasons why, if we are to operate the original Act and the amending Bill in the true spirit of the Act and of the Bill, we should seek to bring the figures in the Act and, by implication, those in the Bill into line with real values. Where £1,000 has become £800, we must ensure that the original value is re-established, and the only way to do that, as a general proposition, so that all people may have fair treatment, is to ensure that we increase the figure in the Act by means of Amendment to the Bill to allow for it.

Hence the proposition that the £1,000 and the £1,250 should rise to £1,250 and £1,500. The due percentage contributions which the Bill proposes in general should thereby be increased in current cash terms to match the real objectives in cash terms intended under the 1969 Act, which it is the duty of all those who are interested in this aspect of housing policy to continue over an indefinite period ahead.

Mr. Channon

I congratulate the hon. Member for Willesden, East (Mr. Freeson) on raising this interesting point, which, I think, is well worthy of consideration by the Committee. I confess to having been slightly mystified initially as to the precise purpose of the Amendment, for reasons to which I shall come in a moment. I was interested in the figures which the hon. Gentleman had taken in the Amendment. He seeks to insert in Clause 2 further amendments to Section 5 of the Housing Act, 1969.

Originally. I thought that the hon. Gentleman had found an ingenious way of raising the point, which is perfectly accurate, that Section 5 of the 1969 Act limits local authorities, under subsection (1)(a), to one-half of the approved expense of the works or £1,000. Therefore, were we to increase the £1,000 to £1,500 for the ordinary improvement grant, the hon. Gentleman had it in mind, I thought, that we should amend Section 5(2) also in order to put that figure up to £1,500, since otherwise, although one would not have been caught by the one-half any more, one would be caught by the monetary limit, which would not be the 75 per cent. allowed under the Bill.

I hope that I can now meet the actual point which the hon. Gentleman has raised. Section 5(3) provides that the Minister may fix a higher amount with respect to a particular case—I agree that that would not be suitable in relation to this Bill and the generality of cases—and also, which is the important point, he is entitled to fix a higher amount with respect to a class of case.

My right hon. Friend has it in mind, if the Bill becomes law, as, I think, the whole House hopes it will, to approve higher limits for a particular class of case to which the Bill applies, that is, for improvement grants in the development and intermediate areas. He will make these limits £1,500 and £1,800 in order to meet the point I have made about the 75 per cent. as opposed to the 50 per cent. in the past. Obviously, the £1,500 is 75 per cent. of the ordinary improvement grant and £1,800 is 75 per cent. of the special grant, as the hon. Gentleman will have seen. The 1969 Act gives power to do that by administrative action. Such an approval will be included in the circular to be sent to local authorities after the Bill has been passed. I am glad to have had a chance to make that clear, because some local authorities or others interested in the Bill may wonder whether Section 5(2) imposes a limit that we had not intended.

The hon. Gentleman based his argument largely on the question of rising costs. I see his point, that if costs rise the whole time the real value of the improvement grants will be eroded. Such rising costs, if they continue, are likely to be countrywide and not limited to development or intermediate areas. If it proves necessary to increase the general limits for improvement grants because costs go on rising, that can and will be done by Order. The Committee will agree that such an Order should apply to the country as a whole, and therefore would not be particularly relevant to the Bill. If there were to be a general Order for the whole country, the extra amounts given to development and intermediate areas could be included under the Clause, where specific power is taken to show that where more money is given to the country as a whole the differential to development and intermediate areas can be preserved. So the power to do what the hon. Gentleman would like us to do already exists. My right hon. Friend will have a chance to show him in great detail exactly how it exists under various Sections of the 1969 Act when we come to new Clause 2. As that power exists, the Amendment is unnecessary for that purpose.

The limit imposed by Section 5(2) of the 1969 Act can be raised, as is clearly set out in Section 5(3). My right hon. Friend has it in mind to go further to meet the requirements of the Bill, from £1,000 to £1,500 for improvement grants and for special grants from £1,200 to £1,800.

I hope that that explanation will satisfy the hon. Gentleman. He has raised a very real point about the need to keep improvement grants up with rising costs, should they go on rising. There is no evidence that there is any need to increase them now ; there is no evidence that they are biting at the top level. Should they do so, my right hon. Friend has the power that the hon. Gentleman seeks in the Amendment. We shall bear in mind what the hon. Gentleman said, and I hope that he will feel it unnecessary to press the Amendment.

