THE PERMITTED TOTALS OF REBATES AND ALLOWANCES

HC Deb 24 April 1972 vol 835 cc1172-93

Mr. Julius Silverman

I beg to move Amendment No. 58, in page 25, line 35, leave out '110' and insert '200'.

In a number of the uncontested Amendments that the Under-Secretary moved he referred to giving the Government more flexibility. This Amendment proposes to give local authorities considerably more flexibility in dealing with the rebate scheme.

As the Bill as amended in Committee now stands, the position is that a local authority may bring forward a scheme with a tolerance of 10 per cent. above that of the standard or model rebate scheme. The Amendment proposes that the 10 per cent. be increased to 100 per cent.

The 10 per cent. which the local authority pays in addition to the amount under the standard rebate scheme is not subject to any Government subsidy. It is the local authority's own money which comes either from the rates or into the housing revenue account from the tenants. Therefore in the Amendment I make no proposal which will impose an added burden upon the Exchequer. It is simply dealt with by the local authority out of its funds, which it ought to have discretion to exercise itself.

All that we say is that if a local authority wishes to spend its ratepayers' money—and that is always subject to what the ratepayers say at the next election—or if it wishes to spend money which has been collected by way of surplus from the rents, it should have discretion to do so without having to ask the Minister to adjudicate upon the matter. The Amendment gives discretion to the authority to spend its own and its tenants' money in the way that it chooses. The Amendment does not attract any additional Government subsidy.

The position is made clear by a reading of Clauses 6 and 7, especially of Clause 7(2)(c) which provides that the 10 per cent. over tolerance provided to the local authority does not attract Government subsidy and is purely a rate contribution. All that I ask is that the local authority should be allowed to spend its own or its tenants' money in the way that it pleases.

That brings me to the finances of the scheme as a whole. It has been said many times that there will be extremely substantial increases in rents under this scheme. It is calculated that council rents throughout the country will roughly double. The Government have contested this in Committee, and the Minister has chosen to deny that he is the putative father of the document which was brought out in Committee by my hon. Friend the Member for Salford, East (Mr. Frank Allaun). That document undoubtedly was produced by his Department. The right hon. Gentleman chose to deny it, for some reason that he has never made clear.

9.0 p.m.

There is evidence from that document, apart from that of many independent rent experts, that rent increases will be very substantial. That, notwithstanding the existing rebate scheme, will bring considerable hardship to very large numbers of tenants. This allows the local authority, by introducing an im- proved scheme, to mitigate the hardship to some extent.

I do not like this combination of greatly increased rents and a rebate scheme which embraces 50 per cent. of the tenants who would be subject to a means test to get the rebate. I think that this is wrong in principle. However, when the Bill comes into operation, the rebates will to some extent mitigate the hardship imposed by these high rents.

The Amendment provides that local authorities shall have a much greater latitude out of their own funds in meeting this rebate scheme and dealing with this hardship. While in comparison with most rebate schemes the present model scheme is reasonably generous, it is not generous in all respects. The right hon. Gentleman will know that the Birmingham scheme as it affects tenants in certain categories is better than the Government's scheme. However, the Amendment is concerned to mitigate not only the hardship in the cases I have mentioned, but the hardship which will fall upon a large belt of tenants when these high rents come into operation.

These high rents will undoubtedly create substantial surpluses. The Minister mentioned a total of £30 million, but I suspect that that figure was calculated at a time when interest rates were substantially higher than they are now. There has been a transformation of housing revenue accounts. Birmingham, in the last financial year, had a surplus of £1 million. The next expected surplus will be about £3 million. Had it not been for the Bill, it would have been possible for the local authority in Birmingham as housing authority to reduce substantially the rents of council tenants. When the Bill comes into operation, this will not happen, but it shows the way that housing finance is going throughout the country.

Apart from surpluses previously expected, there will clearly be substantial surpluses in a large number of local authorities. After the Government's subsidies have gone, and bearing in mind that in practice they will have gone, the figure of £300 million is bogus because it includes a large part of the amount of supplementary benefit allowances, and quite a number of other items. In fact, to the ordinary tenant the subsidy disappears entirely.

There will then be a surplus on the account. This surplus will take place after the tenant has met from his rent—there is no doubt that it comes from his rent—the cost of the rebate scheme for council tenants, which should have been met by the whole community and not just by council house tenants; a contribution towards the supplementary benefit allowances; and the cost of the private rent allowance scheme. After all that has been met by the tenant there will be a surplus, half of which will go to the Exchequer, and half to the Government.

We think that that is wrong, and that the local authority should have the right to decide what use to make of any surplus that there is, or of any money that is available from the rates. It should be left to decide whether to mitigate the hardships imposed by the Bill by operating a more generous rebate scheme than that proposed by the Government. The Amendment does not say that local authorities have to do something. It gives them permission to take certain action if they desire to do so, and it suggests that there should be an increase, not of 10 per cent., but of 100 per cent., which would go a long way towards mitigating the hardships imposed by the Bill.

As I said earlier, we do not like a combination of high rents, means tests and rebate schemes, bearing in mind that if the Bill comes into operation, so will high rents. The Amendment will give local authorities the discretion, out of funds provided by the tenants—but it is the authority's own business where the money comes from—to exercise the flexibility which the Minister demands for himself but is not prepared to give to local authorities. We seek to provide flexibility to enable local authorities to mitigate the hardship that will be imposed by high rents and to do what the Government say they want to do, namely, to ensure that those in need get the greatest benefit out of housing finance by means of a rebate. The Amendment will be a contribution towards undoing some of the harm that will otherwise be done by the Bill.

The Amendment will give more discretion, more power and more flexibility to local authorities. It will provide greater relief for council tenants and, inci- dentally, for the private tenant, too, who qualifies for housing allowance. The tenant will receive greater benefits, and local authorities will be given greater discretion than they have now. The Amendment will put tenants in a very much better position than they will be if the Bill becomes law without amendment.

Mr. Eyre

In his interesting speech in moving the Amendment the hon. Member for Birmingham, Aston (Mr. Julius Silverman) asked for more flexibility for local authorities and made it clear that that extra flexibility should be created at the expense of the ratepayers.

Mr. Silverman

I said that it may be at the expense of the ratepayers. In the vast majority of cases the money will come from the rents paid by tenants.

