PRICES, PAY, DIVIDENDS AND RENTS

HC Deb 16 November 1972 vol 846 cc624-89

Mr. John Pardoe (Cornwall, North)

I beg to move Amendment No. 83, in page 2, line 12, leave out subsection (4) and insert: '(4) A landlord or housing authority shall not demand rent which exceeds the rent paid for the same property before 6th November 1972'.

The Chairman

With this amendment we are to take the following amendments:

No. 22, in page 2, line 12, leave out 'may' and insert 'shall'.

No. 6, in page 2, line 13, after first 'rent', insert 'including the rent of unregulated tenancies'.

No. 44, in page 2, line 13, after first 'rent', insert 'including the rent of houses built for letting by private landlords with public subsidy under the Housing (Financial Provisions) Act 1924'.

No. 7, in page 2, line 13, leave out '6th November' and insert '1st October'.

No. 98, in page 2, line 14, at end insert 'and for preventing increases in the price of land, including all buildings and dwellings, over the price payable before 6th November 1972'.

No. 8, in page 2, line 16, after 'goods', insert 'or land'.

No. 9, in page 2, line 16, after 'goods', insert 'land and dwellings'.

No. 11, in page 2, line 19, after 'business', insert 'and including service charges in residential properties'.

No. 13, in page 2, line 28, after 'goods', insert 'or land'.

New Clause 1—(Sale of local authority houses)—

ment No. 6 also deals with the rents of unregulated tenancies and other amendments, particularly Nos. 98, 8, 9 and 13, deal with the price of land and houses.

I should perhaps say a brief word about the difference between our amendment and Amendment No. 7, which is the Opposition amendment seeking to alter the date 5th November to 1st October. We agree with that amendment, but it was fortuitous for the Government that the Downing Street talks did not reach their climax early enough for the freeze to catch the increase in local authority rents on 1st October under the Housing Finance Act. Nevertheless that increase on 1st October makes absolute nonsense of the freeze and of the so-called Counter-Inflation Bill, because that increase of rents in local authority housing on 1st October is and will remain a major factor in inflation. It exerts pressure on land and house purchase prices and it exerts upward pressure on incomes.

I recognise immediately the importance of Amendment No. 7 and we support the principle enshrined in it. But I do not wish to cloud the issue of the extension or non-extension of the freeze to rents. In our amendment we ask for a clear and straightforward answer from the Government, if the Government are capable of giving any straightforward answers on the Bill, whether they consider that the Bill does or does not freeze rents. The Government's replies in the debates during the past four weeks before we settled down to the Committee stage, have been exceedingly vague. The Bill itself is extraordinarily vague.

Subsection (4), which we seek to delete and replace, says: The appropriate Minister may by order provide for preventing increases of rent over rent payable before 6th November 1972".

Many hon. Members on all sides of the House have grave reservations about the exercise of ministerial discretion. We seem fated to have to introduce more and more ministerial discretion into recent legislation. That is not a new move. The Labour Government's prices and incomes legislation was riddled with ministerial discretion. In general I am opposed to legislation which is so imprecise or uncertain in its effects that it requires such a wide degree of ministerial discretion to make it work.

The kind of ministerial discretion laid down in subsection (4) allows the Minister to run away all too easily from the real problems of inflation, to make value judgments and party political judgments. I believe that they undermine the whole nature of the freeze. This provision allows him to pick and choose between one rent increase and another. Why not ban all rent increases and say so in the Bill? If there is to be a freeze of rents, then let us have a freeze and let everybody know that it is one.

This is the first major difference between our amendments and the wording of the Government's subsection. I claim that our amendment is legislation and theirs is an apology for inaction. Our amendment would ensure that something will be done about rent increases, whereas the Government's drafting says that something may be done, if the spirit is willing and the Minister is tough enough. In this respect there is a gulf between the Bill and the White Paper.

In paragraph 22 of the White Paper it says that those tenants of private unfurnished accommodation who are at present subject to rent control and who will move from control to regulation on 1st January, 1973, will have this date postponed until after the freeze. That is something to be thankful for. We are told later in the same paragraph of the White Paper that the fair rents of private tenants will be frozen until the end of the freeze.

Paragraph 23 goes slightly further and says that the rents of business premises and land will also be frozen. If one studies the Bill to find where this is enshrined one finds it does not exist. It will presumably be done by order, but the Bill does not say it will be done. It says it may be done, which is very different. How are we to know what the Minister may do? If the Government reply that the Minister will do what the White Paper says he will do, there are many members of the Opposition who will be cynical about the Government doing what they promised. Moreover, even if all the promises in the White Paper were honoured in legislation, I maintain they would fall far short of an effective freeze policy applying to the cost of housing.

Surely the importance of rents in the control of inflation cannot be denied. However, there have been some extraordinary omissions on rent policy and the control of rents in recent debates. In the debate on the Address on 2nd November the then Secretary of State managed not to mention rents once in his opening speech which was a remarkable feat, though perhaps wise in the circumstances.

When the Chancellor of the Exchequer moved the Second Reading of this Bill on 8th November, he again omitted to mention rents. In spite of the blistering attack which was mounted by the right hon. Member for Grimsby (Mr. Crosland) on the Government's rent policy during the debate on the Address, we did not have a reply by the Minister then, nor did we have a reply from the Minister for Trade and Consumer Affairs when he wound up the debate on the Second Reading of this Bill. That is astonishing, because the Government seem to be saying and seem to believe that rents are an also-ran in the battle against inflation. We do not believe they are an also-ran; we believe that they are the essence of the whole policy. This omission is not new in prices and incomes legislation.

Similarly, the Labour Government's White Papers of February and April, 1965, did not refer to rents. Indeed, not until the penultimate paragraph of the second White Paper is one able to find a reference to the incomes of landlords which, I suppose, is one way of referring to rents.

Mr. Raymond Gower (Barry)

In posing these problems, which are serious, would the hon. Gentleman tell the Committee what he would do about the rebates due to numerous tenants throughout the country? That is plainly a complicating factor in some rents.

Mr. Pardoe

I am sure that it is a complicating factor that the Government would like to drag across the scene, but I do not think that it is complicating. However, I shall be dealing with that matter later.

I should like to stress my first argument that rents are immensely important in the battle against inflation, and a glance at the 1971 family expenditure table, for instance, shows how important housing costs are. They amount on average to 12.8 per cent, of total household expenditure, but the percentage is much higher among the lower income groups. The percentage goes up to 19 and 20 per cent, at the bottom end of the scale. Housing costs are second only to food and transport as items of household expenditure.

The hon. Member for Barry (Mr. Gower) mentioned increases in council house rents. The then Minister of Housing, in answer to a Question, said: … our first broad assessment of the average increase in rent likely to be paid by all council tenants in 1972–73 is about 35p."—[OFFICIAL REPORT, 18th October, 1972; Vol. 843, c. 249.] One cannot separate this forecast, which works out at about a 14 per cent, increase, from the forecast made by the Prime Minister in his letter to the Leader of the Opposition on 31st July, 1972. He said: … any national average figure must be very uncertain and perhaps misleading. However, the best estimate we have been able to make is that over the next 12 months the net average effect of the two Bills might be to increase total rents in Great Britain by about 7½ per cent. Many of us felt then that that was a gross underestimate. It is clear now that certainly council house rents will rise this year by 14 per cent, and, even if the Minister was right on 2nd November to forecast that the increase next year would be 25p, or 8 per cent.—I doubt that he was right—one cannot just wash away an increase of 8 per cent. in so important an item of household expenditure and say that we do not have to worry about it.

The figures from Shelter—I am indebted, as we all are, to the work done by Shelter, and especially for its array of figures—cast extreme doubt on the estimates by the Prime Minister and the then Minister of Housing. An official of the Department of the Environment, speaking at a National Federation of Housing Societies conference in Warwick in September, estimated that fair rent registrations would increase by 10 per cent. a year over the next 10 years, a fairly alarming forecast.

Shelter considers that current registrations in the London area are up by 10 per cent. on last year, and in some places much more. For instance, in Coventry they are up by 20 per cent. In January, 1972, 43 per cent. of all families coming to Shelter for help were paying more than £6 a week in rent. By September, 1972, 85 per cent. of all families coming to Shelter for help were paying rents of £6 and more. That is a shattering increase in only a few months.

In face of those figures, the Government cannot excuse inaction by saying, as does the White Paper, that council house tenants are covered by rebate schemes. The rebate may be available for some—this is the reply to the hon. Gentleman—but it is a rebate on an already sharply increased rent as of" October last and, rebate or not, inflation has already taken place in this important expenditure sector.

I should like to take one example which ties in closely with the sort of examples on housing which I get in my constituency. Let us consider a couple with one child and with an income of about £24. The unrebated rent rose on 1st October from £2 to £3. These may sound astonishingly low rent figures to some Members from the South-East, though in other places this is not so true.

Mr. Ted Rowlands (Merthyr Tydvil)

Plus rates?

Mr. Pardoe

This is unrebated rent—gross.

The rebate was 69p; so the rebated rent is now £2.31 which is an increase of 31p on the September rent that they were paying. If the rent were to rise by 50p in April, as it will, and the rebate were to go up to 99p, they would pay a rebated rent, with the full effects of the rebate thrown in, of £2.51.

Mr. Frank Allaun (Salford, East)

Plus rates?

Mr. Pardoe

Yes, plus rates, which are going up by 25 per cent. or so. This means that the rent has risen by 51p on a rent of £2 in six months, which is an increase of 25 per cent. This answers the Government's point in the White Paper that the whole local government housing sector is all right because it is covered by rebates.

The Minister for Housing and Construction (Mr. Paul Channon)

Is the hon. Gentleman saying that this rent rose in October and is due to rise again next April? I do not follow that.

Mr. Pardoe

This is a total increase over six months.

Mr. Channon

I am sorry, but I am confused and there may be confusion among other hon. Members. Is the hon. Member saying that this local authority is putting its rents up both in October and next April? I do not understand that.

Mr. Pardoe

No, it is a rent increase over the whole period of 51p on the rebated rent; this is still an increase of 25 per cent. Whether it is over six months or a year, it is still an alarming increase. It may well be that the period will eventually be 12 months, but this is the figure which I have been given by a local authority and these are the calculations which the authority is making. The authority has to bear the burden and I can only accept its figure.

In a reply to the debate on the Address on 2nd November, the Minister for Housing and Construction tried to show why it was impossible—and he was challenged by some of my hon. Friends—to fix a ceiling of, say, 5 per cent. on rent increases. Although we have a different Minister now, presumably the arguments will be the same. The Minister said that the variations in rent up and down the country were enormous. He then said this: it is not easy to achieve equitably a percentage ceiling on rents."—[OFFICIAL REPORT, 2nd November, 1972; Vol. 845, c. 470.] I do not accept any of the arguments the right hon. Gentleman put forward as being a satisfactory or sufficient reason for being unable to fix a 5 per cent. ceiling then. There are contradictions in the argument. I take it that part of the reply that the Government will make to this amendment, and others coupled with it, will be that there is no need for this because the Bill freezes rents. That is what the Government would like to get away with. If that is so, why is it now possible to put a zero increase ceiling on rents whereas on 2nd November it was impossible to impose one of 5 per cent.?

In the interests of other hon. Members who wish to speak, I have no intention of delving into the problem of land prices, though why they should not be included in the freeze is beyond me. Arguments will no doubt be deployed from the Opposition Front Bench on their own amendments, which I fully support.

There is inevitably a strong interaction, as we all know, between rent increases and increases in land and house building costs; one works on the other, the other works on the one. What we must try to do in any freeze and in any prices and incomes policy is to keep down—and in a freeze to freeze completely—total housing costs. Land and house prices are immensely important. Moreover, it is extraordinary that the Government should say in their White Paper that they can freeze the rents of land but not the price of land because the rents of land enter into daily consumption costs. Surely the price does also; one cannot enter into it and the other not. In my view, that is a totally fallacious argument.

I hope that we shall hear how the Bill is to affect the rising cost of housing. The best way in which the Government could reassure hon. Members on this side would be to accept the Amendment. It is certainly the least they can do.

4.15 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I find myself in a slight difficulty and wish to apologise to the Opposition Front Bench for it. I wish to talk about the price of land, whereas the Amendment which has been moved is about rents. Therefore, I shall be discussing a proposition which has not been put forward yet by those who will propound Amendments Nos. 8, 9 and 13. However, I think it would be helpful if I said a few words at this stage, though as I wish to be brief I hope that the hon. Member for Cornwall, North (Mr. Pardoe) will forgive me if I do not stray on to the question of rents.

I believe the price of land will be one of the major problems of the future because it has increased by two or even three times its original value and has consequently had an effect upon the price of houses which has given very serious problems to those such as young marrieds who do not own a house—it is all right for those who do and for those who are switching from one to another. The price of housing has increased in London because there has been an influx of people wishing to buy houses and offices as a result of our joining the Common Market. That is the London area. For the vast majority of land elsewhere—whether it is building land, agricultural land, expensive houses or less expensive houses—the increase has been phenomenal yet cannot be due to inflation or any other special factor which would have had this startling effect upon the price.

Reasons for this must be found in economic factors, such as tax relief given in the Budget on interest on borrowed money. I made a few mild noises on the Report stage of the Finance Bill pointing out the effect that such a concession would have. It would be wrong to claim that it has been a major cause in the increase of the price of land, but equally it cannot be denied that it has had some effect. It has enabled the personal purchaser of property to buy land more cheaply, especially if he is well-off. It has helped the well-off to speculate in houses and land, with unfortunate results. A speculator has had to borrow money to buy the land. Equally, it cannot be denied that there must have been a considerable increase in the money available for this purpose in order for the banks to have been prepared to lend it to the building societies. That brings us back to the real problem which underlies the inflationary situation, that there has been too much money floating about.

It is well known that the money supply increased at times during the summer by between 20 per cent. and 30 per cent. over last year's levels. It is interesting to note that, where the increased money supply has been greater than was needed for financing the increase in production, it has not gone into productive resources but has found its way into the purchase of assets which have been not in any sense creating new wealth but simply forcing up the price of properties.

There is the added factor that this increase in the money supply in itself whetted people's expectations of further inflation and served to make property seem to be the most attractive investment as a hedge against inflation. This added factor accelerated the increase in land prices.

I do not know whether I have been contentious in anything I have said hitherto. Perhaps the Opposition will say that they disagree with that analysis. Other reasons could be adduced, but if that analysis of the reason for the increase in the price of land and houses is broadly speaking true, it illustrates the effect that a surplus of money supply can have on prices. It cannot be argued that this is in any sense due to landlords or sellers of property sticking out for high prices. Nor can it be laid at the door of the trade unions for having demanded high wages.