Mr. Freeson

I do not intend to press the Amendment, but the matter should be kept very much alive in the Department and before the House. It is very difficult to establish clearly when there is firm evidence that because of rising costs or a reduction in the value of the pound a direct impact is being felt on improvements policy. There are so many factors. Between 1949 and 1969, with the introduction of standard improvement grants in the middle 1950s, which was only a marginal contribution to the solution of a big problem, there was no change in the figures for improvement under the 1949 Act.

12.45 a.m.

One of the reasons for the loss of impact of the improvements policy was that Parliament had been content to allow the figure to remain, although it had long since lost its value, had been halved or even worse. It is important not to allow long gaps to occur, not gaps of 20 years, but not even of two, or three, or five years. This is something which must be constantly watched to ensure that the Act builds up a modest impetus. The only way to do that is to accept the purpose of the legislation and to ensure that the purpose is maintained.

I do not fully accept what the hon. Gentleman says, but I shall not press the Amendment. When I say that I do not fully accept what he says, I mean that it is not sufficient to wait to see what effect a reduction in the value of the pound will have on improvements policy. It must be having an effect now. If £1,000 of two years ago is now worth only £800, there is an effect on every owner-occupier and local authority wishing to undertake this work. We need not go through a sophisticated exercise to reach that conclusion.

Mr. Channon

I may have misled the hon. Gentleman at one point. I think that I referred to a special improvement grant. The sum of £1,200 is, of course, for the conversion of houses ; that is not a special improvement grant.

Mr. Freeson

I had noted that and assumed it to be a slip of the tongue.

We need not undertake a sophisticated exercise to see the impact of rising costs. Action needs to be prompt when the value of money is falling as it is. If our suggestion is not accepted tonight, I hope that the matter will come before the Ministry and before Parliament again within the coming year. I do not expect an undertaking now, but we shall un-doutedly be returning to this subject.

[Mr. ARTHUR PROBERT in the Chair]

Mr. Ronald Brown

I listened intently to the Under-Secretary and I am still not satisfied that the point we have been making has been taken. Under the provisions of the Housing Act, 1969, many items may be included in the cost of the work, including survey and legal fees. That element of the cost alone has risen and the White Paper published today recognises the rise to such an extent that a special subsidy is suggested to meet it.

The Under-Secretary is under-estimating the increase in costs. Local authority personnel tell me that by the time they have fixed the cost of a contract and got agreement about the amount of work to be done within the two-year period, especially when additional work such as dealing with dry rot is found to be necessary, costs have risen above the original figure. I am still not satisfied, incidentally, that the Minister has agreed that when additional work is found to be necessary, for instance, during a conversion, the extra work will rank for grant to meet rising costs.

Mr. Channon

I will take careful note of all the points made by the hon. Member for Shoreditch and Finsbury (Mr. Ronald Brown). My right hon. Friend has often made it clear that we shall keep the closest watch on the limits of the system, and if there is evidence that they are proving too low, he will not hesitate to raise them.

Mr. Freeson

That is not the point.

Mr. Channon

I thought that it was ; I am sorry if I have misunderstood.

Mr. Freeson

Semantics are important in this. The Under-Secretary keeps saying that if there is evidence to show that the rising cost is having an impact on the level of house improvements, the Minister will take action immediately. That does not mean very much. There is no need for further evidence than that the £ is worth only 90p after one year and that it will fall to 80p in real terms at the end of another year. Translate that into the Bill and we know that people will get less done for their money and less done within the grant ceilings.

We do not need to wait for the evidence that, instead of 156,000 improvement grants rising to a projected 170,000, they have risen to only 165,000 or 167,000, to take action on rising costs. There is a real and sharp difference in costs, not just a marginal one. All the evidence is that this will continue for some time and that in itself is evidence enough for the Government to act, if not tonight then within a very short time.

Mr. Channon

I see the point. It was hoped that the £1,000 figure fixed in 1969 would last for some time and that it was a generous sum. It probably was generous. But there is no evidence that the difference in the value of money is having any deleterious effect on the improvement grant scheme.

We will keep the figures up to date and if necessary we will increase the improvement grants. My right hon. Friend has shown that he is extremely anxious to keep up the impetus of improvement grants. The figures have been extremely good and we hope this will continue because the grants meet a social and economic need.

I hope hon. Members will not have to chide us for not having lived up to our responsibilities. We shall keep the limits and the working of the scheme carefully, urgently and constantly under consideration. I cannot go any further than that but I welcome the debate because it shows how important this matter is and the keen interest that all hon. Members have shown in keeping up the momentum of the scheme. We shall do all we can to maintain that momentum.