Mr. Eyre

The hon. Gentleman made it clear—I thought quite fairly—that it could be at the expense of the ratepayer.

Mr. Silverman

It could be, but I said that in the vast majority of cases the money would be provided by tenants. If there is a deficit on the housing account, it is not likely that a local authority will operate this scheme, but it could and would operate it if there were a surplus.

Mr. Eyre

On the basis of that supposition—that there was a surplus on the housing revenue account—we must look at this proposal against the background of the scheme as proposed in the Bill.

The standard amount is the amount of rebates or allowances which an authority would grant if it were operating only the model scheme. The permitted total is the limit for the amount of rebates and allowances which an authority may grant by making its scheme more favourable to the tenants than the model scheme or by granting greater rebates or allowances for special circumstances under Clause 21(1) and (2).

The Amendment would thwart the major principle of the Bill. The aim of the model scheme is to provide adequate help throughout the country in normal circumstances for those who cannot afford the fair rent. If, therefore, authorities were able under the Amendment to make their rebate schemes twice as generous as the model scheme, they could effectively prevent many, if not all, of their tenants from paying fair rents on their dwellings.

The amount of rebate granted in excess of the standard amount would have to be borne by the rates. Under the Amendment an authority could revert to the practice, now adopted by some authorities, of making a special rate fund contribution to the housing revenue account to keep down the rents paid by all tenants, irrespective of whether they were able to afford a fair rent.

Mr. Freeson

The hon. Gentleman said that if the sort of situation which my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) described arose, the excess would be carried by the rates. The Minister was at great pains to argue that throughout most of the country that could not possibly happen because housing revenue accounts would be in surplus. How, then, does he explain the point he was making about the rates?

Mr. Eyre

The hon. Member for Willesden, East (Mr. Freeson) is perhaps putting a slightly different interpretation than I am putting on the words of his hon. Friend the Member for Aston. If there were a rebate scheme twice as generous as the model one—that was the practical implication of what the hon. Member for Aston was suggesting, since he was multiplying the 10 per cent. differential by 10 and saying that local authorities would be in a position to double the amount—a great number of tenants in that local authority would not be paying a fair rent on their dwellings because they would be receiving so much more by way of subsidy.

It therefore follows that the housing revenue account would to that extent be very seriously diminished, and there would be few cases where the housing revenue account would be showing the surplus on which the hon. Member for Aston and the hon. Member for Willesden, East, would be relying.

Mr. Freeson

I hope that the Minister will clarify this central point. My hon. Friend the Member for Aston was arguing on the basis of the Birmingham experience, which seems to be true of a large part of the country. It is estimated that there will be a £3 million surplus under the Bill within two or three years of it coming into operation.

Mr. Julius Silverman

Before it is in operation.

Mr. Freeson

I made some calculations in Committee and my figures supported what my hon. Friend said. I was rather more cautious and said that the surplus would arise within two or three years of the Bill operating. If 50 per cent. of the surplus goes to the Treasury and 50 per cent. to the general rate fund, then if there is a more generous rent rebate scheme, there is bound to be less of a surplus. There will, therefore, be no charge on the rates. In other words, there will be a lower profit or surplus on the housing revenue account.

Mr. Eyre

I accept that, and it is difficult to answer the arguments which have been adduced in regard to Birmingham because Birmingham has been exceptionally well administered for some years and is coming into a particularly good position.

However, I do not believe that that situation would necessarily apply in the long term in Birmingham if it came under an obligation, as it will under the Bill, to give much more generous rebates over a much wider area of needy tenants. One must, therefore, look at the obligations which Birmingham would have to assume for giving more generous rebates, and that would soon diminish any surplus that appeared. It all depends enormously on this consideration, which varies greatly in different parts of the country.

I repeat that if a rebate scheme were twice as generous as the model scheme, then it would follow, since the proposed rebates would be spread over a much wider area and granted on a more generous basis, as the hon. Member for Aston proposed, that a great number of tenants would not be paying fair rents.

9.15 p.m.

Mr. Skinner

The Minister is arguing that, if local authorities decided to use this surplus, hypothetical at present, in the way my hon. Friend describes, being allowed flexibility up to 200 per cent., that would remove from the field many more council tenants who, in his words, would not be paying a fair rent. How can that be consistent with the view put forward by the Minister, and the Prime Minister, too, that 1¾ million council tenants would not pay a fair rent anyway because they will have the advantage of rebates? There is no logic in the Government's argument. All my hon. Friend wants to do is to enlarge the number of those people or give a greater amount of rebate to the 1¾ million.

Mr. Eyre

I am going through the scheme and looking at it against the background of the comments made by the hon. Member for Aston. I make the assertion that, if the rebates are doubled, it follows that the rents of a great number of tenants will be reduced and, inevitably, a great number of them will not then pay a fair rent under the scheme.

Mr. Silverman

That is the object of a rebate.

Mr. Eyre

Precisely, but I am stressing that that would bring about a situation in which the surplus no longer continued to exist. Therefore, the giveaway argument—"All right; we will not spend the surplus"—would not be available because the surplus would have disappeared with the more generous rebates.

The hon. Member for Aston was absolutely right and honest when he said that the rebate might well have to be borne by the ratepayers.

Mr. Silverman

No. What I said was that, under the 10 per cent. rule, the local authority has the right to raise the money from the rates if it so desires, but as a matter of practical fact it is extremely unlikely that any local authority in deficit will improve the rebate scheme. All that the Amendment does is to allow a local authority to enlarge its rebate scheme up to a limit of 100 per cent. It is entirely discretionary; no local authority would be compelled to do so.

Mr. Eyre

I fully appreciate the hon. Gentleman's point. If the rebates are doubled it must follow that any authority's surplus will be diminished accordingly. Over the country as a whole that would mean the surplus was not available for a great number of local authorities. Even Birmingham's surplus would wither and die. Therefore, the practical continuation of the hon. Gentleman's proposition would require a rate subsidy, or something like that.

Under the Amendment an authority could revert to the practice now adopted by some authorities of making a substantial rate fund contribution to the housing revenue account to keep down the rents paid by all tenants, irrespective of whether they could afford a fair rent. This practice creates unfairly large burdens——

Mr. Silverman

They can do that now.