It is a clear instance within the sphere of inflation where the only identifiable cause has been money, rather than the behaviour of persons. As such I would slightly cross swords with my right hon. Friend the Member for Barnet (Mr. Maudling) who suggested that we are suffering purely from a cost-push inflation and not in the least from a demand-pull inflation, because in this case buyers have been scrambling over each other bidding up the prices of land and houses, and it is demand and not cost-push that has been the cause in the escalation of prices.

It must therefore follow that the only remedy to the problem is to reduce the money supply and to bring about the opposite effect. No control of a statutory nature is sensible against the background that I have sketched, and I will give no support to the Opposition Amendments which seek to control, by Statute, house and land prices. It would be unfair to bring down house prices by law, because often people will have mortgaged themselves and bought at the top of the market. To be forced by law to sell at lower prices could be a serious injustice to those people.

It is equally impossible to say what is the right price for a house. Every house is different. It is an individual and completely separate entity, and each piece of land has a different value. To try to impose a rigid system of statutory control upon the price of land or houses seems to be an unworkable proposition. It is for that reason, I imagine, that the last Government left land and house prices out of their prices and incomes policies. It is for that reason that such prices are, rightly, left out of the Bill.

In the most easily identified series of prices and price rises where the money supply is evident as the cause, not only do we agree that it is impossible to control it by Statute, but it must be conceded that it is impossible to control it in any other way than by financial management methods. This again underlines how difficult it is to use the law to control economic forces.

Possibly I have been fortunate in picking the most obvious example for what I am trying to explain to the Committee, but the conclusion can be drawn that perhaps the methods that I have suggested for controlling the price of land and houses are more appropriate for controlling the price of other goods, too.

Mr. Anthony Crosland (Grimsby)

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) is not correct in saying that the Labour prices and incomes policies contained no provisions for rents. On the contrary, he will recall that in 1969 we passed the Rent (Control of Increases) Act. Having said that, unusually, I agree with a considerable part of the hon. Gentleman's argument.

Mr. Ridley

I said that they did not contain provisions for controlling the price of land and houses. I did not mention rents.

Mr. Crosland

In that case. I have to answer that the prices of land and houses were not rising at one-fifth of the rate at which they are rising today. But I have some sympathy with the hon. Gentleman's general argument. There has been a great deal of confusion about the reason for the rise in land prices. I think that Ministers who, like the previous Secretary of State, think that the problem can be settled just by getting quicker planning consents and marginally increasing the supply of land are wrong, and there is much in what the hon. Member for Cirencester and Tewkesbury says about the effect of an increase in money supply. Where I take issue with him is that I decline to generalise from this to the rest of the economy. I have some sympathy with his proposal to restrict the money supply available for the purchase of land and in this particular sector of the economy, but if that were to be extended, as I think he suggests in other speeches, to a general case for restricting the money supply, I would then part issue with him, because I fear that that policy can work only at the expense of stopping growth and causing an increase in unemployment, which I should not be prepared to accept.

I want to go rather wider than the hon. Gentleman who, perfectly reasonably, confined himself to one part of the sector with which this debate is concerned. Unlike the hon. Gentleman, I am convinced that a prices and incomes policy is necessary in an advanced industrial society. All the experience we have had since 1945 shows that general demand management of a conventional Keynesian character—given that we absolutely must keep full employment—is unable to prevent an unacceptable degree of inflation. A new form of Government intervention is necessary, and I feel this the more strongly because I reject what is the only possible alternative—a drastic cut in total money supply, which can work only at the cost of growth and full employment.

But while I have sympathy for the aims of an equitable prices and incomes policy, I have none whatsoever for this freeze and this Bill, with its ridiculous Title, its gross inequities and its glaring omissions. This amendment and others are concerned with one glaring omission—the price of housing—a particularly sensitive price, having a heavy impact on the cost of living and the standard of living, and one which not only bites deeply into household budgets, but has a strong psychological significance for the individual worker and his family which is heightened by the certain knowledge that huge profits are being made out of speculation in land and housing.

We are bound to say a brief word about what has been happening to the cost of housing because what has been happening in the housing and land markets constitutes the background to the tripartite talks which took place at Chequers, and this background will largely colour the reaction of wage and salary earners to any proposals that the Government may make. I shall be very brief on this point because we debated the whole matter a fortnight ago.

The price of owner-occupied houses, both new and secondhand, increased in the first half of 1972 at an annual rate of 40 per cent. In London, prices of new houses are up by 55 per cent. compared with a year ago. Many hon. Members will have seen the horrifying poll in the Evening Standard recently, carried out on 14th November by the Opinion Research Centre, according to which the number of people who expect to pay more than £14,500 for the average family house in the London area has more than doubled in the past three months. This constant rise in prices has created appalling inflationary expectations.

Plainly inflation invariably worsens when inflationary expectations become universal. People now expect that the prices of houses will continue to rise. They think that they must get on the band wagon before it is too late and are prepared to strain their financial resources and the household budget in order to do so. Consequently, there is now amongst young couples looking for a house a mood of insecurity and of resentment which makes the Government's task in getting their policies accepted a hundred times harder. As for the ordinary wage earner, with average earnings of £1,600 a year, he is altogether priced out of the market.

4.30 p.m.

On the question of council rents, to which the hon. Member for Cornwall, North (Mr. Pardoe) referred, 1 million council tenant households have already had a rent increase of £1, on 1st October, while a further 500,000 had an average increase at that date of 60p. For the country as a whole, as the hon. Member for Cornwall, North, pointed out, over the current financial year the increase in rebated rents—thus taking account of the points invariably made by right hon. and hon. Members opposite—will be 14 per cent. I do not believe that to be a realistic figure as I think it exaggerates the likely take-up of rebates.

What will often be significant is the likely increase in unrebated rents, and this will be not 14 per cent., but 24 per cent. For millions of people, there will be a further increase next April. The private rented tenant faces even larger increases over the next 12 months.

That is the background to this freeze on wages—a story of wild inflation, speculation and profiteering; a background of rents rising and house prices soaring while huge fortunes are made by property companies and landowners. The Government must face the fact that these trends have created the most unfavourable possible background for any attempt to reach a voluntary tripartite agreement.

Unfortunately, in economic matters, bygones are often bygones. We cannot altogether undo the past. However, we might expect that this Bill will at least bring some alleviation to the situation and will undo a little of what has been done. Above all, we would expect that for the duration of the Bill, while wages are to be frozen, an equal freeze should be imposed on council rents, private rents and house and land prices. After all, the first sentence of the Explanatory and Financial Memorandum to the Bill reads: The Bill empowers the Government to apply a standstill in prices, charges for services, pay, dividends and rents. Let us, therefore, examine the Bill and see how far this laudable aim is achieved in the housing sector.

Such an examination reveals that it will have only the most minimal effect upon that sector since the freeze applies only to a very small part of the private rented sector. First, regulated rents increased by rent officers or rent assessment committees during the 90 days will not be implemented until after the freeze. If we reckon that regulated rents are fixed about once every five years, the numbers involved will be perhaps one in 20 of unfurnished tenants, or 60,000 households.

Secondly, the rise in controlled private rents is postponed. These rents were due to be increased on 1st January, 1973, by about 70p for tenants in London and 60p for those living elsewhere in England and Wales. Approximately 60,000 households will, under the Bill, be reprieved from this increase.

Thirdly, the freeze applies to housing associations, where rents were due to move towards fair rents on 1st January, 1973. While we have no means of calculating the numbers involved, they will be small.

That is the only protection afforded by the Bill to any sector of housing. The freeze wholly fails to touch the owner-occupied sector, comprising over 50 per cent. of households, and the council tenant sector comprising over 30 per cent. of households. The Bill excludes the 1st October increases in council rents—£1 for 1 million people and 60p for another 500,000. It excludes the rises in house prices, which affect some 200,000 purchasers in any one quarter. It excludes the rise in the cost of mortgages—after all, an extra ½ per cent. on mortgage rates will come in on 1st January, which will affect nearly 4 million existing borrowers. On a £5,000 mortgage this will mean an increase of about 50p.

Mr. Gower

Does the right hon. Gentleman accept that if the Government took steps to freeze mortgage rates that might have the effect of drying up the source of mortgage money? That could inflict hardship on people attempting to borrow for the first time.

Mr. Crosland

I referred to that question in the debate a fortnight ago when I proposed that that difficulty could be met by the notion of a building society stabilisation fund. I am certain that we need such a fund anyway on grounds unconnected with the present freeze.

The Bill totally excludes furnished tenancy rents. If we assume that there are ½ million people in that sector and that their rents are reviewed on average every two years, over 60,000 tenants of furnished property can expect increases in the 90 days. The Bill wholly excludes tenants who agree a registered rent with their landlord under Sections 42 and 43 of the Housing Finance Act without going to the rent officer or the rent assessment committee.

Examination of the Bill shows that, including those who lose out under the October rent increases, approximately 5¾ million households can expect increased housing costs from October to the end of the freeze period compared with only about 125,000 who are given any protection under the Bill. And, of course, nothing whatever is mentioned about the price of land. In other words, we have a freeze on incomes but no corresponding freeze on the price of houses, the price rise in which has been a major cause of inflation over the last two years.

Housing is almost totally, incredibly, exempt from the Bill. It is the most exempt item in the whole package. Therefore, the builder, although his wage costs are frozen, can raise the price of any new house he may build by any amount that the market will stand—10 per cent., 20 per cent., or 30 per cent.—without the Government lifting a finger. The seller of an existing house can likewise ask whatever the market will bear, again without the Government lifting a finger. The landowner can continue to squeeze the last drop of profit out of his land, totally unaffected by the Bill's provisions. The speculative landlord can still make a "killing" in North Kensington, Hammersmith and similar areas, totally unaffected by the provisions of the Bill. Building societies can put up their rates, totally unaffected by the provisions of the Bill.

What sort of reactions will there be in our constituencies? How will the wage earners of Grimsby react when they read about what will continue to happen during a period which they are told is one of freeze? What have they been reading about since the freeze began? I quote from the Evening Standard of 10th November: Estate sold for £1,520,000". A 2,200 acre estate in Oxfordshire was sold for that amount only a few days ago. The Financial Times, which even some people in Grimsby read—and they are sensible to do so—made the most intelligent comment on the Bill as it affects housing and property: The initial reaction of the property industry to the Government's anti-inflation proposals was one of relief "— I am not surprised— … The actual measure—a commercial rent freeze—is mainly of political importance and will have no significant effect on property values". I was interested to read in the Sheffield Morning Telegraph of 14th November: £100 shock for house-buyers. House-hunters who have ordered new homes on the massive Gosforth Valley development at Dronfield, near Sheffield, got a shock yesterday when they were told that their bills are going up by up to £100. And the Government freeze on prices does not apply to their contracts … A spokesman at the prices unit of the Department of Trade and Industry says: 'There is nothing we can do. House prices are specifically exempt from the freeze regulations' "There is nothing we can do", says the Department of Trade and Industry. It is clear that the new Secretary of State has imposed his own mark on his new Department.

Mr. Ernest G. Perry (Battersea, South)

By his absence.

Mr. Crosland

No, the new Secretary of State at the Department of Trade and Industry, who was responsible for the famous remark that I quoted a fortnight ago. "'What can I do?' Walker" has arrived at the DTI.

I hope that the Minister of Housing—and I formally welcome him back to housing as he made a great impression on all of us during the Committee stage of the Housing Finance Bill—will not say there is nothing which the Government can do. Of course, the Government could do something, complicated no doubt—but then every provision in the Bill is intensely complicated to carry out. The answer of complication is not sufficient. I suggested a number of practical steps in the debate a fortnight ago—for example, suspend the operation of the Housing Finance Act, which is basically the purpose of our Amendment No. 7; limit mortgage interest tax relief to first houses and to non-luxury houses; stop the uncontrolled fluctuations in building society lending; stop the present profiteering to which the Opposition constantly draw attention, in inner London particularly, in improvement grants; put at the very least an emergency higher rate of capital gains tax on purely speculative transactions in land and residential property; above all, produce a policy for land. Any policy would be better than the present state of affairs.

The Chief Secretary to the Treasury (Mr. Patrick Jenkin)

I am interested in the right hon. Gentleman's suggestion of a high capital gains tax rate on purely speculative property transactions. Will he give some indication of how he would define them?

Mr. Crosland

I can give the hon. Member a direct answer, which enables me to take up my next point.

The Prime Minister has been—and I say this with sorrow—extremely disingenuous with us about how far housing featured in his discussions with the TUC. He has more than once sought to give us the impression that housing did not figure largely in the discussions and that the TUC did not press the housing arguments. That is not correct. I have here a TUC paper dated 18th August which raises fundamental points about housing policy and makes it absolutely clear that the TUC attached major importance to housing being brought within the ambit of any package on prices and incomes.

To answer the Chief Secretary's question, this paper, of which he will certainly have a copy, proposes how this special rate of capital gains tax should be levied.

Mr. Patrick Jenkinrose—

Mr. Crosland

No, I will not give way. Surely no one is advancing the argument that it would not be possible to have a special rate of capital gains tax. Let me give the hon. Gentleman a simple definition of what I mean by speculation in land and residential property: transactions in land and residential property other than those carried out by an owner-occupier.

Mr. Patrick Jenkin rose—

The Chairman

Order. The Chief Secretary knows that if the right hon. Gentleman does not give way he must not persist any more than any back bencher.

Mr. Crosland

I thought that I had given an extremely clear and explicit answer to the hon. Gentleman.

I return to the question of land. We have discussed this in the House before and my views on it are well known. The one thing which the Government cannot continue to do is to have a laissez-faire policy on land. They can attack the 1947 Act, the Land Commission and our proposals as much as they like. What they cannot do is sit on their backsides and do nothing.

The TUC was absolutely right to treat housing as being a central factor in any prices and incomes policy. One cannot have a prices and incomes policy which excludes the cost of housing, and one cannot have a housing policy which ignores the problem of inflation. It is not a question, as was argued by the hon. Member for Cirencester and Tewkesbury, of saying that housing and land policy should be determined in future, not by Parliament, but by the TUC and the CBI. There has been a lot of nonsense talked on this issue. That is not the question at all. The true question is quite different; it is a question of priorities.

4.45 p.m.

If we give first priority, as we should, to combating inflation, it is no good having a housing policy which pulls totally in the opposite direction. If, on the contrary, the Government give first priority to having a laissez-faire, market-oriented land and housing policy, complete with cuts in subsidies, profit rents, decontrol, abolition of the land Commission, uncontrolled building society lending and general "what can I do?" passivity in the face of land speculation, we shall not get an agreed prices and incomes policy. We must choose one or the other objective.