Mr. Freeson

Whatever the differences of emphasis, sharp or otherwise, that there may have been on this point, I accept that the Minister has gone as far as he can in the assurances he has given about the general intentions. As I have given for our part an undertaking that we propose to return to this as the opportunity arises, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

The Temporary Chairman (Mr. Probert)

I understand that the hon. Member for Willesden, East (Mr. Free-son is not proceeding with Amendment No. 18, in page 2, line 37, leave out '75' and insert '90', and Amendment No. 19, in line 40, leave out '75' and insert '90'.—both standing in his name and the name of the hon. Member for Greenock (Dr. Dickson Mabon).

Mr. Freeson

That is so, Mr. Probert, for reasons which my hon. Friend mentioned earlier.

Mr. Frank Allaun (Salford, East)

I beg to move Amendment No. 21, in page 3, line 41, at end insert : (3A) Where assistance has been given to a private landlord by the making of a grant specified in this section, the rent officer in determining what rent is or would be a fair rent shall have regard to the fact that the increase in the value of the property has resulted primarily from the use of public funds and not from the funds of the landlord. Hon. Members from constituencies all over the country are being approached by tenants in great trouble—tenants whose rents are being trebled or more because they possess a bathroom or because one is being installed. This results from the 1969 Act. I remind the Committee that several of us voted against the appropriate Clause in the Standing Committee which considered that Measure because we foresaw precisely what would happen.

These tenants dearly want a bathroom, lavatory and hot water but they cannot afford such a drastic increase in their rent to pay for them. Therefore, they are now attempting to resist these improvements, but they cannot resist them because, under the Act, they can be compelled to have them done and their rents increased. There are exceptions for people on such low incomes that they are to get these improvements on supplementary benefit and those under £10 a week income or £12.25p if married.

I am afraid that this situation will lead—and I am as concerned as anyone about improvements—to a widespread tenants' resistence movement, which is the last thing we want to see. Under this Bill, landlords are being give a fourfold bonanza. First, they already get a grant of 50 per cent. of the cost of improving their houses under the 1969 Act ; secondly, they get a greatly increased value on their property in consequence ; thirdly and most profitable of all, they are allowed to take their houses out of the present rent control, which roughly increases rents 2.6 times—these are Ministry figures—even before the added improvement is allowed for in the form of the further increases ; fourthly, now the grant is to be raised to 75 per cent.

The landlords are going to enjoy this bonanza. What about the tenants? Have they no rights, except the right to have their rents sharply increased? Surely it is reasonable that, if the landlord is to be so greatly helped out of public funds, the tenant should not be forced to pay for it, or not to this extent. It may be argued that this is not the case, since it is the taxpayers who stand 75 per cent. of the cost. If the tenant's rent remained the same, that would be so, but it will not. It will be increased, not 2.6 times, but between 3.6 and 4 times in many cases. Therefore, my hon. Friends and I urge that the very least protection should be that the rent officer and the rent assessment committee be required to consider the hand-out from public funds to the landlord when fixing the new rent.

1.0 a.m.

If bribing the landlords brought results, it might be acceptable ; but when accompanied by a penalty for the tenant it is insupportable. I am reported last Friday as having said that I opposed "driving" landlords to improve houses. I assure hon. Members that that is not my position. What I said was that I was opposed to "bribing" landlords to improve houses, which is very different. However, it is too late to make a correction.

I can take hon. Members to a row of houses in Salford—"Coronation Street" land—which, before the 1969 Act, had been greatly improved. They have had a bedroom or half a bedroom converted into a bathroom. It cost the tenants 8s. a week extra. They are delighted. It has turned their houses into what they call little palaces. I do not suggest that the landlord made a fortune out of this ; but he is not a philanthropist. He covered his cost with the aid of the grant, which at that time was 12½ per cent. of his share of the cost, and he did it for 8s. a week. He did not lose on it, or he would not have done it. Now I must go to the tenants and say, "Sorry, gentlemen, your rent is not going up by 8s. a week ; it will be trebled or quadrupled". What will they think of their Member of Parliament or other Members of Parliament who will have put him in that position? Now the grant is to be increased from 50 to 75 per cent. It is therefore even more imperative that tenants be protected. Without this Amendmentment, unfortunately, the improvements campaign will encounter very serious obstacles.