Mr. Eyre

Yes, and it would be unfair if authorities used the rate funds to subsidise tenants who could afford to pay the rent. That is the essence of the difference between the two sides. This practice creates unfairly large burdens on the ratepayers of the authorities concerned.

The Amendment could also lead to means-testing an unnecessarily high proportion of tenants—[Laughter.]—I am sorry if Opposition hon. Members have heard this before, but I understand that is a situation they do not like.

Mr. Freeson

The laughter is not because we have heard it so often before, but because we have stated it so often before.

Mr. Eyre

Accepting that Opposition Members do not like that idea, I must point out that if the scheme is broadened, and the subsidy is paid indiscriminately, it would be extended to various tenants who may not need subsidy. There would have to be a yardstick. Having extended the area in which decisions must be made as to whether people should have the subsidy, we might have to extend the means test.

In any case, the model scheme is broadly adequate, and does not need to be made quite so generous. There are very few existing schemes which are more generous. The hon. Gentleman was very fair when he described the Birmingham scheme. It has one or two aspects in which it is more generous than the model scheme, but there are some parts where it is not as good. The model scheme is generous. The schemes that are better are usually more generous only in certain limited respects. The model scheme will be kept under regular review, and the Secretary of State is empowered to alter its provisions.

Mr. Neil McBride (Swansea, East)

Local authorities in Wales are in a difficulty. The Secretary of State mentioned in the Bill is not the Secretary of State for the Environment, but the Secretary of State for Wales who has executive responsibility vested in him for housing in Wales. Who are the Welsh local authorities to get in touch with? The Prime Minister has declared to me that it is the Secretary of State for Wales. But if there is a hiatus in the line of communication, I should like the Minister to give guidance to the Welsh local authorities.

Mr. Eyre

I assure the hon. Gentleman that there is close liaison between the Secretary of State for the purpose of the Bill, who is the Secretary of State for the Environment, and the Secretary of State for Wales. The hon. Gentleman can rely on the Secretary of State for the Environment, working with the Secretary of State for Wales, to be just as generous to tenants in Wales who are in need as to tenants in England who are in need.

The Government Amendments to increase the needs allowance, which we shall come to later, demonstrate that the Government are aware of the need to keep under review the help given by the model scheme, under which, as it will be amended, a married man with two dependent children, an income of £20 a week and a rent of £3 a week, would have to pay only £1.14p towards the rent, or less than 6 per cent. of his income. If his rent were £5 a week, he would have to pay only £1.94. This is still less than 10 per cent. of his income. If he had an income of £30 a week, he would receive no help for a rent of £3 and so would pay 10 per cent. of his income on rent. If the rent were £5 he would have to pay £3.66, which would be not unreasonable in the circumstances I have outlined.

There will inevitably be some areas of high rents for which the provisions of the scheme will be inadequate. These areas can be adequately assisted by the Secretary of State's power in Clause 20(5) to authorise a variation lowering the minimum rent or increasing the maximum amount of rebate or allowance.

My predecessor told the Standing Committee that the aim is that families with one or more dependent children, living in typical dwellings, should not be called upon to pay more than about 10 per cent. of their income in rent, where the amount of income equals their needs allowance—in other words, the level which we all know to be not a very high one. This is set out in the Official Report at col. 739. Any alterations so authorised will attract subsidy. Government Amendment No. 52 makes this power more flexible and thus more helpful to local authorities with unusually high rents.

There will also be cases of special need which merit a more generous rebate or allowance. Some of these are already provided for in the model scheme—for example, blind persons, one-parent families, war and disability pensioners. But there will inevitably be particular cases of need which are not adequately provided for in the model. It is to meet this limited number of cases that authorities have the discretion to grant additional rebates or allowances. For such cases a financial limit of 10 per cent. above the standard amount is sufficient.

We therefore maintain that the model scheme is, reasonably generous taken against the background of the country as a whole. It is a distinct improvement on what has gone before. There is power in the Secretary of State to make the necessary adjustments. There is the 10 per cent. fund for such cases. We maintain that 10 per cent. degree of allowed flexibility under the existing scheme is sufficient to take account of the extra cases where the sympathy of the local authority would be incurred and its practical help thought to be necessary and justified.

The Bill provides also for those very few tenants who may be in receipt of a larger rebate, or allowance in Birmingham, under existing schemes when a scheme is introduced under the Bill. Such tenants will be helped by the provision in paragraph 15 that authorities can grant at their discretion an additional rebate or allowance for a transitional period. A later Government Amendment widens the provisions in the Bill as drafted to ensure that this transitional help can be given, not only where the rebate or allowance is less under the model scheme, but also where it is extinguished.

It cannot be plausibly argued that a 10 per cent. permitted total is a great curtailment of authorities' traditional freedom to grant rebates as they consider necessary. Despite exhortations by the previous Government to grant more and better rebates, the freedom has mainly been exercised to grant rebates on a less generous scale than in the model scheme and nearly 40 per cent.—this figure surprised me—of all housing authorities grant no rebate at all.

9.30 p.m.

Mr. Freeson

This figure has been quoted in Committee by the hon. Gentleman's predecessor, on the Floor of the House and elsewhere. It should be made clear that although the figure is correct, it relates to 1,200 housing authorities, and the ownership of dwellings among those 1,200, is disproportionate. Speaking off the cuff, I think that rebate schemes cover about 90 per cent. of all tenants. There has been some misleading talk about the figure when it is said that 40 per cent. of housing authorities do not operate a rebate scheme. The position is not as bad, to put it mildly, as Ministers have suggested.

Mr. Eyre

I appreciate the emphasis which the hon. Member puts on the figures. I accept what he said, but if I were one of the 10 per cent. of tenants, I should be aggrieved.

Mr. Skinner

I do not know why a tenant among the 40 per cent. of local authorities not operating a rent rebate scheme should be unduly concerned. Among the authorities in Derbyshire which do not operate rent rebate schemes, and that is more than half, average rents are less than £2 a week and there is no need for a rent rebate scheme.

Mr. Eyre

I appreciate the hon. Member's feelings, which are expressed on a local basis, but it means that the houses were built a long time ago at low cost and the authorities concerned are extremely lucky. I assure the hon. Gentleman that that is not the position in a big city such as Birmingham where there is a tremendous slum clearance problem.