The Government's land and housing policies, which have created the worst prices inflation in our history, were initiated with a great fanfare of trumpets at a time when the Government foolishly thought that they needed no anti-inflationary policy except confrontation and union bashing. The Government now find that they need a more constructive policy, but such a policy is fatally inhibited by the appalling legacy of the former Secretary of State.

That sums up the story of the Government's recent efforts to find an effective counter-inflationary policy. One cannot spend two years deliberately increasing inequality in the distribution of wealth, indulging in eyeball-to-eyeball confrontations with the unions, creating gross hardship, injustice and insecurity in housing, and then expect the unions to radiate brotherly love.

We need a complete reversal of all the Government's social policies as a precondition—not as a surrender to one side or the other—of an effective anti-inflationary policy. The amendments provide the opportunity of doing this with the crucial problem of land and housing.

Mr. Christopher Tugendhat (Cities of London and Westminster)

The right hon. Member for Grimsby (Mr. Crosland) ranged very widely over land and housing problems, as is right for a Shadow Minister. I hope that the right hon. Gentleman will understand if I do not endeavour to take up all his points.

The right hon. Member for Grimsby will have realised from my contribution to the debate on the Gracious Speech that I agree that abuses and profiteering in the land and property market have taken on the proportions of an immensely serious social problem. It is of the utmost importance for the Government, with as much speed as possible, to bring forward measures to tackle these abuses and difficulties.

I take issue with the right hon. Gentleman when he says that much of what is happening in the property market is a cause of inflation. I think that it is largely a symptom and a result of the inflation. It has in itself become extremely important and serious, but what we have seen happening in the land and property market arises from the fundamental problem of the depreciation of currency and is not, in itself, a principal cause.

I wish to discuss Amendments Nos. 6 and 11, which have been bracketed with the principal amendment which we are discussing. During the Committee stage of the Finance Bill, the hon. Member for Heywood and Royton (Mr. Joel Barnett) developed an agreeable practice of putting forward what he referred to as probing Amendments, designed primarily to find out the Government's intentions on certain issues. Having discovered the Government's intentions, the hon. Gentleman was in a position to make up his mind whether he wanted to press matters further.

The Amendments which I have put forward are probing. There is some uncertainty about both the White Paper and the Bill on two matters in which I am interested as a constituency Member.

The first concerns service charges. We have discussed them at length in the House, especially during the debates on the Housing Finance Bill, and I was pleased when the Government were able to meet the wishes of London Conservative Members by bringing about a considerable tightening-up in the regulations governing service charges. Notwithstanding the improvements, we all recognise that service charges are open to abuse, that often even in regulated tenancies when it is impossible to raise rents landlords can get round the problem by jacking up service charges. In big blocks of flats in London where break-up has already occurred and where flats are on leases as long as 75 years, service charges are often used by property companies owning the freeholds to gouge tenants without any ability on their part, until the changes that took place earlier this year, to hit back.

It is important that the Bill should be clear about service charges. The White Paper is not. The Bill does not make the Government's intentions clear and I hope that the Minister will be able to assure us that service charges are covered in exactly the same way as wages, prices, and so forth.

The second matter concerns unregulated tenancies. Here, too, there is a certain laxity of expression both in the Bill and in the White Paper. The White Paper specifically mentions controlled and regulated tenancies. It mentions business rents. It does not mention unregulated tenancies, and the uncertainty is not clarified by looking at the Bill. We look to the Minister to assure us that unregulated tenancies will be covered in precisely the same way as regulated and controlled tenancies. All of us who have any experience of London matters—this is common to both sides of the House—appreciate that some of the biggest difficulties have occurred among the unregulated tenancies—those in London with rateable values of £400 and above—which basically include most of the large mansion blocks found in Westminster, Hampstead, Kensington, Chelsea and areas of that nature, where it is not uncommon to find rents rising by 50, 75 or even 100 per cent. It would be intolerable if rent increases of this or any other kind were brought forward during the period of the freeze.

No one on either side of the Committee is under any illusion about the activities of some of the companies concerned with this section of the property market, and there has been something extremely disagreeable in the combination of these companies reporting enormously high profits for their operations over the last few years while tenants have had their rents rising at a phenomenal rate and the scarcity of accommodation has been increasing. If only a small proportion of the huge profits of some of these companies had gone into building more residential accommodation, my constituency and others might be in a better position than they are today.

I cannot believe that it is the Government's intention to exclude tenants of unregulated tenancies from the freeze, and I cannot believe that it is their intention to exclude property companies which deal in this section of the market from the effects of the freeze.

Mr. Reginald Freeson (Willesden, East)

In speaking to his amendment and referring to unregulated rents, the hon. Member for Cities of London and Westminster (Mr. Tugendhat) has illustrated his case by referring to those properties above the rateable value of £400 in London, and less elsewhere, which do not come under the "fair rent" provisions. As I read his amendment, I understood it to refer to all unregistered unregulated rents—that is, those which could become regulated but which have not been; in other words, the majority—beyond the 300,000 that have been registered, and not just the category to which he has been referring. Will he make clear to the Committee that he is referring to all unregulated rents and not just those above certain rateable values?

Mr. Tugendhat

The hon. Gentleman has me at a disadvantage. In my amendment I am dealing only with those people to whom I have been referring.

Mr. Geoffrey Finsberg (Hampstead)

Paragraph 22 of the White Paper, covers those tenancies that will move from control to regulation. Together with those with rateable values over £200, they fall within the ambit of Clause 4.

Mr. Tugendhat

I am most grateful to my hon. Friend. His knowledge of these matters is certainly greater than mine and is based on many years' experience in local government in London. However I was then referring to the section of the community of whom I had earlier spoken. I hope that the Minister will be able to reassure us on this point.

There is one other aspect of the problem on which it would be interesting to hear the Minister's views and on which we all hope to see action as the freeze progresses. I have had the opportunity of talking to business people in my constituency—which has a great many business people one way and another—and their experience has been that a number of landlords are saying that while they have to abide by the freeze on business rents as they stand at the moment they will look to the tenant to make up for that by some other form of payment when the freeze ends. This is an extremely difficult matter to police. So many of the dealings between landlord and tenants are difficult for a Government Department to master.

However, we must recognise that in freezing rents there is a great danger that landlords will, while abiding by the letter of the law, seek to ensure when the freeze ends that tenants make up for what has been lost. It is a difficult matter for the Government to deal with but it is a point worth taking into account. Clearly it would be quite unreasonable to exclude the rents of any section of the community from a freeze of this nature. We must recognise that the freeze is of short duration—90 to 150 days—and that by freezing rents at present levels for the next 90 or 150 days we shall not get to the heart of the matter in the London and national property markets.

I hope that some of the measures which the former Secretary of State discussed in the debate on the Gracious Speech for dealing with development land will be brought forward as soon as possible. I hope too that the Department of the Environment will take advantage of this lull to do some deep thinking about the whole position of residential accommodation in London and perhaps come forward with more radical ideas than we have previously heard for encouraging the building of new residential accommodation. That is essential because the pool of residential accommodation has been diminishing. Consequently we need incentives to build. I hope too that it will also devote some thought to putting tenants on a level nearer to those who own houses and thus enjoy the benefit of mortgages.

At the very least the question of mortgages on second houses should be looked at if tenants are unable to gain any form of tax relief. The cost of extending tax relief to tenants in rented property would be considerable, but the argument in favour of doing so and limiting the tax advantages of mortgagees on second houses is worthy of the closest consideration.

Mr. Gower

Might it not be unfair if what my hon. Friend suggests were introduced? Why should we penalise a person who has to live in two parts of the country, and therefore in two houses, while we give a large mortgage to a person who buys a very expensive house? That seems an inequitable proposition.

5.0 p.m.

Mr. Tugendhat

I have no desire to penalise people who are obliged to live in two parts of the country. Members of Parliament are in this category. But my hon. Friend will recognise that in today's affluent society an increasing number of people are buying weekend homes, country cottages and so on. These people often derive considerable tax advantages out of what, in effect, is a luxury, whereas people who have only one home and are quite unable to think of buying it in my constituency are unable to gain any benefit, given the prices which are being demanded. These are the people to whom I refer. I hope that the Minister will be able to give us some assurances on service charges and unregulated tenancies.

[Mr. GEORGE WALLACE in the Chair]

Mr. Clinton Davis (Hackney, Central)

When the hon. Member for Cities of London and Westminster (Mr. Tugendhat) repeatedly expresses his hopes that the Government will introduce legislation to deal with speculative land prices and all the other anomalies of which he speaks, he reminds me of an expression of opinion by the late Nye Bevan who said that to expect a Conservative Government to introduce radical proposals was to be about as hopeful as expecting a mule to deliver a large family. I think that the hon. Gentleman's hopes will be consigned into the dustbin, and I doubt whether he will get any change from the Minister.

I deal first with two points about which the Law Society has written to the Minister concerning the practical difficulties which arise from the vagueness of the Bill's proposals. The first point relates to rent revision clauses in existing leases, where a rent is payable on 6th November and is increased thereafter, but before the end of the standstill period.

We have no guidance from the White Paper or from the Bill on what is to happen about rent revision clauses. I hope, therefore, that guidance will be given by the Minister because solicitors and barristers will be asked to advise on this aspect and it is important to put them in a position to give cogent advice to their clients. There is nothing in the White Paper about furnished or unfurnished tenancies which are outside the "fair rents" scheme and it is absolutely essential, therefore, that legal advisers are in a position to advise their clients about that aspect of the matter, too.

The Law Society has also posed a question which is relevant to our debate. It is whether the Government propose to give retrospective protection to tenants in order to provide them with a defence to an increased rent for the period from 6th November, 1972, to the date of any order which may be laid, and to enable them to recover overpayments of rent. This matter has not been dealt with either in the White Paper or in the Bill. Are the Government able to offer the House some advice on those two important and practical difficulties?

The hon. Member for the Cities of London and Westminster drew attention to the scandal of land speculation, a point made time and time again from this side of the House, and most eloquently by my right hon. Friend the Member for Grimsby (Mr. Crosland) yet again today. What will the Government do about it?

Mr. Arthur Lewis (West Ham, North)

Nothing.

Mr. Davis

My hon. Friend says "Nothing", and I fear that that is likely to be the case.

In the mind of the ordinary housewife who lives in Hackney, Islington or any other stress area, this problem cannot be isolated from those which she faces in her daily or weekly situation. She has already faced the impact of increased rents if she is living in a council tenancy. There can be no doubt that she will exercise some pressure on her husband to ensure that she is not penalised by this standstill. The Government say, "It is something that happened in the past. It happened on 1st October and there is nothing to be done about it." That is absolute nonsense and must place the whole purpose of the standstill period in peril.

Equally, one of the interesting features that I have experienced in the past few weeks at my advice bureau has been that a number of people have come to see me there and have asked, "How can the Government expect us to adhere to a standstill period when we see fantastic profits being made in land prices which have an enormous effect on our standard of living?" I can offer them no advice because clearly the Government have indicated that they are not prepared to do anything. The Government are prepared to be extremely firm with council tenants, workers and especially farm workers' wages. But when it comes to property speculators, pusillanimity is the order of the day. The Government are totally cowardly about it.

The reason may well be that property speculators are immune because they are very important supporters of the Conservative Party when it comes to the provision of funds, particularly at election time. [Interruption.] If that is wrong and the Government deny it, let them show that they are prepared to take action. That is the simple answer to the hon. Member's intervention. What does he suggest?

Mr. Gower

One frequently meets people who are in property in a big way and who are Socialists—or who say they are.

Mr. Davis

Then they must be condemned, too, and I am quite happy to see them the subject of any legislative action which the Government are prepared to take. Whether they pay the Labour Party or not is quite irrelevant. I am prepared to see action taken against them and that is the difference between the Labour side of the Committee and the Conservative side. The Government want their friends to be rewarded and not to be penalised in any shape or form. This is a matter of considerable gravity and it throws the whole purpose of the Government's standstill into jeopardy, together with the whole principle lying behind it.

Mr. Frank Tomney (Hammersmith, North)

I realise that the hon. Gentleman wants to be fair. There is an edifice to be erected across the road on possibly the best site in the United Kingdom. We all know who will erect that edifice—Land Securities Investment Trust. We all know who is the boss of that trust. We all know the terms of compensation. If another barrow-load of cement is not poured on that site the terms of compensation will be not less than £15 million. Let us be fair. This applies to property speculators of all colours.

Mr. Davis

That is precisely what I said. My hon. Friend has neither added to nor subtracted from anything I have said. I am not being selective about it; I am condemning them all across the board.

Mr. A. E. Cooper (Ilford, South)

Rubbish.

Mr. Davis

The hon. Gentleman says "Rubbish". But what is he proposing? Does he think that the Government ought to take any action in this connection? His silence is deafening.

Mr. Thomas Cox (Wandsworth, Central)

I am sure that as a fellow Inner London Member my hon. Friend must have experienced the problem that it being faced in Wandsworth where people living in furnished tenancies are now being evicted under different kinds of guises. Would my hon. Friend not agree that during the period of the freeze an eviction freeze should also apply? Many of these people, who are already paying very high rents have to pay even higher rents once they are evicted vet their wages are being frozen during the very period when this is happening.

Mr. Davis

That is an experience which many of us share in Inner London. It is a substantial point and I hope that my hon. Friend will be able to develop it later. I want to see the Government introduce legislation of that kind. It is totally absurd for the Government to abandon their moral duty to impose sanctions against property speculation. It is right that the TUC should have made that a cardinal point of its representations. It is a scandal that the Government should have ignored it.

Mr. Geoffrey Finsberg

The hon. Member for Hackney, Central (Mr. Clinton Davis) began with two specific questions. Certainly the hon. Member will not be the only one who wants to hear them answered. It is not only lawyers who are consulted. He and I know that we are consulted by constituents and it is useful to give them some information. The hon. Member omitted, when he was talking about his housewife constituent whose husband would have to pay an increased rent on 1st October, if the council were law-abiding, unlike Camden, to say that in many cases they would have substantially increased rebates. It is wrong to confuse the House by omitting these facts.

Mr. Clinton Davis

What proportion of council tenants does the hon. Gentleman think have managed to obtain these rebates? He obviously is not able to answer for Hackney, but can he answer for Camden?

Mr. Finsberg

I could have answered for Camden if I thought that the debate would take this somewhat irrelevant turn.

Mr. Tugendhat

My hon. Friend may not have the figures for Camden, but in the City of Westminster about 60 per cent. or 7,500 council tenants, are eligible for rent rebates.