If the so-called fair rents system were working equitably, I might feel less strongly than I do on this issue. But it is not. The average controlled rent is multiplied 2.6 times when it comes out of control, and this has a great bearing on another Bill referred to earlier today. When it comes out of control and into regulation through the rent fixing machinery, this is the average increase : a rent of £2 a week plus rates becomes £5 4s. plus rates. But in certain areas, such as London, the percentage increase is far higher. In addition, where a bathroom is installed, the rent officer naturally says that the value of the house has increased and adds yet again to the rent.

I assure hon. Members that discontent is boiling over in London about rents. Last week, in a crowded room in the House, spokesmen for tenants' associations from all over London representing the thousands of people concerned met to consider what is happening. They reported how big property companies are increasing rents drastically every three years ; that the scarcity factor which accounts for high rents and which the Act says is to be ignored is clearly not being ignored ; how some rent officers are fixing widely different rents for identical flats in the same block ; how highly paid lawyers whom the tenants cannot afford are being employed for the big property companies ; of illegal premiums of £1,000 being required of incoming tenants ; of tenants being forced out to provide flats for wealthy tourists ; of many rent assessment committee members being heavily biased in favour of high property values—I am thinking of chartered surveyors, lawyers, and so on ; and regulated tenants paying more than unregulated tenants.

The tenants are meeting again this week or next week, and a dossier will be presented to the Minister of the things that are taking place under the Rent Act which are completely contrary to what most of us believed were the objectives of that Act.

Mr. Frank McElhone (Glasgow, Gorbals)

I should be failing in my duty if I did not support my hon. Friend (he Member for Salford, East (Mr. Frank Allaun). On 14th January, 1968, there was a terrible storm in Glasgow. As a result of my right hon. Friend the then Secretary of State in the Labour Government taking the initiative, Glasgow received £6 million for the renovation of thousands of tenements which had been neglected for generations by the property owners. That situation is now being exploited.

Now that rents have been decontrolled, I know from the experience of my Saturday surgery, that factors and property owners are increasing rents at a tremendous rate. The weakness of the Rent Act is that no general principles are laid down for the guidance of rent officers. Differing rent assessments are made of similar houses in the same street, and I am at a loss to understand how the assessments are made. Perhaps they are made on a rule-of-thumb basis.

Now that these houses have been decontrolled, real hardship is being suffered. There must be a rethinking of the whole system of fair rents, fair rent officers and the method of arbitration. It would be entirely wrong for us to give out public money as a bonanza to property owners who have for generations neglected their property.

The cry of property owners is that the high cost of repairs has prevented them from maintaining their property. In my constituency, because of a grievous housing shortage, individual flats in tenement buildings have been sold. It is no exaggeration to say that there are few tenement buildings in which two or three or perhaps more flats have not been sold at grossly inflated prices. Many houses do not have an inside toilet or even a bath. The profits from the sale of these tenement flats are often three times as much as the landlord paid for the whole property.

Mr. Robert Hughes (Aberdeen, North)

I wish to emphasise what was said by my hon. Friend the Member for Glasgow, Gorbals (Mr. McElhone) about the general state of tenanted properties in Scotland. In the past landlords have been extremely reluctant to carry out repairs, modernisation and improvement of the properties they own. The excuse that is often trotted out for not ploughing back profits into these properties is the low level of rents prevailing generally in Scotland. This is only an excuse, because the general tendency of landlords has been to make a "fast buck" when the going is good and to let the property run down. If this were not the case, we would not have needed a number of Housing Acts over many years to try to get landlords to carry out some repairs.

We have seen a number of Acts since the war. The 1957 Housing Act led to considerable decontrol of housing tenancies, and allowed landlords to increase rents if they spent a certain amount of money on the property. My evidence is that that Act did not lead to any great improvement in housing. All that happened was that wherever possible tenants were forced out to make room for uncontrolled tenancies. Many people have come to see me over the years and have told me that they have been offered a three-bedroom flat on a different floor in place of a two-bedroom flat in which they have been living only to find that the flat into which they have moved is decontrolled and that they have no protection under the Housing Acts.

There is no evidence that the 1957 Housing Act led to any increase in the number of improvements carried out by landlords. In this Bill we see another attempt to encourage landlords to undertake improvements, and any improvements will be welcomed, but the result is bound to be that rents are likely to rise.

The problem is that we are not dealing with this Bill in isolation. It is to be seen against the background of the White Paper which was presented today and which seeks to extend rent rebates to private tenants. The result will be an upward spiral in the general level of rents. We have this whole bonanza of landlords being able to get more for properties which they have neglected in the past.