Over the country as a whole, while taking account of local variations, the model scheme represents considerable progress and fair social progress and for these reasons I advise the House to prefer it and to reject the Amendment.

Mr. Michael Meacher (Oldham, West)

I should like to say immediately how much I support the Amendment for the obvious desirability of giving local authorities much more discretion to counter the excessive mandatory increases of rent which are to be forced on the tenants. It is symptomatic of the divisions in the House that that is precisely why the Under-Secretary does not accept the Amendment, which would reduce the number of tenants forced to pay what are called fair rents.

Apart from those arguments, which have been well worked over, I should like to develop three other good reasons why local authorities should have greater flexibility, particularly about disregarding other benefits. First, the inclusion of other benefits and other sources of income in assessing income eligibility clearly discriminates against poor households. More explicitly, it is distinctly contrary to the impression which the Government gave when previously discussing anti-poverty measures.

On the Second Reading of the Family Income Supplement Bill, the Secretary of State for Social Services said: …many of the poorest pay large rents. The people who pay large rents are not helped by the Bill…"—[Official Report, 10th November, 1970; Vol. 806, c. 226–7.] The clear implication is that the family income supplement is geared to the relief of general poverty among working households quite apart from housing costs, while rent rebates and rent allowances in the Housing Finance Bill will be geared to the relief of housing costs. To use one—as is the case unless this Amendment is accepted—as a means of offsetting entitlement to the other is clearly contrary both to the impression the Government gave originally and to the whole spirit of the attack upon poverty.

My second reason for asking for greater flexibility is that this would accord much better with the precedent of those other means-tested benefits where a relatively high or higher take-up has been achieved. I am thinking particularly of free school meals. Here allowance is made for a whole range of outgoings which are in no way regarded as diminishing entitlement to that benefit. These allowances include, rent, rates, mortgage payments, insurance payments, fares to work and even such things as special diets, trade union dues, pay to home helps, day nursery or child minding costs and maintenance payments for other dependants.

It is not without significance that it is this benefit which has a much higher level of take-up than is normal with other benefits which are around 15 per cent. to 20 per cent. It avoids the absurdity evident in this case, whereby, in another context, the provision of invalidity benefit immediately reduces or terminates the right to free prescriptions. Surely it would be much better to follow the precedent of very much wider disregards if the more successful example in means testing is to be adopted. At present merely to increase the figure to 110 per cent., 10 per cent. over the level of the model scheme, will in no sense provide for that degree of flexibility.

My third reason for arguing for greater flexibility is to avoid the complexities of the disincentive and also the patent anomalies that arise from the interaction between these various benefits which is likely to be much worse as a result of the wide extent of this new benefit. Consider a man who is earning £18 a week, with three children who, through harder work or getting another job, raises his income to £19.50. Let us assume that he is paying a rent above the level of 40 per cent. of the fair rent. For each extra £1 of his earnings he loses entitlement to a rent rebate or rent allowance to the extent of 17p. A £1.50 increase in gross earings after a partial loss of family income supplement amounts to 80p.

As a result of that, the family's rent rises by 13p per week, which is the amount by which the rent rebate is reduced for the property, namely four fifths of £1, before taking the rent rebate scheme into account. The man by increasing his income by £1.50 is only 26p better off, after loss of family income supplement, and after having to pay higher tax and National Insurance contributions. With the proposed rent rebate scheme, without this greater degree of flexibility, then a man who obtains a £1.50 rise will be better off by only 13p which is a marginal rate of just over 91 per cent.

This reveals in a stark light the assertion in the White Paper that the rebate does not rob him of the incentive to increase his income. The main point is that it is anomalies that arise from the interaction between these various benefits that need to be reduced. This is a strong reason for providing the much greater flexibility given in the Amendment. The figure of 110 is far too low. The Under-secretary tried to make out that by increasing it by this small amount, after taking into account the concessions being made to the blind and the disabled, it would be enough. It is not likely to be nearly enough. If we are to avoid some gross absurdities in certain individual cases then that figure should be substantially increased.

Mr. David Stoddart

I wish to concentrate on the question of the family income supplement. The Minister has in the past declined to disregard FIS. The Amendment gives local authorities greater flexibility and enables them to disregard the supplement.

The Bill will, in effect, rob many people on family income supplement of part of their benefit. This is a case of the Government giving with one hand and taking away with the other. The Child Poverty Action Group recently published a pamphlet dealing with this point. I hope that the Minister has read it and will take heed of it. It says of the Bill: The main scheme provides for various needs allowances which, for a married man and two children, come to £18.50 per week. If his gross income (including family allowance and FIS) is equal to this, he pays 40 per cent. of the 'fair rent'. He will pay 17 per cent. of all income above this level towards extra rent until the 'fair rent' is reached. Thus a married man with two children who earns £16 per week gross will still have to pay £2.56 (exclusive of rates) for a house for which a 'fair rent' of £6 per week has been set—even after rebate. The calculation looks like this: gross pay. £16 per week; plus family allowance, £0.90; FIS (April 1971 rate) £2.55; total income. £19.45. Total needs allowance=£18.50. Since gross income exceeds the needs allowance by 95p this tenant will pay 40 per cent. of the 'fair rent' plus 17 per cent. of 95p—i.e. £2.56 p.w. (£2.40+16p). In other words, he is being robbed of 16p of his family income supplement.

The figures quoted are for 1st April, 1971, but since then the supplement has been revised, and the revised figures operate from 4th April this year. However, the same absurd situation applies in spite of the increase in the family income supplement and the alterations to the needs allowance which the Minister is bringing forward tonight. In future a one-child family in which the man is earning £17 a week will pay an additional 17p in rent. The man earning £18 a week will pay an additional rent of 25p, leaving him with only 75p of his £1 family income supplement. If he earns £19 a week he will pay an extra 34p in rent, leaving him with only 16p a week of his family income supplement.

Mr. Skinner

Is my hon. Friend talking about the railway men on £19 a week who are, it is said, holding the country to ransom?

Mr. Stoddart

There are people holding the country to ransom, but they are not the railwaymen or any other body of workers. They are the people who make money from rents, interest and profits and particularly from speculation in land, which is making the housing situation so difficult.

The man with two children earning £18 will pay an additional rent of 10p a week, leaving him with less than £2 in family income supplement. If he earns £21 a week he will pay 36p in additional rent, leaving him with only 14p in family income supplement.