Mr. Finsberg

I am sorry that the Member for Hackney, Central attacked property speculators and accused us on this side of wanting their support. It was not until a later stage that he said that he did not want to be selective. The hon. Gentleman knows that the Co-operative Insurance Company is one of the large investors in Centre Point, and that company does not give money to the Conservative Party.

I thought that the hon. Member for Cornwall, North (Mr. Pardoe) made some interesting points, including some which should be examined. However, the hon. Gentleman tends to spoil his argument by snide and waspish cracks which are usually irrelevant. The hon. Gentleman is quite wrong—this is a feature that runs through the speeches from the other side—to dismiss the rebate issue, particularly when there is to be an extra increase of 50p in the needs allowance. That may not be of much value in North Cornwall, but it is of great value in the big cities.

I support the views which were put forward by my hon. Friend the Member for Cities of London and Westminster (Mr. Tugendhat).

Mr. Frank Allaunrose—

Mr. Finsberg

I must point out that the right hon. Member for Grimsby (Mr. Crosland) would not give way to the Chief Secretary.

Mr. Allaun

The hon. Member has just said that the Government have increased the needs allowance by 50p. That is one of the suggestions made recently by the Prime Minister which the Government have not carried out. It would have meant an increase of 8½p a week for some tenants and nothing for most. But the Government did not do it. The Prime Minister told us it was merely an offer in the negotiations. I do not know what the hon. Member is talking about.

Mr. Finsberg

The hon. Member having failed—

Mr. Charles Loughlin (Gloucestershire, West)

Answer the question.

Mr. Finsberg

I will do so in my own way without interruptions from a sedentary position. The hon. Member for Salford, East (Mr. Frank Allaun), having failed in his campaign to scare tenants by saying that rents will double, is now trying to say that the extra needs allowance to which the Prime Minister referred, which I believe will be implemented, will be worth only 8½p. I am prepared to believe that is part of the package which included the £10 bonus for pensioners. Whether that is so or not, the £10 bonus does not exist until legislative approval is given to it next week. I am satisfied that the 50p needs allowance will be brought in to give effect to what is needed. That is my understanding of the speeches which have been made. I did not say that it was on the Statute Book.

5.15 p.m.

I support the points which my hon. Friend the Member for Cities of London and Westminster made because there is a need to include unregulated tenancies and service charges within the Bill. My hon. Friend was perfectly right to comment that there is a discrepancy between the White Paper and the Bill. It is right, therefore, to try to clarify it. I hope that we will be told later that these are points which will be taken into account and will be dealt with in accordance with the Bill.

There are major problems in inner London, particularly those concerning service charges. There are abuses of service charges—which I hope will be dealt with by further legislation in either the present Session or subsequent Sessions—which have not been sufficiently checked. Most people, other than hon. Members, merely read what they see in a White Paper or a Bill and do not look behind it. If they do not do so they will assume that all rents and service charges are covered. It is important that we should get some clarification.

The right hon. Member for Grimsby is out of touch with reality. I listened carefully—[Interruption.]—and courteously to his speech. He is trying to say that the Government are wrong not to accept the substance of Amendment No. 98 or Amendment No. 9, which would control the price of houses, dwellings and land. He must know that previous Governments have realised that the prices of houses and dwellings cannot be controlled. There is no way of doing so unless a vast army of inspectors, valuers and surveyors is set up in every town hall. It just is not on. It was not until the right hon. Gentleman was interrupted that he said that he would exclude the owner-occupier from this control. How would he fix the price of a house that has never been on the market, except by bringing in an army of surveyors or valuers?

It is impossible to control the prices of houses and dwellings. I hope to see—I think this is a view that is shared by many hon. Members—when phase 2 comes to be examined that we shall find some way of controlling the speculation in land. Clearly, there is no argument that such speculation is going on. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) mentioned it, as did my hon. Friend the Member for Cities of London and Westminster. But it is no good saying "Do something". The Opposition tried to do so with the Land Commission, which they know was an abject failure. If we are going to do something, let us make certain that it is effective.

I wrote down—I hope correctly—that the right hon. Member for Grimsby said that there was a prospect of even higher rents over the next 12 months in the private sector. Those are the words which I took down and, if I may use the elegant phrase of the hon. Member for Hackney, Central, the deafening silence proves that I am not wrong. The right hon. Gentleman omitted to mention that although there may have been higher rents until the freeze, as from 1st January the tenants will get rent rebates that the measures of the right hon. Member for Coventry, East (Mr. Crossman) did not give them. Those measures merely increased rents without giving any form of rebate. That argument has been plugged ad nauseam by the hon. Member for Salford, East—

Mr. Idris Owen (Stockport, North)

Is my hon. Friend aware that in my constituency 42 per cent. of council house tenants are to receive the rent rebate?

Mr. Finsberg

I am glad to hear that. It will also be appreciated by the 40 per cent. of council tenants most of whom under Labour councils got no rent rebate at all until 1st October of this year.

The right hon. Member repeated this canard about the £1 increase—again without reference to rebates. I may be wrong here but I find myself agreeing with him on one point. I, too, am against joint registrations. I am not at all happy about them. The advice I have always given to every private tenant is that he should not agree to joint registration. I am not satisfied that such registration is right. I have said so ever since the Housing Finance Bill was still a Bill, and I have not changed my views since.

But for lack of time one could go on analysing remarks made by the right hon. Gentleman in a wide-ranging speech, but it is probably better if that speech is allowed to sink into oblivion, because much of it was obviously pulled out of the pigeon-holes at Transport House and very little was germane to the debate.

It may be necessary to give standing to tenants associations so that they can collectively negotiate with landlords on many of the problems which face them, such as fair rents and service charges, because even now there are landlords who do not believe that any tenants' association has any right to exist at all. I would commend perhaps more to Labour than to Tory councils the Camden idea of proper joint tenant council committees which have substantial powers. These committees are most effective. The idea might be looked at in the private sector, because both landlords and tenants, whether public or private, have a joint interest in solving their problems by mutual agreement and not in ending up in bitter controversy. The major amendment in this series is quite unacceptable because it is out of touch with reality, but I very much hope that the Minister can give my hon. Friend the Member for the Cities of London and Westminster and myself the assurances we seek.

I must apologise to the House and to the Minister if I am not here when the Minister replies but I have a very longstanding engagement at 6 o'clock.

5.24 p.m.

Mr. Ray Carter (Birmingham, Northfield)

There are hon. Members on both sides who know far more about housing than I do, but I am as concerned as anyone about inflation, which is the subject of the Bill. I want to refer once again to the rather bizarre spectacle of a Government which claim to be prompted by their overriding concern with inflation, yet do not recognise, or appear to be unwilling to recognise, that over their almost 2½ years of office they have taken, and are presently taking, measures—and continue to take measures—which stoke up the fires of inflation. What we are now discussing is not only the effect of rent increases and inflation generally but the unfairness of increasing rents at a time when the Government are pegging wages.

The whole spectacle conjures up in my mind the vision of a householder standing outside his house which is burning to the ground, shouting for help and calling for the fire brigade, whilst at the same time casually spraying the remains of the house with petrol. There is no intention in the Bill, and certainly none in Clause 2, of containing prices and at the same time ensuring that people's wages are maintained at a level sufficient to pay the prices that are being asked. It is dishonest of the Government to describe this Bill as a prices and incomes policy when all it does is freeze wages.

Are rent increases inflationary or are they not? I believe that they are, and that the House as a whole thinks so—this side certainly does. The country thinks so, and so do council tenants. If rent increases are inflationary—and the Minister has not tried to correct me—why are rents that have been increased over the course of the year, some as late as 1st October, allowed to continue whilst at the same time the people who are paying the increases are having their wages pegged?

There has been an endeavour from the Government side to argue that there is no attempt in the provisions of the Housing Finance Act to increase rents generally; but I have a most vivid recollection of listening in the early stage of this Parliament to the Chancellor of the Exchequer and other Ministers telling us precisely what that measure would do. They were not shy about telling us that its purpose was, quite clearly, to reduce housing subsidies by between £200 million and £300 million, and that in order to achieve that objective they intended to increase rents. The simple conclusion I draw from that is that increases in rents must have inflationary effects.

Mr. Hugh Dykes (Harrow, East)

Will not the hon. Gentleman agree that there was no net overall aggregate reduction in all the subsidies combined? They were redistributed.

Mr. Carter

If what the hon. Member says is true, I shall be corrected by the Minister. I well recollect when I first came into the House and listened very attentively to what the Chancellor of the Exchequer and the then Minister responsible for housing had to say. It was made clear that the purpose of the Housing Finance Bill was to reduce subsidies by between £200 million and £300 million. Admittedly, the rent rebate scheme is part, but all the Act does is to redistribute less of what was there before. I stand to be corrected by the Minister, but he does not rise. Surely, therefore, the Minister must accept that if we withdraw that amount of subsidy from the council-tenanted sector the consequent increase in rent will have an inflationary effect.

Mr. David Stoddart (Swindon)

I am sure that my hon. Friend's recollection is right. He will also recollect that in the debate on the White Paper and on the Second Reading of the Housing Finance Bill the Minister said that he wished to reduce subsidies overall, from what they would otherwise have been in 1976 if the 1967 Housing Subsidies Act had remained in force, by between £200 million and £300 million. My hon. Friend is therefore absolutely correct in saying that that was the Government's intention. It obviously was their purpose.

5.30 p.m.

Mr. Carter

I accept entirely what my hon. Friend says because he is a greater authority on these matters than I am. This was the intention, and it is now, in part, the fact. The Government have succeeded in reducing subsidies while increasing rents, and it is hypocritical of them not to admit that this has been one of the principal elements in the increase in inflation in the last 18 months or so. When the full effects of the Housing Finance Act work their way through there will be an even greater impact on the whole subject of inflation.

Is it fair for the Government to present a counter-inflation Bill containing a prices and incomes policy which acts rigidly on wages but less rigidly on prices? It is dishonest of the Government, and it has been apparent through the 2½ days so far spent on the Bill, to try at every turn to conceal the injustices inherent in the Bill.

An advertisement appeared in the Press at the weekend drawing the attention of tenants to the rent rebate scheme. No doubt it will appear in other newspapers throughout the country over the coming months. We have heard a great deal about the scheme and the hon. Member for Hampstead (Mr. Geoffrey Finsberg), in fulsome praise of the scheme, appeared to believe that it would be a great act of social justice and would improve the lot of the under-paid. Quite how he squares that with the fact that the Bill will freeze the wages of those earning only £20 a week or less I do not know, but he appears to find it possible.

Under the scheme a couple earning £20 a week with two children and paying £3 in rent will apparently get a rebate of £1.86. Add to what is left of their rent the amount they are likely to pay in rates—at the minimum it would be about £1—and subtract rent plus rates from the wage, and they are left with about £17.50 to £17.80. How can a family like that live on such a sum? It is impossible; yet the Government and Conservative Members proclaim the scheme as a great act of social justice. It is nothing of the kind and it will have no impact whatever.

Mr. Gower

Surely the hon. Member is aware that he is criticising not the rebate scheme but the inadequacy of a particular wage. He is not making a valid criticism of the scheme, which seems to be a very fair one.

Mr. Carter

I am glad that the hon. Member accepts my criticism as being fair. But 250,000 of those who are earning £20 a week work on the land and the Government are freezing their wages. Add the shop and distributive workers and the various other categories earning that wage and the total is perhaps 3 million, 4 million or 5 million workers. Does it strike the hon. Member for Barry (Mr. Gower) as an act of great social justice that these workers should have their wages frozen?

Mr. Gowerrose—

Mr. Carter

I shall not give way because I wish to be brief.

There is no chance of any voluntary agreement being brought in involving the TUC as long as the iniquities inherent in the legislation remain. The Government should do as Amendment No. 22 suggests and instruct the local authorities immediately not only to strike out any rent increases made so far this year for tenants whose wages will be frozen but to ensure that in the 90-day period, and certainly in the standstill, there will be no further rent increases for those tenants.

Mr. John Sutcliffe (Middlesbrough, West)

Like the hon. Member for Birmingham, Northfield (Mr. Carter) I readily acknowledge that there are many hon. Members who know a great deal more about housing than I do. I hope that he will forgive me for not pursuing his remarks because I wish to speak to new Clause 1 which stands in my name and which I understand is being discussed with the other amendments.

The clause seeks to bring the price of council houses within the freeze. I do not know whether the demand to buy council houses which has been experienced in the Teesside county borough is paralleled in other parts of the country, but since the inception of Teesside in 1968, 7,600 applications to purchase council houses have been received. Sales completed so far amount to 3,115, and 955 applications have been withdrawn for one reason or another. Last week 3,530 applications to buy council houses were still outstanding. By any reckoning that must be considered a huge backlog of sales to be processed.

The problem is compounded by a conveyancing system which is absurdly slow, and I am informed that taking on extra staff will not speed it up. It means that there is a new form of gazumping for council house tenants who wish to purchase their homes. It is a new form because no third party is involved. The council policy is to revalue its houses after three months, so that the council sells at current market value irrespective of how long the negotiations may take. In many cases such a long period elapses between the original valuation when the price is agreed subject to contract and the exchange of contracts that the final contract price is way above the original valuation price.

An example of this was where a price agreed at Easter this year of £2,350 subject to contract because £2,840 when the house was eventually sold in October, a gazump of £500. Another aspect which gave rise to resentment and anomaly was where two identical houses stood next to each other. One was valued at £2,045 in May and sold at that price; the other was visited by the district valuer in February, but a value was not settled until October, when it was fixed at £2,450.

I am sure that the hon. Member for Putney (Mr. Hugh Jenkins) will argue in the terms of his amendment to my clause that no more council houses should be sold during the freeze, and many of his hon. Friends may argue the same theme. But the Labour council in Teesside, already overwhelmed with applications, considered that very question recently and took a contrary view. With 3,530 applications still to be processed, it decided to continue to receive applications, which are coming in at the rate of 40 a week. But it decided that from now on all applicants will be told that their applications are more than likely to be dealt with by the Cleveland county authority after the Teesside county borough goes out of existence in 1974.

The Bill may not be the appropriate vehicle to control speculation in residential accommodation or in property generally, or to deal with the problem of hoarding development land and many other problems raised in the debate. I agree wholeheartedly with my hon. Friends the Members for Hampstead (Mr. Geoffrey Finsberg) and the Cities of London and Westminster (Mr. Tugendhat) that these problems must be dealt with effectively by the Government, at least in the spirit of the Bill if they cannot be dealt with in the terms of the Bill.