As my hon. Friend the Member for Salford, East (Mr. Frank Allaun) pointed out, the landlord can force improvements to be carried out despite the resistance of the tenant. It is understandable that tenants are worried about improvements to conditions which have been tolerated by landlords for 30 or more years because the tenants fear that they will be unable to meet the increased rents which will result from those improvements.

I do not know about the situation in England and Wales, but in Scotland there is a possibility that the tenant will be able to withhold his consent for improvements to be carried out. However, there is a catch in it. If the landlord wishes to proceed with improvements against the tenants's wishes the landlord can go to the sheriff court and apply for the improvements to be done and that court, in certain circumstances, will allow the matter to go forward. It would be wrong to cast any aspersions on the legal profession, and particularly those who are engaged in the courts. But it is fair to say that their outlook on these matters is not the same as mine. I have never known the law in Scotland, England or Wales to be particularly biased towards the ordinary working-class person.

1.15 a.m.

Many tenants have already been approached by their landlords, as a result of the 1969 Act and possibly given an impetus by this Bill, to see whether they are prepared to allow improvements to be done. If landlords are allowed to carry out improvements, they should not be entitled to a return on Government money.

We used to hear about the poor landlord who has inherited property which he did not want and the landlord who, immediately after the war, had to buy a tenement flat to get a home for himself and found that he got a bad bargain in taking over property which needed a great deal of maintenance. Now there is strong evidence that the property companies are finding it profitable to buy older houses with poor amenities, which have been neglected for generations, and to make block applications for improvement grants. I understand that the local authorities have no discretion in these matters in relation to standard. Provided that these applications meet the qualifications in terms of plans, they must go ahead and allow the grants.

Whether a local authority would be within its rights in refusing discretionary grants on the ground that these were block applications specifically for profit making, I do not know. It may be that some local authority will have to challenge the matter by saying, "We do not believe that this is the way that the money should be spent. If property companies wish to make a killing in housing by carrying out repairs, they should put up their own money."

If the matter went to the courts, I should hesitate to speculate on the outcome. I suggest that the courts might decide that this was a valid application under the various Acts. Certainly I cannot see anything in the Act which defines a landlord as being either an individual or a property company.

We have heard ad nauseam about Government money being used to subsidise tenants in municipal properties who could afford to pay higher rents. This hoary old tale is hawked about the country and repeated month after month. This kind of subsidy to people to enable them to develop properties and increase rents on properties which they would not have allowed to get into such bad conditions is scandalous. I hope that the Government will accept the Amendment because it seeks to provide a very much needed and overdue protection for tenants.

Mr. Ronald Brown

This area of the Bill is very weak. With respect to my hon. Friend the Member for Salford, East (Mr. Frank Allaun) the Amendment does not cover this problem. I should have appreciated an opportunity of discussing this matter with my hon. Friend, because I should have liked to have had incorporated the question of maintenance after the improvements have been carried out. When a landlord has carried out improvements he gets his regulated rent. It is assumed from that time on that the quality of the house or flat will remain the same, because the tenant will have to pay a higher rent. However, experience has shown that landlords do not maintain properties to the standards achieved when the improvements were carried out.

It might be said that the answer is quite simple : call in the public health inspector and get a sanitary notice put on the property, and so on. Somebody from the inspectorate comes along and tries to hurry the owner into getting the work done. The owner finally gets an estimate, and that represents starting the work. Six weeks, or six months, go by before the owner can be pushed into the next stage, which is getting a builder's estimate. Following that, another six months go by, and all the time the tenant is paying the increased rent which was agreed upon when the improvement grant was applied for.

What my hon. Friend proposes does not reflect that situation, and I hope that somewhere in the Bill there will be a provision to protect the tenant. After all, a fair rent is described in the White Paper as the likely market rent that a dwelling could command if supply and demand for rented accommodation were broadly in balance in the area concerned". We all know that it is an impossible assessment to make. Nevertheless, unless some restriction is imposed landlords will get their money and their tenants will be left to pursue them to try to get the necessary improvements carried out.

I appreciate the point made by my hon. Friend about tenement buildings. The White Paper talks of a declining private rented market and the dissuasive effects of rent regulations on landlords. The extraordinary thing is that landlords are rushing in to buy tenement buildings in my constituency. One such building was purchased on the morning that the Minister was expected to announce his decision that it should be demolished. He made his announcement at 11.30 a.m., and it was found that the property had changed hands at 11 a.m.