9.45 p.m.

Those are the figures which I have worked out both in the new rates of family income supplement and the rates of the needs allowances which the Minister intends to bring forward. This is economics gone mad. It is the means-tested State gone mad. It is yet another instance to show up the absurdity of the Bill and the total absurdity of the Government's whole policy in relation to benefits. This is the Tory means-tested State.

Mr. Charles Loughlin (Gloucestershire, West)

I do not intend to delay the House very long because, as I think will be agreed, the last two contributions made by my hon. Friends the Members for Oldham, West (Mr. Meacher) and Swindon (Mr. David Stoddart) have been rather fascinating. Unfortunately both of them speak a little fast and I was not able quite to grasp the full significance of the total allowances relating to this Clause of the Bill.

I am beginning to wonder how it will be possible for ordinary people to establish whether or not they are entitled to rebates under this Bill, and how far their entitlement to rebates under the Bill undermines their entitlement to other rebates which they may have, because of the means testing which goes on. It might be a very useful exercise if the Government were to explain to people who are earning £19 a week.

It is the height of impudence by the Government to introduce a Bill in which they virtually say that men who go to work all the week and earn £30 a week, which is in excess of the average wage, and who work very hard, should subject themselves to disclosure of personal and private information so that they can get the benefits of a rebate scheme, as it was referred to by the Under-Secretary of State, men who need the benefits simply because the Government introduce a Bill whereby they make rents of houses too high for men with £30 a week to afford.

Mr. McBride

Is my hon. Friend aware that in Schedule 3 there is an even more sinister means-testing provision whereby the highest wage earner in a dwelling can be deemed to be the tenant and the tenant classified as a non-dependant? Surely that is gross stupidity?

Mr. Loughlin

I agree with my hon. Friend, but unfortunately the time factor is against rational discussion of Schedule 3. I wanted to make a speech on Schedule 3. However, for the moment I am restricted to the Amendment we are debating.

To pass from general observations to the Amendment, it relates to a fundamental principle to which right hon. and hon. Gentleman opposite have paid lip service over the years—that Whitehall does not know best. Their chief criticism of the Labour Government was that they tended to say that Whitehall knows best

My hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman), in moving an Amendment in Committee, spoke of the situation in Birmingham where, by virtue of a reduction in interest rates alone, the surplus in Birmingham's housing revenue account was likely to be £3 million. He said that where a local authority by its management of the housing revenue account or because of windfalls was able to introduce a better scheme than the one referred to in the Bill it should have the opportunity of doing so. In the light of statements by right hon. and hon. Gentlemen opposite about local people knowing better than Whitehall, I would expect the Under-Secretary of State to subscribe to the point of view expressed by my hon. Friend, but apparently he now believes that Whitehall knows better than the local authorities. He says, in effect, to the local authorities, "It does not matter how competent you are in the management of your scheme, or how much surplus you have, you cannot treat your tenants in a more favourable way than that outlined by Whitehall."

What the Under-Secretary of State is really saying is that the Tory Government reserve to themselves the right to filch from the local authorities 50 per cent. of any surplus they make. I do not say this in a disrespectful way, but if, instead of his waffling reply, he had said that the Government oppose the Amendment only because they insist on their right to filch from the local council tenants 50 per cent. of the surplus they create, he would have been more honest.

Mr. Allason

The hon. Member for Swindon (Mr. David Stoddart) said that he was taking into account the Amendments which my right hon. Friend is about to move to improve the rent rebate scheme, but he did not, and the figures he gave were, therefore, very deceptive. If the man earns £18 a week and the needs allowance is £2 a week, the rent would increase not by 17p but by 25p, until the needs allowance is met. It is only after the needs allowance is exceeded that we come to the 17 per cent. Consequently, the situation is more serious than the hon. Gentleman suggested. This is not a criticism of the rent rebate scheme but of family income supplements, which we shall be discussing on a later Amendment.

This is an extremely generous rent rebate scheme. The hon. Member for Bolsover (Mr. Skinner) said it was not necessary to have any rent allowance if the rent were only £2 a week. I would emphasise the fact that we are here speaking of a man with two children earning £18 per week, or a widow with two children with an income of £18 per week. On a rent of £3 such a person would be required to pay only 67p—a substantially different amount from the £2 suggested by the hon. Member for Bolsover. On a rent of £4, the sum would be 88p. If the income rises to £20 a week, the rent would be £1.17 per week instead of £3 per week, or £1.38 against £4 per week. Therefore there is a substantial benefit.

I accept that the family income supplement makes a nonsense of the whole process, and we all know the argument, but it is not relevant to this debate. Certainly on an income of £30 per week there will be no rebate on a rent of £3 per week, but on a rent of £4 per week the sum required would be only £3.36. The man on £30 per week will be asked to pay some 12 per cent. of his income. This is a generous scheme and I do not think FIS is relevant to this debate.

Mr. Freeson

The main objection to the Amendment, as I understand it, falls into three parts. The first is that the present scheme is generous enough in that it allows for a 10 per cent. tolerance, which is already provided for. The second is that in a number of cases our proposals could result in effectively lowering the general level of rents for classes of property in local authorities because the rent rebates were so widespread. The third is that in many instances our proposals would impose a greater burden upon ratepayers.

I do not think the Minister has quite understood the factual situation which would arise under the Bill. The rent rebates would not be paid from housing revenue account but from the general rate fund, with a certain reimbursement from the Government. Secondly, when the housing revenue account goes into surplus under the provisions of the Bill—which will be the case for the majority of housing authorities within a few years of the operation of the Bill—it will pay off the surplus, half to the Exchequer and half to the general rate fund and not to the housing revenue account. Therefore, with a more generous scheme there is no additional burden on the rates. The Government will be transferring about £100 million from the Exchequer to the rate fund——

It being after Ten o'clock, Mr. Deputy Speaker proceeded, pursuant to Standing Order No. 43 (Business Committee) and the Orders [13th March and this day] to put forthwith the Questions on Amendments, moved by a Member of the Government, of which notice had been