Mr. Ted Leadbitter (The Hartlepools)

The hon. Gentleman's amendment would prevent the sale of council houses at a price above the levels ruling before 6th November, for a 90-day period. The hon. Gentleman has said that conveyancing is slow process. Is he not, therefore, wasting the time of the Committee? Labour and Conservative councils are selling council houses at as much as £1,500 more than the prices quoted as recently as four months ago. This raises the question not of the amendment covering a 90-day period, which is nonsensical, but whether council houses should be sold at all.

Mr. Sutcliffe

I hope to deal shortly with the questions the hon. Member for The Hartlepools (Mr. Leadbitter) has raised. I have not much more to say on the matter. The hon. Gentleman will have his opportunity to make those points during the debate. It is possible within the terms and spirit of the Bill to detach council house sales from the market forces of supply and demand and relate district values to 6th November, at least for the 90-day period, and I hope for longer. District values at 6th November are readily identifiable.

The problem is in many ways artificial, because the demand and scarcity in the open market are not strictly relevant here. The problem arises from an administrative difficulty suffered by the Teesside council, which is overwhelmed by applications. I do not know whether Teesside is unique—

The Temporary Chairman

Order. I believe that the hon. Member for Enfield, West (Mr. Parkinson) is reading a newspaper, which is entirely out of order.

Mr. Cecil Parkinson (Enfield, West)

On a point of order, Mr. Wallace. I was looking only at a piece of information in the newspaper which is relevant to the debate. It concerns wage rates being offered in the Manchester district.

The Temporary Chairman

That is quite all right, but the hon. Gentleman must not make it too obvious.

Mr. Sutcliffe

At least the acceptance of my proposed Clause would obviate gazumping and anomalies in valuations after 6th November. In answer to the hon. Member for The Hartlepools, it would relieve the situation for the Teesside council, and give that council an opportunity to consider ways of dealing with the predicament, which, to be fair, it inherited. Therefore, I commend the clause to my hon. Friend the Minister and hope that he will consider the matter to be one that should be tackled within the terms of the Bill.

5.45 p.m.

Mr. Ted Rowlands

I will not follow the hon. Member for Middlesbrough, West (Mr. Sutcliffe) in speaking about his clause, for the simple reason that there is nothing more irrelevant to our housing problems than the sale of council houses. The rise in price and increased demand in his area can be directly related to his Government's imposition of swingeing, unnecessary rent increases, which are driving people to buy rather than remain in rented houses.

I want to turn briefly to one of the most bogus arguments used by Conservative Members to oppose our suggestion that the Bill should contain a form of rent freeze, retrospective to 1st October, for council house tenants. One Conservative Member after another has quoted the figures for tenants receiving rent rebate as if the rebate completely wipes out the inflationary effect of the Housing Finance Act. One hon. Member spoke of 42 per cent. of tenants in his authority's area receiving rebates; but that means that 58 per cent. of the tenants there are paying up to £1 a week more in rent as a direct result of Government policy. We do not want to know the percentage of tenants receiving rent rebate. It would be much more illuminating to know what percentage of tenants are now paying less rent than they were when the Act was passed. That is the most relevant statistic.

The Minister cannot make any general statement about the number of people receiving rent rebates. In answer to Question after Question his Department has been unable to provide any statistics for the number of people receiving rebates. When the figures of 42 per cent. or 50 per cent. are quoted they inevitably include all those who were originally receiving supplementary benefit for rent but are now registering for rent rebates under the local authority. The figures are a gross exaggeration of the number of people receiving new benefit under the scheme.

Of the 11,000 council house tenants in Newport, Monmouthshire, 3,600 are receiving rent rebates. That seems a high figure; it is a third of the tenants. But no fewer than 2,500 of them were originally receiving supplementary benefit; so it is just a transfer of benefit in their case. There were 600 people benefiting under the local authority's old rent rebate system, so the net increase of people in receipt of rent rebate in Newport as a result of the Housing Finance Act, 1972, is 500, out of 11,000 tenants. Against that, the overwhelming majority of those tenants are having to pay much higher rents than ever before. We should hear no more of the bogus argument advanced as a defence against our amendments that the rent rebate scheme is upsetting them.

As for the argument of Conservative hon. Members who had said that the answer is not to include rent within the ambit of the Bill but for people to accept the pittance of the needs allowance of 50p, my hon. Friends have long memories of means testing. To say that the solution to the problem of modern-day inflation is to extend means testing is deplorable.

We have heard two speeches from Conservative hon. Members representing London constituencies who have spilled crocodile tears about the impact of their Government's policy on tenants in their areas, tenants who are usually in quite wealthy circumstances, often in expensive flats. We share the feelings of those hon. Members about this. We would willingly join with them in any lobby to campaign against the exploitation of tenants in Westminster or Hampstead, as much as we would for tenants in Merthyr Tydvil and in South Wales generally. But we will not take from them the double standards with which they approach the debate. On the one hand, they apparently shed tears over tenants in Westminster, but no mention is made of the average family in a council house in South Wales or anywhere else.

Finally, I come to a point which has a direct constituency bearing. In the same week that the Government have guillotined this Bill and made effective debate impossible, they have made two statutory instruments to compel two local authorities in South Wales to impose a £1 a week increase in the rents of their tenants. Nothing highlights the present situation more than the fact that on 6th November the majority of tenants of those authorities, including my local authority, will have imposed upon them an extra £1 a week when their wages have been frozen.

What is even more disgusting, reflecting the whole attitude taken towards the debates during the passage of the Housing Finance Act and the debates on this Bill, is that those statutory instruments, although local instruments, have profound general significance inasmuch as if they were pursued they would remove the democratic right of local authorities on matters of housing and would impose increases in rent during the period of the freeze. These statutory instruments have not been laid before the House and will never be the subject of normal procedures in the House for debate and discussion. In other words, just as elected local authorities have been deprived of the right to speak out and defend the people they represent, so the House of Commons is being deprived of an opportunity of debating statutory instruments of such importance and significance. But this is characteristic of the whole way in which the Government have behaved over the last two and half years.

There is only one answer. Under paragraph 4(2) of the schedule—the infamous or famous schedule—the Government are taking a power. The paragraph states: The appropriate Minister may by order provide that any Act passed before this Act, or any provision having effect under any such Act, which relates to prices, charges, remuneration, dividends or rents shall, while section 2 of this Act is in force, have effect subject to such exceptions, modifications or adaptations as may be specified in the order. One of the few welcome orders the Minister could bring before Parliament under the schedule would be one to suspend the Housing Finance Act, with effect retrospective to 1st October. If he did that, the Prime Minister could approach the TUC, on this subject at least, with cleaner hands than he approached it during the negotiations a month or so ago.

My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), in the exchanges a few days ago, said that the reason why the Prime Minister now called upon the nation to unite behind him was that he had gone to the discussions and negotiations with unclean hands. One of the dirtiest parts of his hands is that he implemented the Housing Finance Act only a month before the freeze, increasing rents by 25 to 30 per cent. for the majority of council house tenants.

One of the greatest contributions to fighting inflation would be for the Government to abandon the persecution and deliberate discrimination against the vast majority of council house tenants.

I hope that all the amendments will be accepted. I oppose the complete irrelevance of the Bill to one of the major features of inflation, which is the cost of a roof over one's head. I deplore the fact that the Government have deliberately increased rents unnecessarily and without justification.

Mr. Gower

The hon. Member for Birmingham, Northfield (Mr. Carter) was one of more than one hon. Member on the Opposition benches who pleaded a special case of those who are very lowly paid, people such as farm workers and those in the distributive industries, who suffer even a modest increase in rent or other outgoings of their normal domestic activity. It is these particular people who suffer most from a long continuation of inflation. It is these people who would derive the maximum benefit from anything that would lessen inflation, and it is they who would gain most from the across-the-board £2 which was offered. It is these people who suffer every time when someone higher up the wages scale gets a much larger increase.

This is a short-term Bill and we on the Government benches should be foolish if we did not admit that it is a very blunt instrument. I do not mind hon. Members on the Opposition side criticising the Bill for being somewhat blunt, but I argue with them against the unfairness of criticising the Bill for not containing the sort of provisions one would look for in a long-term solution.

The right hon. Member for Grimsby (Mr. Crosland) wanted a long-term solution to meet the problem of the cost of land, to deal with land speculation and to meet the problems of those who buy houses on mortgage and the prices of which are excessively high. Indeed, the right hon. Gentleman wanted some long-term solutions to deal with the problem of the cost of houses, new or secondhand. Surely, in a modest, blunt and short-term measure of this kind, one would not expect to find long-term solutions of that nature.

Here one might say that we have improvised. The Bill, by its nature, has had to be put together hastily. It is to deal with the most pressing, desperate problem, admitted by all parties, by every party in the House, to be a serious problem facing our economy and people. To that extent I should have thought that some of the criticisms we have heard today have been inappropriate for a Bill of this nature.

I agree with my hon. Friend the Member for Cities of London and Westminster (Mr. Tugendhat) and others of my hon. Friends that we want a long-term solution to deal with some of the worst facets of the speculation in land, and we need to study and find a remedy for some of the worst facets of the higher-priced properties which are rented in London and other cities of particular stress.

Mr. Arthur Blenkinsop (South Shields)

I assume that when the hon. Gentleman refers to his rejection of long-term solutions as being inappropriate to the Bill, he is very much in favour of immediate emergency action for these areas?

Mr. Gower

I shall deal with that point now. It would be unwise to try to achieve a short-term, hasty solution to deal, for instance, with the cost of land. That matter requires a permanent solution, one which is carefully phrased and will effect a remedy. When in office, the Labour Party produced the Land Commission and all the associated legislation. But I do not think that the Labour Party would go so far as to claim that that was a complete answer. Despite all the careful thought that went into it, it showed itself to be singularly ineffective in dealing with some of the worst aspects of the need for providing an adequate supply of land for new housing.

6.0 p.m.

The right hon. Member for Grimsby suggested that we should take steps to prevent any increase in mortgage rates. I think this would have a disastrous effect. It could result in a famine in available finance for house purchase. Under the Labour Government it meant that we had a long term when it was extremely difficult for young couples to obtain mortgages. I am not suggesting that the present situation is ideal. It is not. At any rate, we want money to be made available through the media of the building societies, the local authorities and any other agencies which provide finance for house purchase.

The rise in house costs is a far more sophisticated problem than has been suggested in most speeches. It is not merely due to one or other reason which has been suggested. It is a combination of many circumstances, not least the recognition in the last year or two that there is no better investment than to purchase the home in which one lives. This has occurred to many people, and more are coming forward eagerly to buy their own homes in all parts of the country.

[Mr. E. L. MALLALIEU in the Chair]

Mr. Rowlands

Does the hon. Gentleman accept that that is why the price of houses in his constituency has risen from £11,750 to £24,750 in less than a year?

Mr. Gower

There are all kinds of houses at different prices in my constituency. I do not deny that, as in other parts of the country, people have suffered from the general price increase, but more houses are being occupied by young people in my constituency today than before. I hope that effective steps will be taken to curtail further increases beyond the means of those who wish to purchase houses.

If all the blame were to be apportioned to the cost of land it would not be the fact, as it is, that second-hand houses are commanding just as great an increase in price as new houses. I know of many cases in my area of new houses being sold by builders to people who have gone in and almost immediately sold them at a large profit. That indicates that builders are not selling houses at excessive prices.

Mr. Arthur Lewis

This is Tory practice. For years the Tories have claimed "Let us have a free-for-all; let us grab as much as we can." This is Tory philosophy.

Mr. Gower

It is certainly better than the philosophy of having nothing for anyone, which was the result of the Labour Government's policy.

I turn now to the serious argument put forward by the hon. Member for Cornwall, North (Mr. Pardoe), who must agree that this is a more difficult problem than he outlined. He suggested that it could be dealt with by one amendment. This is an extremely involved and sophisticated problem.

The hon. Member for Merthyr Tydvil (Mr. Rowlands) spoke in derisive terms about rebates. Some of the rebates will go to meet the increases in rent which have arisen from legislation passed by the Labour Government.

Mr. Rowlands

What percentage?

Mr. Gower

Many are in the private sector. The hon. Gentleman will recall that the increases in rent which have occurred in recent years in the private sector have resulted from the Labour Government's legislation, which was passed without the benefit of rebates. Some of these rebates will go to meet the increases due to that legislation.

Let no one imagine that these rebates are negligible in all cases. The inference has been that they are small fry. My hon. Friend the Member for Kensington, South (Sir B. Rhys Williams), who unfortunately is not now present, told me that in his constituency some rebates will amount to as much as £300, £400 or £500 a year.

Mr. Arthur Lewis

Rents are much higher in inner London.

Mr. Gower

I appreciate that rents are much higher in inner London than elsewhere. Nevertheless, rebates to be paid in some of the inner London boroughs are of that order.

Mr. Loughlin

Do not let us argue about the effect of rent rebates. Will the hon. Gentleman give us the percentage of tenants who will be paying less rent in total in consequence of the Bill, even after they have had all the rebates to which they are entitled?

Mr. Gower

That will depend partly on the take-up. Nobody can forecast the take-up at this stage.

Mr. Julius Silverman (Birmingham, Aston)

Does the hon. Gentleman know the Birmingham figures? Out of 60,000 private tenants in Birmingham, which has already operated a rent allowance scheme, the take-up so far is about 450.

Mr. Gower

I am assured that in most cases it will be vastly greater, be- cause the national scheme has received infinitely more publicity and has been advertised in greater detail throughout the country.

I turn now to what was said by the hon. Member for Gloucestershire, West (Mr. Loughlin). By definition, those who receive these rebates will broadly be those who have the greatest need.

Mr. Loughlin

They will not.

Mr. Gower

Of course they will. To that extent, it is vital that they should receive them. The people who will suffer from rebates being withheld will be those least equipped to endure without them.

There is a good argument for including rent increases in any measure which is designed to tackle the freezing of inflationary tendencies. My right hon. Friend and his colleagues have reserved the right, which was criticised by the hon. Member for Cornwall. North, to bring in orders to deal with some of these problems. I share the hon. Gentleman's distaste for too much delegated legislation. But in such a sophisticated matter with an infinite variety of problems, I believe it is better to have a flexible instrument of this nature than the blunt amendment which the hon. Gentleman has tabled. I am not quibbling or quarrelling with his motives. I think his design is correct, but I do not believe that he would effect it properly and fairly merely by such a broad amendment. If my right hon. and learned Friend has the power to deal with detailed problems by an order, I think that is preferable in these circumstances able to make an announcement shortly.

We all distaste the spread and increase of delegated legislation. However, the experience of successive Governments—I do not think that a Liberal Government would escape this problem—is that the complexities of contemporary life have made it essential in many cases for this kind of legislation to be used.