The result of that exercise is a High Court case, but the tenants are still living in distressing conditions. The new owners cannot afford to spend a penny on the property, and they are apparently waiting to take advantage of the pro- visions in the Bill to make improvements to it. When that is done they will be able to get the rent they require, and they will make money hand over fist.

I hope that if we provide landlords with money to improve their property we shall give local authorities and rent officers the opportunity to assess from time to time whether the standards of maintenance of properties in their areas are up to standards for which the grants were made.

Mr. Channon

This is an important Amendment, and I shall try to deal with the points that have been raised. If I fail to deal adequately with the Scottish points, I am sure that hon. Gentlemen will forgive me if they are answered by my hon Friend the Member for Ayr (Mr. Younger).

I am tempted to talk about sheriff courts, but the right hon. Member for Kilmarnock (Mr. Ross) would be—

Mr. William Ross (Kilmarnock)

Perhaps the hon. Gentleman would talk about the Procurator Fiscal

Mr. Channon

The night is young, and I might do that. What I have to say applies to Scotland, but if I do not deal adequately with the Scottish points that have been raised perhaps my hon. Friend will be permitted to deal with them.

The hon. Member for Shoreditch and Finsbury (Mr. Ronald Brown) has, on many occasions, raised the case to which he has just referred. The hon. Gentleman is to be commended for his diligence to his constituents, but he will not expect me to deal with the merits of the case in question because, as he said, a court action is pending.

The hon. Member talked about maintenance of houses in disrepair. In fairness, he should look at Section 72 of the Housing Act 1969, which gives local authorities the power to require the repair of houses. This should help. A tenant can go to the rent officer if his circumstances alter, if the house falls into disrepair and so on. That is not a complete answer but the Act gives local authorities the power to insist that repairs are done and if certain statutory processes are gone through the tenant can carry out the repairs and make the landlord pay for them. That is certainly a step forward.

It is probably true that what the hon. Gentleman said about the working of the fair rent system and the rent officers represents a minority view. [Interruption.] That may not be so in Scotland but I think it is the case in England and Wales. I do not say that the hon. Gentleman is wrong, minorities are often right. Most people think that the fair rent system has worked reasonably well. The Francis Committee recently reported and it unanimously concluded that the system was working well. There was a minority report on certain aspects of the subject. But that was the unanimous conclusion of the Committee, and there was a Scottish member.

Mr. Tom McMillan (Glasgow, Central)

He was outvoted.

Mr. Channon

No, he was part of the majority. The Scottish and Welsh members and the English members, with one exception, were unanimous on all points. I am glad that the Scot was able to influence the Committee. Mr. McNiven was his name and he was appointed by the right hon. Member for Kilmarnock (Mr. Ross). I congratulate him on a very wise appointment.

The hon. Member for Salford, East is well known for the strength of his views on this issue and for the battle he has waged on behalf of controlled tenants over many years. His view is not generally held in the Committee. He pointed out that he was against a Section in the 1969 Housing Act introduced by his right hon. Friends. For all I know he may have voted against the 1968 Act—he spent most of his time last Parliament voting against his right hon. Friends and I respect him for that.

Mr. Allaun

In Standing Committee three Members on the Labour side who had pressed the improvements scheme very strongly voted against taking houses out of the existing control when they were improved.

Mr. Channon

I recall reading that debate and I recall an earlier occasion in 1967 when the hon. Member also voted against his right hon. Friends. He is consistent in his point of view.

Mr. Ross

Does that mean that my hon. Friend must not vote for it tonight?

Mr. Channon

We shall have to see.

1.30 a.m.

The fair rent system was largely the creation of the right hon. Member for Coventry, East (Mr. Crossman), built on by the now Lord Greenwood, and it had the support of nearly all hon. Members of the Labour Party, and at the time it perhaps did not have the enthusiastic support of some of my hon. Friends. However, it would be neither appropriate nor in order for me to discuss the whole principle of the fair rent.

I appreciate that the hon. Gentleman has considerable doubts about the whole principle of fair rents. I understand his argument—that as landlords will receive a larger improvement grant, extra attention should be paid to that when the fair rent assessment is made—but I believe it to be a misguided one. The Bill is concerned only with a small limited item, and that is to increase the rate of grant in the intermediate areas. It does not raise wider issues, though I am sure that hon. Members would like to debate the whole issue at some time. I suspect that there will be occasions in the coming months when we shall debate rental policy, and then it will be in order to consider the fair rent system and whether it should be changed.