Division No. 145]	AYES	[10.00. p.m.
Abse, Leo	Edelman, Maurice	Lee, Rt. Hn. Frederick
Albu, Austen	Edwards, Robert (Bilston)	Leonard, Dick
Allaun, Frank (Salford, E.)	Edwards, William (Merioneth)	Lestor, Miss Joan
Archer, Peter (Rowley Regis)	Ellis, Tom	Lever, Rt. Hn. Harold
Armstrong, Ernest	English, Michael	Lewis, Arthur (W. Ham, N)
Ashley, Jack	Evans, Fred	Lewis, Ron (Carlisle)
Ashton, Joe	Ewing, Henry	Lipton, Marcus
Atkinson, Norman	Faulds, Andrew	Lomas, Kenneth
Bagier, Gordon A. T.	Fisher, Mrs. Doris (B'ham, Ladywood)	Loughlin, Charles
Barnes, Michael	Fitch, Alan (Wigan)	Lyon, Alexander W. (York)
Barnett, Guy (Greenwich)	Fletcher, Raymond (Iikeston)	Mabon, Dr. J. Dickson
Barnett, Joel (Heywood and Royton)	Fletcher, Ted (Darlington)	McBride, Neil
Baxter, William	Foley, Maurice	McCartney, Hugh
Benn, Rt. Hn. Anthony Wedgwood	Foot, Michael	McElhone, Frank
Bennett, James (Glasgow, Bridgeton)	Ford, Ben	McGuire, Michael
Bidwell, Sydney	Forrester, John	Mackenzie, Gregor
Bishop, E. S.	Fraser, John (Norwood)	Mackie, John
Blenkinsop, Arthur	Freeson, Reginald	Mackintosh, John P.
Boardman, H. (Leigh)	Galpern, Sir Myer	McMillan, Tom (Glasgow, C.)
Booth, Albert	Garrett, W. E.	McNamara, J. Kevin
Bottomley, Rt. Hn. Arthur	Gilbert, Dr. John	Mallalieu, J. P. W. (Huddersfield, E)
Bradley, Tom	Ginsburg, David (Dewsbury)	Marks, Kenneth
Broughton, Sir Alfred	Golding, John	Marquand, David
Brown, Bob (N'c'tle-upon-Tyne, W.)	Gordon Walker, Rt. Hn. P. C	Marsden, F.
Brown, Hugh D. (G'gow Provan)	Gourlay, Harry	Marshall, Dr. Edmund
Brown, Ronald (Shoreditch & F'bury)	Grant, George (Morpeth)	Mason, Rt. Hn. Roy
Buchan, Norman	Grant, John D. (Islington, E.)	Mayhew, Christopher
Buchanan, Richard (G'gow, Sp'burn)	Griffiths, Eddie (Brightside)	Meacher, Michael
Butler, Mrs. Joyce (Wood Green)	Grimond, Rt. Hn. J.	Mellish, Rt. Hn. Robert
Callaghan, Rt. Hn. James	Hamilton, James (Bothwell)	Mendelson, John
Campbell, I. (Dunbartonshire, W.)	Hamilton, William (Fife, W.)	Mikardo, Ian
Cant, R. B.	Hamling, William	Millan, Bruce
Carmichael, Neil	Hannan, William (G'gow, Maryhill)	Miller, Dr. M. S.
Carter, Ray (Birmingham, Northfield)	Hardy, Peter	Milne, Edward
Carter-Jones, Lewis (Eccles)	Harrison, Walter (Wakefield)	Mitchell, R. C. (S'hampton, Itchen;
Castle, Rt. Hn. Barbara	Hart, Rt. Hn. Judith	Molloy, William
Clark, David (Colne Valley)	Hattersley, Roy	Morgan, Elystan (Cardiganshire)
Cocks, Michael (Bristol, S.)	Healey, Rt. Hn. Denis	Morris, Alfred (Wythenshawe)
Cohen, Stanley	Heffer, Eric S.	Morris, Charles R. (Openshaw)
Coleman, Donald	Hooson, Emfyn	Morris, Rt. Hn. John (Aberavon)
Concannon, J. D.	Horam, John	Moyle, Roland
Conlan, Bernard	Houghton, Rt. Hn. Douglas	Mulley, Rt. Hn. Frederick
Corbet, Mrs. Freda	Howell, Denis (Small Heath)	Murray, Ronald King
Cox, Thomas (Wandsworth, C.)	Huckfield, Leslie	Oakes, Gordon
Cronin, John	Hughes, Rt. Hn. Cledwyn (Anglesey)	Ogden, Eric
Crosland, Rt. Hn. Anthony	Hughes, Mark (Durham)	O'Halloran, Michael
Crossman, Rt. Hn. Richard	Hughes, Robert (Aberdeen. N)	O'Malley, Brian
Cunningham, G. (Islington, S.W.)	Hughes, Roy (Newport)	Oram, Bert
Cunningham, Dr. J. A. (Whitehaven)	Hunter, Adam	Orbach, Maurice
Dalyell, Tam	Irvine, Rt. Hn. SirArthur (Edge Hill)	Orme, Stanley
Darling, Rt. Hn. George	Janner, Greville	Oswald, Thomas
Davidson, Arthur	Jay, Rt. Hn. Douglas	Owen, Dr. David (Plymouth, Sutton)
Davies, Denzil (Llanelly)	Jeger, Mrs. Lena	Paget, R. T.
Davies, Ifor (Gower)	Jenkins, Hugh (Putney)	Palmer, Arthur
Davis, Clinton (Hackney, C.)	Jenkins, Rt. Hn. Roy (Stechford)	Pannell, Rt. Hn. Charles
Davis, Terry (Bromsgrove)	John, Brynmor	Pardoe, John
Deakins, Eric	Johnson, Carol (Lewisham, S.)	Parry, Robert (Liverpool, Exchange)
de Freitas, Rt. Hn. Sir Geoffrey	Johnson, James (K'ston-on-Hull, W.)	Pavitt, Laurie
Delargy, H. J.	Jones, Dan (Burnley)	Pendry, Tom
Dell, Rt. Hn. Edmund	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)	Pentland, Norman
Dempsey, James	Jones, Gwynoro (Carmarthen)	Perry, Ernest G.
Doig, Peter	Jones, T. Alec (Rhondda, W.)	Prentice, Rt. Hn. Reg.
Dormand, J. D.	Kaufman, Gerald	Prescott, John
Douglas, Dick (Stirlingshire, E.)	Kelley, Richard	Price, J. T. (Westhoughton)
Douglas-Mann, Bruce	Kinnock, Neil	Price, William (Rugby)
Driberg, Tom	Lambie, David	Probert, Arthur
Duffy, A. E. P.	Lamond, James	Rankin, John
Dunnett, Jack	Latcham, Arthur	Reed, D. (Sedgefield)
Eadie, Alex	Leadbitter, Ted	Rhodes, Geoffrey

given, to that part of the Bill to be concluded at Ten o'clock.