I hope that hon. Gentlemen will not feel that the Bill is wrong because it does not include all the detail they would wish. The Bill will confer the greatest benefit on those whose rights they have pleaded. The slowing down of inflation will be of the maximum benefit to the lowest paid. It will confer greater benefit on the agricultural worker and the distributive worker than upon the highly paid. I hope, therefore, that the Opposition will find it possible at least to support the final implementation of this legislation.

Mr. Hugh Jenkins (Putney)

On a point of order, Mr. Mallalieu. In referring to new Clause 1, the hon. Member for Middlesbrough, West (Mr. Sutcliffe) said that I should no doubt have an opportunity to discuss sub-Amendment (a). May I be allowed a couple of minutes to do so in order to enable the Minister effectively to reply to the debate?

The Second Deputy Chairman

I should like to allow the hon. Member for Putney (Mr. Hugh Jenkins) his two minutes. Unfortunately, however, the Committee is pressed for time and I must allow a certain amount of time for the winding-up speeches.

Mr. Frank Allaun

I am sorry to ditch my hon. Friend the Member for Putney (Mr. Hugh Jenkins). However, I have only five minutes, so I hope he will understand my predicament.

Mr. Hugh Jenkins

I will give my hon. Friend my notes.

Mr. Allaun

First, I wish to refer to the absence of the Secretary of State. There may be a serious reason for his absence this afternoon. Otherwise I regard it as inexcusable that he should not be present during a debate of this kind. Possibly the Minister for Housing and Construction will give the Committee an explanation.

Several million families will have to pay further increases in rent next year. Those increases would be justified only if they were necessary to cover the cost of housing after subsidy. However, it is well know that these increases are unnecessary. They are therefore quite different from some other increases which are to be suffered. This measure is entitled the Counter-Inflation (Temporary Provisions) Bill. It is difficult to imagine anything more likely to be inflationary than unnecessary rent increases. Certain other increases can be justified on grounds that they are required in terms of our entry into the European Economic Community. However, even the Minister could not argue that rent increases are unavoidable because of our entry to the EEC.

Yesterday it was said that many of the new rents which have been imposed recently were near the "fair rent" level. With respect, no one can know that. They are to be imposed by rent scrutiny boards, against which there is no appeal, and on criteria which are extremely doubtful. One hon. Gentleman on the Government side referred to our "scare-mongering". My hon. Friends and I believe that that could still come about document, which estimated that rents would be more than doubled by 1976. I believe that that could still come about if we were to allow it.

Rent scrutiny boards, for example, are to take into consideration the investment value of property. Is that to apply in respect of council houses, which may have been built at a cost of £300 but are worth a great deal more today? Taken on that basis, such an increase may possibly be well over 100 per cent.

Many of my hon. Friends have referred to the rebate trick. Many of those involved are old-age pensioners who are not affected one way or the other. Of the remainder, most are likely to receive increases in their net rents rather than reductions.

Why have the Government taken the trouble to include a clause saying that they "may" prevent further rent increases although they do not operate it? They must realise how vulnerable they are in this respect and how hypocritical it is to claim that they are trying to curb prices while proceeding deliberately to impose unnecessary rent increases. Can it be that the Government fear that they will unite the opposition of the unions, the Labour Party, councillors and tenants' associations against further rent increases if they are imposed? Are they preparing for a retreat if the pressure grows sufficiently great? I need not repeat that a big rent increase is a big wage reduction.

Finally, I want to refer to the daddy of all land price increases, and some lovely cases have been quoted. Lord Wimborne is now worth £26 million for 575 acres of his land at Poole. Those acres were worth approximately £200,000 in 1967. Building permission is now to be given and they become worth £45,000 an acre. Lord Wimborne has just sold 7½ acres at that price, so he is now worth £26 million, with further increases taking place as we are talking. Prices are going up every day during the period of the freeze. We maintain that public ownership is the only alternative. The Government ask what they can do to stop these increases. They could drop the Bill. As my hon. Friend the Member for Merthyr Tydvil (Mr. Rowlands) said, the Government could drop the idea of cutting by £200 million a year the subsidies which would have been paid by 1975.

6.15 p.m.

I am not normally bitter but I am deeply angry with the Ministers and civil servants responsible for the Bill. They are inflicting misery on vast numbers of people. The Ministers are sitting comfortably in Whitehall while the councillors are having vented on them the anger of thousands of tenants for rent increases which the councils strongly object to having to impose. The Ministers escape all that anger. It makes me bitter.

I believe that the Government will never be forgiven for the increases and for the Bill. I believe that they can be forced to abandon the serious increases which will face us in the coming years.

Mr. Freeson

We are discussing the Counter-Inflation (Temporary Provisions) Bill. Whatever may be argued on either side of the Committee and in the country about the capacity of this or any other Government to control inflationary processes in the housing and land markets, it is clear that as a result of the Housing Finance Act we shall see next year a 14 per cent. increase in council rents after rebates. Next year, under the Housing Finance Act, 1972, the standard unrebated rents that will emerge—which is the appropriate level to look at when discussing inflation—will bear an increase of 24 per cent.

The Government could take action. They could accept our amendments. They could take action even without the Bill. Section 105 of the Housing Finance Act gives the Minister power virtually to suspend the operation of the Act, or any part of it, to any group of property. We have been told that in practice the temporary first stage of the Government's freeze policy may extend until next April and not just for the 90 days talked about so far. That is on the record. If that be the case, is it the Government's intention to suspend the 50p increase on council house rents which will fall due in many local authority areas as a result of the 1972 Act? Will the Government give a specific undertaking, as we are talking about a freeze, that they will apply that freeze and suspend that 50p a week increase on council house rents next April?

Further, will the Government use their powers under Section 105 of the Housing Finance Act, 1972, to suspend the 50p increase per week which will operate in respect of many other council properties in October, 1973? These two steps will be the only way open to the Government to apply the freeze in such a way as to avoid the 14 per cent. increase in council house rents, net of rebates, which we can expect under present Government policy.

Mr. Hugh Jenkins

I do not know what my hon. Friend's experience is in his constituency, but in my constituency many rebated rents, with the new rent and the new rebate, are being increased by as much as £2 a week. I can give examples of cases which I have quoted to the Minister. He has confirmed that an increase of £1.63 for an old-age pensioner is approved by the Government. That is what we are being asked to accept.

Mr. Freeson

I have not had personal experience of that kind of case in my area, and I hope my hon. Friend will receive a suitable reply from the Minister.

We must accept by implication that nothing can be done under the freeze to handle the problem of furnished properties and their rents or to deal with unregulated rents. I do not mean the class of property to which the hon. Member for the Cities of London and Westminster (Mr. Tugendhat) referred, namely, properties at present outside the scope of regulation under the Rent Act, 1968. I refer to the majority of properties which have not been referred to rent officers, but the rents of which have been increasing. It is the bulk of the private sector and no method has been proposed in the Bill to handle it. What does the Minister intend to do about service charges and the rents of properties with rateable value above £400?

I turn now to prices of houses and of land. In the run-up to the Bill and since its publication we were told that land and housing could not be dealt with under the terms of the freeze or by any other regulatory means. This is a key factor in the situation, as my right hon. Friend the Member for Grimsby (Mr. Crosland) pointed out. There has been a 50 per cent. increase in land prices for development in the past 12 months. There have been lower increases in labour charges—7 to 10 per cent.—and there have been lower increases in the price of building material also within the 10 per cent. level. The big increase has been in the purchase price of land. We also know there has been a rise of over 30 per cent. in house prices in the past 12 months, a rate which is continuing unchecked in the current year.

This is the sphere, apart from the question of rent control, of which the Government have decided to wash their hands completely. They say they cannot—I say they will not—do anything to check the situation. I put it to the Government that this problem could be tackled. There is no question that if speculation—a prime factor in inflation—were dealt with, there would be a major assault on the psychology as well as the actuality of inflation. Apart from anything else, something like one-quarter to one-third of wages and salaries go as mortgage repayments as well as in rents.

The rate of increase in this element of the cost of living is far higher than the rate of increase in food prices. By far the biggest rate of increase in the cost of living index is in the subject we are discussing this afternoon. It has a major effect on the activities of local authorities in urban renewals, slum clearance, new buildings and so on, as well as in related matters such as the provision of public services, which I shall not pursue in any detail tonight. It is having a major impact on the quality of life, and the future quality of life, in the major cities.

The Government should take steps to tackle this problem in terms of the economics of the present situation. It would be possible, by accepting the Amendment, for a ceiling to be imposed on all land and property sold for urban development and redevelopment. It also would be possible for a similar ceiling to be imposed on the price of houses and flats sold after modernisation and conversion with the aid of improvement grants. This is a matter of great importance in inner London. There are procedures whereby this could be done. They have been put to the Government and have been rejected. I ask the Minister to look up the correspondence and papers which lie in the Department and to have another look at this matter rather than to say that nothing be done.

These are the reasons why we have tabled these amendments. It is a matter of political decision in the first instance, and that decision could be taken today if the Government accepted the amendments. We could establish a practical and reasonable control over the prices of land for development and redevelopment and on the prices of key properties in the market.

One final point I should like to make brings me back to the problem of council housing. I am not going in detail into the question of the sale of council houses. Other hon. Members have raised valid points on this subject. It is nonsense to reduce the quantity of rented property by Government policy at the same time as every major city is crying out for an increase in the number of rented properties. However, there is more to this than the problem of preventing a further cutback in the rented sector. If the Government would reverse their policy on the provision of council housing and the proportion of council housing for rent and on rents and return to the principle of rents related to the cost of providing housing, instead of the market profit rents which they have pursued under the 1972 Act, this would have a major impact on inflation.

The kind of rent policies which were pursued in the past by most local authorities, policies which have now been rejected by the Government's 1972 Act, were disinflationary; they held costs down. I shall not pursue the matter in detail owning to lack of time. The Minister knows the exchanges that took place during Committee proceedings on the Housing Finance Act, 1972. He also knows that figures were quoted which have not been confounded by any statistics produced by the Department showing that the kind of rent increases visualised in that Act are not necessary in terms even of meeting the costs of providing the houses. It would be possible to half further increases under that Act in this Bill, if amended, without adding unduly—if at all—to the total cost of providing and maintaining the houses.

6.30 p.m.

If time permitted I would elaborate on these matters. The Minister knows that they have been argued in great detail. I will end with one last plea which is directly related to inflation. The present Minister and his predecessor have said time and again that there is no restriction on council-house building. Hon. Members on this side of the Committee have said that it is not good enough to stand at the Dispatch Box, or anywhere else, and say that action needs to be taken to step up building. An enlargement in the council house building programme and a return to reasonable cost rents would have a marked impact on inflation. We have dropped from 414,000 houses completed in 1968 to about 350,000 in the current year and, despite what is going on in the private sector, the prospect is that number will fall even further. The only way in which there can be a major change is by means of a massive increase in council house building. That would have a marked impact on the inflationary situation, especially if it provided for a return to sensible rent policies such as we have been advocating.

Mr. Channon

We have had a very long debate on a series of very important topics. May I first thank the right hon. Member for Grimsby (Mr. Crosland) for his kind references to me. I am pleased to be back in this sphere again, and it seemed to me that there were some familiar faces and some familiar points made during the debate. I shall seek to deal with with as many remarks as I can, and if I do not deal with them all it will be due to lack of time.

If I cannot deal with all the matters raised by the hon. Member for Hackney, Central (Mr. Clinton Davis)—and those which are raised by the Law Society are particularly important—I shall write to him fully and make sure that the Law Society has a full answer. They are technical and important points on which there should be no lack of understanding by those who advise.

This debate has fallen into three parts. The amendment of the hon. Member for Cornwall, North (Mr. Pardoe) dealt generally with the rent issue, as did many of the speeches. Some more technical matters were raised by my hon. Friend the Member for Cities of London and Westminster (Mr. Tugendhat) and others, which I will deal with later. There was also the general question of house and land prices, which was dealt with by the right hon. Gentleman and others, and there was my hon. Friend's interesting point about council houses.

I noted the Amendment tabled by the hon. Member for Putney (Mr. Hugh Jenkins), even though he did not have an opportunity to speak to it, which would forbid the sale of council houses at all. That is an interesting topic and one on which I know his views and I think he knows mine. Perhaps we can deal with that subject on another occasion.

Finally, the debate dealt with the other important issue of local authority rents and in particular whether the Bill, when it becomes an Act, should be retrospectively validated for the purpose of catching the local authority October rent increases.

I must make one general point before I dealt with rents in the private sector. We are dealing in the Bill with a 90-day freeze or standstill for the purpose of attacking inflation; this is a crucial objective but a limited one.

Many of the suggestions made this afternoon would require major housing legislation regardless of their merits, and some have merits but others do not. Do hon. Members expect me, within nine days of taking office, to counter inflation by introducing proposals for a massive Housing Bill? Having endured most, but not all, of one massive Housing Bill, I had hoped to be allowed a week or two before starting the next!

I am aware of the crucial problems in the private sector, such as security, levels of rent, furnished tenancies and so on, but it is essential while considering this 90-day Bill that nothing is done to hurt the long-term future of tenants and their houses. To put matters into perspective, we are concerned with between 2½ million and 3 million private tenancies. It is primarily for that sector that my right hon. and learned Friend proposes to introduce in due course and as appropriate orders to prevent increases of rent for the duration of the standstill.

By far the greater proportion of rents in the private sector are already frozen under one or other of the various provisions of the Rent Acts. Of the 2½ million to 3 million tenancies there are approximately 1.1 million controlled tenancies. Previous legislation provided two routes for the conversion of these controlled tenancies into regulated tenancies. The Government believe in the fair rent system principle, a belief shared by the Opposition since it was introduced in their Bill.

In terms of numbers, the most important are those dealt with in Part IV of the Housing Finance Act which provides for general decontrol in a number of bands related to rateable values beginning January, 1973, and ending July, 1975. Under these provisions about 1 million controlled tenancies would in due course be converted, entitling landlords over a period of two years to seek a fair rent. The Government propose, for the duration of the standstill, to hold back the first phase of decontrol which might have affected about 150,000 tenancies. In effect, over 1 million controlled tenancy rents will remain frozen during the standstill period, as they have been since 1957. Rents for these properties are on average less than £1 a week, often for substantial accommodation.

Hon. Members will have among their constituents landlords of these properties who often are among the poorer members of our society, such as retirement pensioners, who find it difficult to keep their property in decent repair. Hon. Members will be aware of the hardship which that has caused in the past for both the landlord and tenant. However, in the context of the standstill the Government believe the decision to be the right one.