Mr. Frank Allaun

The hon. Gentleman is making his case in a courteous way. He is suggesting that the Bill is confined to grants and is not concerned with rents. How can one discuss grants and ignore rents? It is like increasing the speed limit to 75 m.p.h. without taking steps to protect pedestrians. In either case the two cannot be separated.

Mr. Channon

I accept that the two are linked, but I will try to show that this is not the time to make the sort of Amendments the hon. Gentleman wishes to make.

As the law stands, a fair rent has no regard to the personal circumstances of the landlord or tenant. The hon. Gentleman is seeking to take into account for the first time the fact that the person has had public money and he wants that to be a criterion in assessing a fair rent. At present a fair rent is assessed, it is claimed, on objective criteria. A fair rent is defined broadly as the market rent discounting the scarcity factor. To import some other consideration would be to change the whole system.

Mr. Robert Hughes

Perhaps the hon. Gentleman will refresh my memory. Does not the 1969 Act call on the rent officer to take into account any money spent by the tenant in improving the property? If so, cannot the same consideration apply in the case the hon. Gentleman is now answering?

Mr. Channon

I will be dealing with this point later. If I forget to do so, I trust that the hon. Gentleman will draw it to my notice.

Section 46(1) of the 1968 Act defines a fair rent and how it should be determined. It says : In determining for the purposes of this Part of this Act what rent is or would be a fair rent under a regulated tenancy of a dwelling-house, regard shall be had, subject to the following provisions of this section, to all the circumstances (other than personal circumstances) and in particular to the age, character and locality of the dwelling-house and to its state of repair. On the technicalities of the Amendment, it is my belief that with the wording of the Rent Act, 1968, and the Section which I have just read, even were we to accept the Amendment, given that particular wording it would not make any difference, because even if the rent officer were to consider that public funds had been used, it would not affect any of the criteria laid down in Section 46 of the Rent Act, 1968, by which fair rents are determined.

But that is a drafting argument rather than an argument of substance to meet the hon. Member's point. The argument of substance is that the hon. Member is seeking that a rent officer should take account of the fact that an increase in value results mainly from the 75 per cent. grant. The implication behind the Amendment is, naturally, that a lower fair rent would be set for such a dwelling. Acceptance of the Amendment would introduce a fundamental change in the detailed rules which govern private rents where there have been grant-aided improvements.

The House may decide at some future date—I doubt it, but it is possible if one could imagine such a circumstance—that such a consideration ought to be part of the assessment of fair rents. But, if we believe that that is the case, it makes no difference in logic whether one does that with 50 per cent. or with 75 per cent. If it is urged that such things should be disregarded by the rent officer and that new criteria should be imported, the argument is equally strong whether one does it for 50 per cent. or for 75 per cent.

This modest Bill merely raises the grants in certain parts of the country. What the hon. Member should do, if he is moved to try to change a criterion for fair rent is to seek an opportunity to deal with the main question as to how a fair rent is assessed and what are the criteria. I suspect that we shall have plenty of opportunities of discussing that in the not very distant future.

I should point out some of the difficulties that would arise were the Committee to accept the Amendment. First, one would have to have different rules for assessing fair rents outside development and intermediate areas than one has inside them, and an entirely different criteria for assessing the fair rent. Within a development or an intermediate area one would also have to have two different criteria for assessing fair rents according to whether a property had received a 75 per cent. improvement grant under this Bill, or a 50 per cent. improvement grant under some previous Bill, or, indeed, after the expiry of this Bill. The Committee will agree that that would give rise to confusion and anomalies.

There are great practical difficulties. I am not sure how rent officers would necessarily know whether a house had received a grant. If it were the will of the Committee that this should be done, I am sure that these difficulties could be overcome. However, there would be considerable difficulties. At present there is no duty on a person to tell a rent officer that he has had an improvement grant of this kind, and the rent officer would be required to find out what the fair rent is and then to reduce it by a certain proportion to take into account all the factors that the hon. Member has in mind.

I suggest that this is not an Amendment which is appropriate to this Bill. The Amendment strikes at the whole basis of assessing fair rents in general, and the House will have to decide, in the coming months, whether fair rents are assessed equitably not only in the private sector but, in view of the changes proposed by the Government, in the publict sector also. If the House decides that fair rents is an equitable way of deciding rents and the criteria that ought to be considered, that is the moment when this related question ought to be considered.

In a limited Bill dealing with a limited problem what the hon. Gentleman suggests would, I suspect, cause more confusion and problems or anomalies than it would solve. I therefore hope that the hon. Gentleman will not find it necessary to press the Amendment.