Question put, That the Amendment be made:—

The House divided: Ayes 263, Noes 277.

Richard, Ivor	Spearing, Nigel	Walden, Brian (B'm'ham, All Saints)
Roberts, Albert (Normanton)	Spriggs, Leslie	Wallace, George
Robertson, John (Paisley)	Stallard, A. W.	Watkins, David
Roderick, Caerwyn E. (Br'c'n&R'dnor)	Steel, David	Weitzman, David
Roper, John	Stewart, Donald (Western Isles)	Wellbeloved, James
Rose, Paul B.	Stoddart, David (Swindon)	Wells, William (Walsall, N.)
Ross, Rt. Hn. William (Kilmarnock)	Stonehouse, Rt. Hn. John	White, James (Glasgow, Pollok)
Rowlands, Edward	Strauss, Rt. Hn. G. R.	Whitehead, Phillip
Sandelson, Neville	Summerskill, Hn. Dr. Shirley	Whitlock, William
Sheldon, Robert (Ashton-under-Lyne)	Swain, Thomas	Willey, Rt. Hn. Frederick
Shore, Rt. Hn. Peter (Stepney)	Thomas, Jeffrey (Abertillery)	Williams, Alan (Swansea, W.)
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)	Thomson, Rt. Hn. G. (Dundee, E.)	Williams, Mrs. Shirley (Hitchin)
Short, Mrs. Renée (W'hampton. N. E.)	Thorpe, Rt. Hn. Jeremy	Williams, W. T. (Warrington)
Silkin, Rt. Hn. John (Deptford)	Tinn, James	Wilson, Alexander (Hamilton)
Silkin, Hn. S. C. (Dulwich)	Tomney, Frank	Wilson, William (Coventry, S.)
Sillars, James	Torney, Tom	Woof, Robert
Silverman, Julius	Tuck, Raphael
Skinner, Dennis	Urwin, T. W.	TELLERS FOR THE AYES:
Small, William	Varley, Eric G.	Mr. James A. Dunn and
Smith, John (Lanarkshire, N.)	Wainwright, Edwin	Mr. Joseph Harper.

NOES
Adley,Robert	Digby, Simon Wingfleld	Hordern, Peter
Alison, Michael (Barkston Ash)	Dixon, Piers	Hornby, Richard
Allason, James (Hemel Hempstead)	Douglas-Home, Rt. Hn. Sir Alec	Hornsby-Smith. Rt. Hn. Dame Patricia
Amery, Rt. Hn. Julian	Drayson, G. B.	Howe, Hn. Sir Geoffrey (Reigate)
Archer, Jeffrey (Louth)	du Cann, Rt. Hn. Edward	Howell, David (Guildford)
Astor, John	Dykes, Hugh	Howell, Ralph (Norfolk, N.)
Atkins, Humphrey	Edwards, Nicholas (Pembroke)	Hunt, John
Awdry, Daniel	Elliot, Capt. Walter (Carshalton)	Iremonger, T. L.
Baker, Kenneth (St. Marylebone)	Elliott, R. W. (N'c'tle-upon-Tyne, N.)	Irvine, Bryant Godman (Rye)
Balniel, Rt. Hn. Lord	Emery, Peter	James, David
Batsford, Brian	Eyre, Reginald	Jenkin, Patrick (Woodford)
Beamish, Col. Sir Tufton	Farr, John	Jennings, J. C. (Burton)
Bell, Ronald	Fenner, Mrs. Peggy	Jessel, Toby
Bennett, Dr. Reginald (Gosport)	Fidler, Michael	Johnson Smith, G. (E. Grinstead)
Benyon, W.	Finsberg, Geoffrey (Hampstead)	Jones, Arthur (Northants, S.)
Berry, Hn. Anthony	Fisher, Nigel (Surbiton)	Jopling, Michael
Bitten, John	Fletcher-Cooke, Charles	Joseph, Rt. Hn. Sir Keith
Biggs-Davison, John	Fookes, Miss Janet	Kaberry, Sir Donald
Blaker, Peter	Foster, Sir John	Kellett-Bowman, Mrs. Elaine
Boardman, Tom (Leicester, S.W.)	Fowler, Norman	Kershaw, Anthony
Body, Richard	Fry, Peter	Kimball, Marcus
Boscawen, Robert	Galbraith, Hn. T. G.	King, Evelyn (Dorset, S.)
Bossom, Sir Clive	Gardner, Edward	King, Tom (Bridgwater)
Bowden, Andrew	Gibson-Watt, David	Kinsey, J. R.
Braine, Sir Bernard	Gilmour, Ian (Norfolk, C.)	Kitson, Timothy
Bray, Ronald	Gilmour, Sir John (Fife, E.)	Knight, Mrs. Jill
Brinton, Sir Tatton	Godber, Rt. Hn. J. B.	Knox, David
Brocklebank-Fowler, Christopher	Goodhart, Philip	Lane, David
Brown, Sir Edward (Bath)	Goodhew, Victor	Langford-Holt, Sir John
Bruce-Gardyne, J.	Gower, Raymond	Legge-Bourke, Sir Harry
Bryan, Paul	Grant, Anthony (Harrow, C.)	Le Merchant, Spencer
Buchanan-Smith, Alick (Angus.N&M)	Gray, Hamish	Lewis, Kenneth (Rutland)
Buck, Antony	Green, Alan	Lloyd, Ian (P'tsm'th, Langstone)
Bullus, Sir Eric	Grieve, Percy	Longden, Gilbert
Burden, F. A.	Griffiths, Eldon (Bury St. Edmunds)	Loveridge, John
Butler, Adam (Bosworth)	Grylls, Michael	Luce, R. N.
Campbell, Rt. Hn. G. (Moray&Nairn)	Gummer, Selwyn	McAdden, Sir Stephen
Carlisle, Mark	Gurden, Harold	MacArthur, Ian
Carr, Rt. Hn. Robert	Hall, Miss Joan (Keighley)	McCrindle, R. A.
Chapman, Sydney	Hall, John (Wycombe)	McLaren, Martin
Chataway, Rt. Hn. Christopher	Hall-Davis, A. G. F.	Maclean, Sir Fitzroy
Churchill, W. S.	Hamilton, Michael (Salisbury)	Macmillan, Rt. Hn. Maurice (Farnham)
Clark, William (Surrey, E.)	Hannam, John (Exeter)	McNair-Wilson, Michael
Clarke, Kenneth (Rushcliffe)	Harrison, Brian (Maldon)	McNair-Wilson, Patrick (New Forest)
Clegg, Walter	Harrison, Col. Sir Harwood (Eye)	Maddan, Martin
Cooke, Robert	Haselhurst, Alan	Madel, David
Coombs, Derek	Hastings, Stephen	Marples, Rt. Hn. Ernest
Cooper, A. E.	Havers, Michael	Marten, Neil
Corfield, Rt. Hn. Frederick	Hawkins, Paul	Mather, Carol
Cormack, Patrick	Hay, John	Maude, Angus
Costain, A. P.	Hayhoe, Barney	Maudling, Rt. Hn. Reginald
Critchley, Julian	Heseltine, Michael	Mawby, Ray
Crouch, David	Hicks, Robert	Maxwell-Hyslop, R. J.
Crowder, F. P.	Higgins, Terence L.	Meyer, Sir Anthony
Davies, Rt. Hn. John (Knutsford)	Hiley, Joseph	Mills, Peter (Torrington)
d'Avigdor-Goldsmid, Sir Henry	Hill, James (Southampton, Test)	Miscampbell, Norman
d'Avigdor-Goldsmid, Maj.-Gen. James	Hill, John E. B. (Norfolk, S.)	Mitchell, Lt.-Col. C. (Aberdeenshire,W)
Dean, Paul	Holland, Philip	Moate, Roger
Deedes, Rt. Hn. W. F.	Holt, Miss Mary	Money, Ernle