Apart from the 1.1 million controlled tenancies there are 1.2 million regulated tenancies. Under the Rent Acts a landlord could not increase the rent for such dwellings above the level of the rent in the existing contract or agreement. But the landlord can, if he wishes, go to the rent officer and ask for a fair rent to be registered. If a rent officer registers a fair rent higher than the existing rent the landlord may increase the rent up to the fair rent level. Registrations of fair rents are running at about 6,000 to 7,000 a month. But the landlord can charge the higher rent only when he has issued his tenant with a notice of increase. In the normal way there will be very few rents—perhaps 20,000—for which there will be an increase over a 90-day period.

The Government propose that for the 90 days standstill they should provide that, where a fair rent is registered during that period, the landlord will not be able to charge any resulting increase in the rent until the end of the period. Under Clause 2 (4) very substantial powers have been given to my right hon. and learned Friend, and therefore none of the amendments to enlarge those powers is necessary. For most private sector rents, no further standstill provisions are required. But there are many complex statutory provisions to which rents are subject.

I confirm that both points mentioned by my hon. Friend the Member for Cities of London and Westminster and other hon. Members, and indeed by the hon. Member for Glasgow, Craigton (Mr. Millan) are covered. It is our intention to apply the 90-day standstill not only to controlled and regulated tenancies, except under the phasing provisions, but to the tenancies of unfurnished accommodation of the kind with which they are concerned.

Mr. Freeson

I am still not clear about the position of that vast bulk of rents which can be referred to rent officers but which are not so referred, as the Minister knows. What will be the position there when rents are fixed freely because they are not referred to rent officers by landlords?

Mr. Channon

The position is that in those circumstances a regulated rent can be increased only through the rent officer, and they are otherwise frozen at 1965 levels. If I have misunderstood the hon. Member's point I will write to him about it. That is what I understand the position to be and I have explained what will happen if people go to rent officers at present.

There is a limited class of exceptions. They are the phasing exceptions, the 12½ per cent. exceptions—hon. Members will know the "shorthand"—those who had their property improved. Such an increase in rent reflects, not only a fall in the value of the landlord's rental income or any general movement in prices but an increase in the quality of accommodation being rented. If hon. Members would like to table detailed Questions I will give them full answers, or the opportunity will arise when the order is made by my right hon. and learned Friend.

Mr. John Horam (Gateshead, West)

Is it correct that improved property is not frozen?

Mr. Channon

Where a landlord of a controlled or regulated tenancy improves his property, he is entitled under the provisions of the Rent Act, 1968, to increase the rent on a yearly basis by 12½ per cent. of his net outlay. That is not frozen during the standstill period. There are other complications, and I will seek an opportunity of setting this out fully for the benefit of the Committee.

The Government propose to apply the standstill to increases in the rents of housing association tenants, and I will give details of the methods at the appropriate time.

All service charges for rented accommodation are subject to the standstill. Where the service charge is an integral part of a fair rent it is caught by the standstill on rent increases following the registration of a fair rent. Other service charges come within the scope of Clause 2(5) and my right hon. and learned Friend will not hesitate to make an order under this provision should he have any evidence that the standstill has been breached as regards service charges for rented dwellings.

I do not believe that an extension of the Bill to cover the increase of land and house prices would be of benefit to house purchasers. As one of my hon. Friends pointed out, plots of land and houses are not standardised and easily priced articles like pairs of stocks. They are infinitely various. They cannot be priced on any standard basis with any hope of fairness. They can only be priced individually with reference to a highly sensitive relationship between supply and demand and the particular circumstances.

6.45 p.m.

As my hon. Friend the Member for Barry (Mr. Gower) pointed out, there is the further difficulty that for many plots of land and many houses there will be no obvious price, especially where the last sale took place a long time ago. Problems of this nature would affect particularly second-hand houses, which give rise to most sales. One would have to fixed the theoretical level of market value for every land or house transaction caught by the control.

The Committee must accept that this is wholly impracticable. The number of transactions is enormous. In 1971 there were upwards of three-quarters of a million sales of existing dwellings in owner-occupation. Is it really suggested that there should be a statutory control in this field? What would be the effect? The supply of land would dry up and so would the number of houses offered for sale. Surely the owners of actual or potential building land would hang on until the end of the restriction period before selling. This would have no immediate effect on the production of new houses, but a drop in the number of building sites offered for sale would surely undo much that all of us wish to see—the encouragement of the release of more housing land. I believe it would result in the completion of fewer new houses in a couple of years' time when the sites in question would normally be built upon.

More important still, a similar situation would arise in the housing market. House sales are often made up of chains of transactions between buyers and sellers of existing and new houses and the first-time purchaser is often the last link in that chain. There are many existing owner-occupiers who would like to sell but who do not have to sell immediately. They, too, would defer selling until the end of the restriction period. There would be far fewer houses offered for sale. Who would suffer most? Surely in a situation of that kind it is those who are most exposed who would suffer most, and probably they would be first-time purchasers looking for homes. No one in this Committee would wish to be responsible for creating such a situation.

The control of house prices would also penalise those who have to move immediately as against those who have some choice in the timing of their moves. That would be very unfair. An interesting suggestion has been made, which I shall consider, but every previous Administration has taken the same view. I have a sheaf of quotations. My predecessor was particularly fond of quoting Mr. Aneurin Bevan and, were I to follow his example, I could make a quotation from Mr. Aneurin Bevan also this evening.

More pertinent to the Committee, the right hon. Member for Coventry, East (Mr. Crossman), when he was Minister of Housing, took precisely the same view. I am sorry that the right hon. Member for Grimsby feels that that is not a particularly valuable point to make, but it is one I think I am entitled to make and the House must take it for what it is worth.

I must take up the right hon. Member for Grimsby on one point he raised when he refused to give way to my hon. Friend the Chief Secretary about the taxation of speculative profits in land. The right hon. Gentleman was asked to define such speculative profits and he instanced the case of a man buying land as a speculation and selling it at a huge profit. Such a man, he said, ought to pay more than the 30 per cent. capital gains tax and it was at that point, perhaps wisely, that the right hon. Member refused to give way again.

The truth is that such a man, so far from paying only 30 per cent. capital gains tax, pays full income tax and surtax on such a gain. Profits from speculative transactions of that sort are treated as income within the Income Tax Acts and are fully taxed as such—not just capital gains tax, but full income and surtax. If it is a company which speculates, the profit is subject to corporation tax and, when distributed, to personal tax as well. The owner of a one-man property-speculating company will not escape by selling his shares, because he will be caught for full income tax and surtax on his profits. Nor will he escape by setting up trusts or settlements or by indulging in other avoidance devices. Legislation passed by the last Government, and supported by this side of the Committee, catches such transactions and the right hon. Gentleman is being disingenuous to suggest imposing a special rate of capital gains tax. I have the full authority of my hon. Friend the Chief Secretary for making this statement. This is the taxation position in respect of the fruits of property speculation of the kind referred to by the right hon. Gentleman.

Mr. Freeson

On paper.

Mr. Channon

Not only on paper, but in fact.

I now turn to the questions raised by Opposition Members about the Housing Finance Act. However, in order not to create ill will on my first day in addressing the Committee, I should like first to offer the hon. Member for Salford, East (Mr. Frank Allaun) an apology for not giving him a fuller answer to his question yesterday. I shall try to do so in future, and I have taken note of his Early Day Motion.

The right hon. Member for Grimsby did not disguise that the amendment is an attack on the increases in council rents required by the Housing Finance Act. As he will know, the date of 1st October had no significance with regard to rents in the private sector, but according to the terms of the Act those authorities which did not make an increase in April were required to do so in October unless—as was the case with a few authorities—special arrangements had been made between the two dates.

It is interesting that the right hon. Gentleman should have reverted to 1st October in respect of council rents but not in relation to other factors—for example, wages and salaries. Common sense demands that a standstill, if applied, must apply in every case from a common date. Any other arrangement would surely be wholly indefensible. [HON. MEMBERS: "No."] It would be unfair in all respects. For example, it would be unfair to those tenants whose rents were increased in April if tenants of authorities which had imposed increases in October had that increase rescinded.

I should add that during the 1968 freeze the Opposition did not go so far as to prevent increases in the rents of council dwellings. On the contrary, they were quite prepared to permit local authorities to increase their rents by an average of 37½p. Therefore, it is wholly inconsistent and hypocritical that they should be pressing us now to impose a complete freeze—

Mr. Frank Allaun rose—

Mr. Channon

I cannot give way: I have only three minutes. It is hypocritical that they should be asking for a complete freeze to be achieved by a piece of retrospection uniquely aimed at council rents. It is time that the Committee took account of the actual effects of the Housing Finance Act rather than that we should rely on imaginary fears. From what has been said by Opposition Members, one might have had the impression that every council tenant as from October had been required to pay a rent increase of £1. In fact, about half the number of council tenants suffered no increase of rents in October, while only one tenant in five has had to pay an increase of as much as £1. Therefore, a large proportion of tenants paid no increase in October while a great many paid increases of less than £1 at that date. A very large number of all those tenants have received rebates.

Opposition Members who make such a fuss about the Housing Finance Act tend conveniently to forget the national system of rent rebates which the Act introduces—[Interruption.] I notice that they try to decry it, but they do not seek to freeze that part of the Act. For the first time, any council tenant who has difficulty in affording his rent can apply for a rebate. There are many people who are now paying out of their own pocket less rent than they have hitherto paid. Many others are paying only a fraction of the nominal increase in their rent. For example, the rebate scheme which the Greater London Council used to operate was generally considered to have been a very good scheme. However, the GLC under our scheme expects to be paying rebates to 9,000 more tenants than previously.

The Labour Party is not interested in the real situation or the Housing Finance Act. It is interested only in building up its hysterical and misguided campaign to try to mislead council tenants—a campaign which, as is becoming increasingly clear, has wholly backfired as people begin to realise the truth about the Act. Every tenant in unfurnished housing accommodation will in future be part of the national rent rebate and allowance scheme. The same will apply from April in respect of furnished tenants. All rents will be fixed on the same equitable basis, and there will be rebates and allowances for those unable to afford them. Help

and subsidies are devoted to those in need. Surely any fair-minded person would accept that those aims are extremely desirable. The Government will not be diverted from this course. We believe it is in the best interests of housing and of all who are involved in this sector.

I ask the Committee to reject all the Opposition amendments, because I genuinely believe that in the interests of tenants, local authority or private, and of prospective owner-occupiers it would be wholly disastrous to adopt the course suggested. I ask my hon. Friends to support me in the Division Lobby.

Mr. Pardoe

The Minister must be congratulated on at least having attracted into the Chamber the Secretary of State and on having made the benches behind him more densely populated than they have been throughout the afternoon. His reply on rents was totally inadequate. It reminds me of the music-hall comedian who, having deducted Saturdays and Sundays, nights and holidays, said, "We work only 18 days." By the time the Minister had finished talking about rents, there appeared to be about only two and a half tenants who would have their rents raised in the 90 days.

The answer on land prices was the same as that which we have always had: "It is very sad. We are terribly sorry, land prices are going up and up and up, but what we can we do?" We have "What can we do?—Channon" instead of "What can we do?—Walker". At the beginning of the debate I posed the vital question: does the Bill freeze rents or does it not? We have had the answer in the Minister's reply. It does not. Therefore, I have no intention of seeking leave to withdraw our Amendment.

Question put, That the Amendment be made:—

The Committee divided: Ayes 274, Noes 293.