Mr. Freeson

Whether my hon. Friend the Member for Salford, East (Mr. Frank Allaun) wishes to press the Amendment or not and whether the Under-Secretary wishes to accept it or not, others of us will accept that my hon. Friend has raised a very important point. At the very outset of his remarks the Under-Secretary was a little provocative. No doubt he is sorry for that now, because otherwise perhaps I might not have risen to my feet.

There is an important point here. Much of the discussion has hinged on the relationship of the Amendment and what it seeks to do to the position, not only in the 1969 Act, but also in the Rent Acts of 1965 and 1968 where the proposal for fair rents was first set down. When the 1965 Rent Bill was before the House, in the early stages there was a great deal of discussion, both in the House and publicly in many quarters, about the difficult problem of definition, of which the Under-Secretary has made heavy weather, but I do not say that necessarily critically. There was a good deal of discussion about the merits or demerits of leaving the definition of "fair rent" in the form in which it remained in the Bill as enacted. A number of hon. Members, of whom I was one, had serious doubts about that.

When the Francis Committee was set up to examine and review the operations of the Act it was hoped by a number of hon. Members, including myself when I was in the position which the Under-Secretary now holds, that this aspect, too, would be taken account of. Views were not expressed, because it would have been wrong for any member of the Government to have done so while a committee to which he was a party was investigating the matter independently. Some of us expected or hoped that this aspect would be dealt with. A number of views to this effect were expressed in serious articles in the Press, not only by people in the Labour Party, not only by people working in the social services and in welfare, but also by people in development. Some of the bigger private developers were concerned about getting a more sensible and rational approach.

One of the points which was revived in public discussion before Francis reported was precisely the point about re-considering the criteria of fair rent to take a closer account of actual cost involved on the part of the owner of a property in purchasing, in maintaining, in modernising—whether under improvement grant procedure or otherwise. Although I have not reached any firm or detailed view on this I am generally of the view, or I have come back to the view which I expressed on the original Rent Bill, that there is much to be said for being more specific about the criteria to be set by way of wording in the legislation or in guidance to rent officers.

We have not heard the last word on this. "Fair rents", which begs to question as a phrase, must always be defined. I doubt whether we should continue to define them solely as market rents less scarcity value, although that may have served a very useful purpose in the initial stages of the operation of the 1965 and 1968 Acts. I am inclined to the view that we should seek to relate the establishment of rents to basic costs and a fair return. In other words, we should return to the principle first enunciated in the 1949 Act in relation to improvements and which my hon. Friend has resurrected tonight—that is, a percentage return on outlay by an owner.

1.45 a.m.

In the White Paper, "Fair Deal for Housing", published today, this issue is raised once more along lines which will create even further difficulties. In paragraph 13, in the section on house improvement, it is said : The landlord will still be allowed to charge, as soon as the improvement works have been carried out, a rent increase whose annual rate is 12½ per cent. of the amount (net of grant) spent on the improvements. But charging this increase will no longer interfere with the landlord's right to apply for a fair rent that is, market rent less scarcity value. If it be wrong to pursue the principle of a given return—10 per cent., 12½ per cent., or, as it was in 1949, I think, 8 per cent.—one wonders whether it is right and proper to continue the policy enunciated once more, in a very conditional way, in paragraph 13 of the White Paper. Why is it considered wrong to establish rents basically on the principle of a fair return on the capital and running costs of private property?

This is a limited debate, and the point will not be pressed, but I give general support to the case which my hon. Friend has advanced. The time has come, since the whole issue of rent policy in the public sector and, to some extent, the private sector is under debate again, to reconsider this question. We shall have to look far more closely at it.

I hope that the Minister, in the liberal and considerate spirit in which he answered my hon. Friend, will not close his mind to a careful re-examination of the criteria upon which fair rents, where labelled as such, are determined. The question must be reoponed. Let him and his colleagues consider whether a fairer basis can be established than just market rent less scarcity value. I think that the House will wish to do that, as we proceed in the months ahead, to use the hon. Gentleman's phrase.

If we can move in that direction and make the Rent Acts more effective and more fair, we shall at the same time help to restrain inflation. There is no doubt that, where there is a big jump between actual costs and a given percentage return, such as my hon. Friend proposed in a limited sense in his Amendment, and market rents way above the actual costs in which the owner is involved in running property, and we continue to legislate in those terms, we encourage inflation, and we encourage the continuance of unfair burdens on the ordinary householders who live in rented property.

Amendment negatived.

Clause 2, as amended, ordered to stand part of the Bill.