Monks, Mrs. Connie	Renton, Rt. Hn. Sir David	Thatcher, Rt. Hn. Mrs. Margaret
Monro, Hector	Rhys Williams, Sir Brandon	Thomas, John Stradling (Monmouth)
Montgomery, Fergus	Ridley, Hn. Nicholas	Thomas, Rt. Hn. Peter (Hendon, S.)
More, Jasper	Ridsdale, Julian	Thompson, Sir Richard (Croydon, S.)
Morgan-Giles, Rear Adm	Roberts, Michael (Cardiff, N.)	Tilney, John
Morrison, Charles	Roberts, Wyn (Conway)	Trafford, Dr. Anthony
Mudd, David	Rost, Peter	Trew, Peter
Murton, Oscar	Royle, Anthony	Tugendhat, Christopher
Nabarro, Sir Geralo	Russell, Sir Ronald	Turton, Rt. Hn. Sir Robin
Neave, Airey	St. John-Stevas, Norman	van Straubenzee, W. R.
Normanton, Tom	Sandys, Rt. Hn. D.	Vaughan, Dr. Gerard
Nott, John	Scott, Nicholas	Vickers, Dame Joan
Onslow, Cranley	Sharples, Richard	Waddington, David
Oppenheim, Mrs. Sally	Shaw, Michael (Sc'b'gh & Whitby)	Walder, David (Clitheroe)
Osborn, John	Shelton, William (Clapham)	Walker, Rt. Hn. Peter (Worcester)
Owen, Idris (Stockport, N.)	Simeons, Charles	Walker-Smith, Rt. Hn. Sir Derek
Page, Graham (Crosby)	Sinclair, Sir George	Walters, Dennis
Page, John (Harrow, W.)	Skeet, T. H. H.	Ward, Dame Irene
Parkinson, Cecil	Smith, Dudley (W'wick L'mington)	Warren, Kenneth
Percival, Ian	Soref, Harold	Weatherill, Bernard
	Speed, Keith	Wells, John (Maidstone)
Pike, Miss Mervyn	Spence, John	White, Roger (Gravesend)
Pink, R. Bonner	Sproat, Iain	Wiggin, Jerry
Powell, Rt. Hn. J. Enoch	Stainton, Keith	Wilkinson, John
Price, David (Eastleigh)	Stanbrook, Ivor	Winterton, Nicholas
Prior, Rt. Hn. J. M. L.	Stewart-Smith, Geoffrey (Belper)	Wood, Rt. Hn. Richard
Proudfoot, Wilfred	Stodart, Anthony (Edinburgh, W.)	Woodhouse, Hn. Christopher
Pym, Rt. Hn. Francis	Stoddart-Scott, Col. Sir M	Woodnutt, Mark
Quennell, Miss J. M	Stokes, John	Worsley, Marcus
Raison, Timothy	Stuttaford, Dr. Tom	Wyle, Rt. Hn. N. R.
Ramsden, Rt. Hn. James	Tapsell, Peter	Younger, Hn. George
Redmond, Robert	Taylor, Frank (Moss Side)
Reed, Laurance (Bolton. E.)	Taylor, Robert (Croydon, N.W.)	TELLERS FOR THE NOES:
Rees, Peter (Dover)	Tebbit, Norman	Mr. Tim Fortescue and
Rees-Davies, W. R	Temple, John M.	Mr. Marcus Fox.

Question accordingly negatived.

Mr. Speaker

We now come to a group of Government Amendments on which there can be no discussion because the guillotine has fallen. I understand that it is the wish of the Opposition to have a Division on Amendment No. 86. Therefore, by agreement, I will put Amendments Nos. 59 to 66 and 68 to 83 together.

Amendment made: No. 59, in page 27, line 3, at end insert: (9A) If the amount of rebates or allowances granted for the year 1972–73 by a local authority exceeds the amount which was the permitted total for that authority for that year, but the authority satisfy the Secretary of State that, because of the changes in local authorities or local government areas made by any Act of the present Session to make provision with respect to local government and the functions of local authorities in England and Wales, it is undesirable that the provisions of their rebate scheme, or as the case may be, their allowance scheme, should be varied in accordance with subsections (4) to (8) above, he may direct that the said subsections shall not apply to that authority for the year 1973–74.—[Mr. Eyre.]