Division No. 12.]	AYES	[6.58 p.m.
Abse, Leo	Barnes, Michael	Bishop, E. S.
Allaun, Frank (Salford, E.)	Barnett, Guy (Greenwich)	Blenkinsop, Arthur
Allen, Scholefield	Barnett, Joel (Heywood and Royton)	Boardman, H. (Leigh)
Archer, Peter (Rowley Regis)	Baxter, William	Booth, Albert
Ashley, Jack	Beaney, Alan	Bottomley, Rt. Hn. Arthur
Ashton, Joe	Benn, Rt. Hn. Anthony Wedgwood	Boyden, James (Bishop Auckland)
Atkinson, Norman	Bennett, James (Glasgow, Bridgeton)	Bradley, Tom
Bagier, Gordon A. T.	Bidwell, Sydney	Brown, Robert C. (Nc'tle-u-Tyne,W.)
Brown, Hugh D. (G'gow, Provan)	Hilton, W. S.	Owen, Dr. David (Plymouth, Sutton)
Brown, Ronald(Shoreditch & F'bury)	Horam, John	Padley, Walter
Buchan, Norman	Houghton, Rt. Hn. Douglas	Paget, R. T.
Buchanan, Richard (G'gow, Sp'burn)	Huckfield, Leslie	Palmer, Arthur
Butler, Mrs. Joyce (Wood Green)	Hughes, Rt. Hn. Cledwyn (Anglesey)	Pannell, Rt. Hn. Charles
Callaghan, Rt. Hn. James	Hughes, Mark (Durham)	Parker, John (Dagenham)
Campbell, I. (Dunbartonshire, W.)	Hughes, Robert (Aberdeen, N.)	Parry, Robert (Liverpool, Exchange)
Cant, R. B.	Hughes, Roy (Newport)	Peart, Rt. Hn. Fred
Carmichael, Neil	Hunter, Adam	Pendry, Tom
Carter, Ray (Birmingh'm, Northfield	Irvine, Rt. Hn. Sir Arthur (Edge Hill)	Perry, Ernest G.
Carter-Jones, Lewis (Eccles)	Janner, Greville	Prentice, Rt. Hn. Reg
Castle, Rt. Hn. Barbara	Jay, Rt. Hn. Douglas	Prescott, John
Clark, David (Colne Valley)	Jenkins, Hugh (Putney)	Price, J. T. (Westhoughton)
Cocks, Michael (Bristol, S.)	Jenkins, Rt. Hn. Roy (Stechford)	Price, William (Rugby)
Cohen, Stanley	John, Brynmor	Probert, Arthur
Coleman, Donald	Johnson, Carol (Lewisham, S.)	Reed, D. (Sedgefield)
Concannon, J. D.	Johnson, James (K'ston-on-Hull, W.)	Rees, Merlyn (Leeds, S.)
Conlan, Bernard	Johnson, Walter (Derby, S.)	Rhodes, Geoffrey
Corbet, Mrs. Freda	Johnston, Russell (Inverness)	Richard, Ivor
Cox, Thomas (Wandsworth, C.)	Jones, Barry (Flint, E.)	Roberts, Albert (Normanton)
Cronin, John	Jones, Dan (Burnley)	Roberts, Rt. Hn. Goronwy(Caernarvon)
Crosland, Rt. Hn. Anthony	Jones, Rt.Hn.Sir Elwyn(W.Ham,S.)	Robertson, John (Paisley)
Crossman, Rt. Hn. Richard	Jones, Gwynoro (Carmarthen)	Roderick, Caerwyn E.(Brc'n&R'dnor)
Cunningham, G. (Islington, S.W.)	Kaufman, Gerald	Rodgers, William (Stockton-on-Tees)
Cunningham, Dr. J. A. (Whitehaven)	Kelley, Richard	Roper, John
Dalyell, Tam	Kerr, Russell	Rose, Paul B.
Darling, Rt. Hn. George	Kinnock, Neil	Ross, Rt. Hn. William (Kilmarnock)
Davidson, Arthur	Lambie, David	Rowlands, Ted
Davies, Denzil (Llanelly)	Lambourn, Harry	Sandelson, Neville
Davies, G. Elfed (Rhondda, E.)	Lamond, James	Sheldon, Robert (Ashton-under-Lyne)
Davies, Ifor (Gower)	Latham, Arthur	Shore, Rt. Hn. Peter (Stepney)
Davis, Clinton (Hackney, C.)	Lawson, George	Short, Rt.Hn.Edward (N'c'tle-u-Tyne)
Davis, Terry (Bromsgrove)	Leadbitter, Ted	Short, Mrs. Renée (W'hampton,N.E.)
Deakins, Eric	Lee, Rt. Hn. Frederick	Silkin, Rt. Hn. John (Deptford)
de Freitas, Rt. Hn. Sir Geoffrey	Leonard, Dick	Silkin, Hn. S. C. (Dulwich)
Delargy, Hugh	Lestor, Miss Joan	Sillars, James
Dell, Rt. Hn. Edmund	Lewis, Arthur (W. Ham, N.)	Silverman, Julius
Dempsey, James	Lewis, Ron (Carlisle)	Skinner, Dennis
Doig, Peter	Lipton, Marcus	Small, William
Dormand, J. D.	Lomas, Kenneth	Smith, Cyril (Rochdale)
Douglas, Dick (Stirlingshire, E.)	Loughlin, Charles	Smith, John (Lanarkshire, N.)
Douglas-Mann Bruce	Lyon, Alexander W. (York)	Spearing, Nigel
Duffy, A. E. P.	Lyons, Edward (Bradford, E.)	Spriggs, Leslie
Dunn, James A.	Mabon, Dr. J. Dickson	Stallard, A. W.
Dunnett, Jack	McBride, Neil	Stewart, Donald (Western Isles)
Eadie, Alex	McCartney, Hugh	Stewart, Rt. Hn. Michael (Fulham)
Edelman, Maurice	McElhone, Frank	Stoddart, David (swindon)
Edwards, Robert (Bilston)	McGuire, Michael	Stonehouse, Rt. Hn. John
Edwards, William (Merioneth)	Mackenzie, Gregor	Strang, Gavin
English, Michael	Mackie, John	Strauss, Rt. Hn. G. R.
Evans, Fred	Mackintosh, John P.	Summerskill, Hn. Dr. Shirley
Ewing, Harry	Maclennan, Robert	Swain, Thomas
Faulds, Andrew	McMillan, Tom (Glasgow, C.)	Thomas, Rt. Hn. George (Cardiff, W.)
Fernyhough, Rt. Hn. E.	McNamara, J. Kevin	Thomas, Jeffrey (Abertillery)
Fisher, Mrs.Doris(B'ham,Ladywood)	Mahon, Simon (Bootle)	Thomson, Rt. Hn. G. (Dundee, E.)
Fletcher, Raymond (Ilkeston)	Mallalieu, J. P. W. (Huddersfield, E.)	Thorpe, Rt. Hn. Jeremy
Fletcher, Ted (Darlington)	Marks, Kenneth	Tinn, James
Foley, Maurice	Marquand, David	Tomney, Frank
Foot, Michael	Marsden, F.	Torney, Tom
Ford, Ben	Marshall, Dr. Edmund	Tuck, Raphael
Forrester, John	Mason, Rt. Hn. Roy	Urwin, T. W.
Fraser, John (Norwood)	Mayhew, Christopher	Varley, Eric G.
Freeson, Reginald	Meacher, Michael	Wainwright, Edwin
Galpern, Sir Myer	Mellish, Rt. Hn. Robet	Walden, Brian (B'm'ham, All Saints)
Garrett, W. E.	Mendelson, John	Walker, Harold (Doncaster)
Gilbert, Dr. John	Mikardo, Ian	Watkins, David
Ginsburg, David (Dewsbury)	Millan, Bruce	Weitzman, David
Golding, John	Miller, Dr. M. S.	Wellbeloved, James
Gourlay, Harry	Milne, Edward	Wells, William (Walsall, N.)
Grant, George (Morpeth)	Mitchell, R. C. (S'hampton, Itchen)	White, James (Glasgow, Pollok)
Grant, John D. (Islington, E.)	Molloy, William	Whitehead, Phillip
Griffiths, Eddie (Brightside)	Morgan, Elystan (Cardiganshire)	Whitlock, William
Griffiths, Will (Exchange)	Morris, Alfred (Wythenshawe)	Willey, Rt. Hn. Frederick
Grimond, Rt. Hn. J.	Morris, Charles R. (Openshaw)	Williams, Alan (Swansea, W.)
Hamilton, James (Bothwell)	Moyle, Roland	Williams, Mrs. Shirley (Hitchin)
Hamilton, William (Fife, W.)	Mulley, Rt. Hn. Frederick	Williams, W. T. (Warrington)
Hamling, William	Murray, Ronald King	Wilson, Alexander (Hamilton)
Hannan, William (G'gow, Maryhill)	Oakes, Gordon	Wilson, Rt. Hn. Harold (Huyton)
Hardy, Peter	Ogden, Eric	Wilson, William (Coventry, S.)
Harper, Joseph	O'Halloran, Michael	Woof, Robert
Harrison, Walter (Wakefield)	O'Malley, Brian
Hart, Rt. Hn. Judith	Oram, Bert	TELLERS FOR THE AYES:
Hattersley, Roy	Orbach, Maurice	Mr. David Steel and
Healey, Rt. Hn. Denis	Orme, Stanley	Mr. John Pardoe
Heffer, Eric S.	Oswald, Thomas

NOES
Adley, Robert	Fookes, Miss Janet	McCrindle, R. A.
Alison, Michael (Barkston Ash)	Fortescue, Tim	McLaren, Martin
Allason, James (Hemel Hempstead)	Foster, Sir John	Maclean, Sir Fitzroy
Amery, Rt. Kn. Julian	Fowler, Norman	McMaster, Stanley
Archer, Jeffrey (Louth)	Fry, Peter	Macmillan, Rt.Hn.Maurice(Farnham)
Astor, John	Galbraith, Hn. T. G. D.	McNair-Wilson, Michael
Atkins, Humphrey	Gardner, Edward	McNair-Wilson, Patrick (New Forest)
Awdry, Daniel	Gibson-Watt, David	Maddan, Martin
Baker, Kenneth (St. Marylebone)	Gilmour, Ian (Norfolk, C.)	Madel, David
Baker, W. H. K. (Banff)	Gilmour, Sir John (Fife, E.)	Marten, Neil
Balniel, Rt. Hn. Lord	Glyn, Dr. Alan	Mather, Carol
Barber, Rt. Hn. Anthony	Godber, Rt. Hn. J. B.	Maude, Angus
Batsford, Brian	Goodhart, Philip	Maudling, Rt. Hn. Reginald
Beamish, Col. Sir Tufton	Gorst, John	Mawby, Ray
Bennett, Sir Frederic (Torquay)	Gower, Raymond	Maxwell-Hyslop, R. J.
Benyon, W.	Grant, Anthony (Harrow, C.)	Meyer, Sir Anthony
Biffen, John	Gray, Hamish	Mills, Stratton (Belfast, N.)
Biggs-Davison. John	Green, Alan	Mitchell, Lt.-Col.C.(Aberdeenshire, W.)
Blaker, Peter	Grieve, Percy	Mitchell, David (Basingstoke)
Boardman, Tom (Leicester, S.W.)	Griffiths, Eldon (Bury St. Edmunds)	Moate, Roger
Body, Richard	Grylls, Michael	Molyneaux, James
Boscawen, Hn. Robert	Gummer, J. Selwyn	Money, Ernie
Bossom, Sir Clive	Gurden, Harold	Monks, Mrs. Connie
Bowden, Andrew	Hall, Miss Joan (Keighley)	Monro, Hector
Braine, Sir Bernard	Hall, John (Wycombe)	Montgomery, Fergus
Bray, Ronald	Hall-Davis, A. G. F.	More, Jasper
Brewis, John	Hamilton, Michael (Salisbury)	Morgan-Giles, Rear-Adm.
Brinton Sir Tatton	Hannam, John (Exeter)	Morrison, Charles
Brocklebank-Fowler, Christopher	Harrison, Brian (Maldon)	Mudd, David
Brown, Sir Edward (Bath)	Harrison, Col. Sir Harwood (Eye)	Murton, Oscar
Bruce-Gardyne, J.	Haselhurst, Alan	Nabarro, Sir Gerald
Bryan, Sir Paul	Hastings, Stephen	Neave, Airey
Buchanan-Smith, Alick(Angus,N&M)	Havers, Sir Michael	Nicholls, Sir Harmar
Buck, Antony	Hawkins, Paul	Noble, Rt. Hn. Michael
Bullus, Sir Eric	Hay, John	Nott, John
Burden, F. A.	Hayhoe, Barney	Onslow, Cranley
Butler Adam (Bosworth)	Heseltine, Michael	Oppenheim, Mrs. Sally
Campbell, Rt.Hn.G.(Moray & Nairn)	Hicks, Robert	Orr, Capt. L. P. S.
Carlisle, Mark	Higgins, Terence L.	Osborn, John
Carr, Rt. Hn. Robert	Hiley, Joseph	Owen, Idris (Stockport, N.)
Cary, Sir Robert	Hill, John E. B. (Norfolk, S.)	Page, Rt. Kn. Graham (Crosby)
Channon, Paul	Hill, James (Southampton, Test)	Page, John (Harrow, W.)
Chapman, Sydney	Holland, Philip	Parkinson, Cecil
Chataway, Rt. Hn. Christopher	Holt, Miss Mary	Peel, John
Chichester-Clark, R.	Hordern, Peter	Percival, Ian
Churchill, W. S.	Hornby, Richard	Pike, Miss Mervyn
Clark, William (Surrey, E.)	Hornsby-Smith, Rt.Hn.Dame Patricia	Pink, R. Bonner
Clarke, Kenneth (Rushcliffe)	Howe, Hn. Sir Geoffrey (Reigate)	Pounder, Rafton
Clegg, Walter	Howell, David (Guildford)	Price, David (Eastleigh)
Cockeram, Eric	Howell. Ralph (Norfolk, N.)	Prior, Rt. Hn. J. M. L.
Cooke, Robert	Hunt, John	Proudfoot, Wilfred
Coombs, Derek	Hutchison, Michael Clark	Fym, Rt. Hn. Francis
Cooper, A. E.	Iremonger, T. L.	Raison, Timothy
Cordle, John	Irvine, Bryant Godman (Rye)	Ramsden, Rt. Hn. James
Corfield, Rt. Hn. Sir Frederick	James, David	Redmond, Robert
Cormack, Patrick	Jenkin, Patrick (Woodford)	Reed, Laurance (Bolton, E.)
Costain, A. P.	Jennings, J. C. (Burton)	Rees, Peter (Dover)
Critchley, Julian	Jessel, Toby	Rees-Davies, W. R.
Crouch, David	Johnson Smith, G. (E. Grinstead)	Renton, Rt. Hn. Sir David
Crowder, F. P.	Jones, Arthur (Northants, S.)	Rhys Williams, Sir Brandon
Dalkeith, Earl of	Jopling, Michael	Ridley, Hn. Nicholas
Davies, Rt. Hn. John (Knutsford)	Joseph, Rt. Hn. Sir Keith	Ridsdale, Julian
d'Avigdor-Goldsmid, Sir Henry	Keberry, Sir Donald	Rippon, Rt. Hn. Geoffrey
d'Avigdor-Goldsmid, Maj.-Gen.Jack	Kellett-Bowman, Mrs. Elaine	Roberts, Michael (Cardiff, N.)
Dean, Paul	Kershaw, Anthony	Roberts, Wyn (Conway)
Deedes, Rt. Hn. W. F.	Kilfedder, James	Rodgers, Sir John (Sevenoaks)
Digby, Simon Wingfield	Kimball. Marcus	Rossi, Hugh (Hornsey)
Dixon, Piers	King, Evelyn (Dorset, S.)	Rost, Peter
Dodds-Parker, Douglas	King, Tom (Bridgwater)	Russell, Sir Ronald
Douglas-Home Rt. Hn. Sir Alec	Kinsey, J. R.	St. John-Stevas, Norman
Drayson, G. B.	Kirk, Peter	Scott, Nicholas
du Cann, Rt. Hn. Edward	Knight, Mrs. Jill
Dykes, Hugh	Knox, David	Scott-Hopkins, James
	Lambton, Lord	Shaw, Michael (Sc'b'gh & Whitby)
Eden, Rt. Hn. Sir John	Lamont. Norman	Shelton, William (Clapham)
Edwards, Nicholas (Pembroke)	Lane, David	Simeons, Charles
Elliott, R. W (N'c'tle-upon-Tyne,N.)	Langford-Holt, Sir John	Sinclair, Sir George
Eyre, Reginald	Le Marchant, Spencer	Skeet, T. H. H.
Farr, John	Lewis, Kenneth (Rutland)	Smith, Dudley (W'wick & L'mington)
Fell, Anthony	Lloyd, Rt.Hn.Geoffrey(Sut'nC'field)	Soref, Harold
Fenner, Mrs. Peggy	Lloyd, Ian (P'tsm'th, Langstone)	Speed, Keith
Fidler, Michael	Loveridge, John	Spence, John
Finsberg, Geoffrey (Hampstead)	Luce, R. N.	Sproat, Iain
Fietcher-Cooke, Charles	MacArthur, Ian	Stainton, Keith

Stanbrook, Ivor	Thomas, Rt. Hn. Peter (Hendon, S.)	White, Roger (Gravesend)
Stewart-Smith, Geoffrey (Belper)	Thompson, Sir Richard (Croydon, S.)	Wiggin, Jerry
Stodart, Anthony (Edinburgh, W.)	Tilney, John	Wilkinson, John
Stoddart-Scott, Col. Sir M.	Trew, Peter	Winterton, Nicholas
Stokes, John	Tugendhat, Christopher	Wolrige-Gordon, Patrick
Stuttaford, Dr. Tom	Turton, Rt. Hn. Sir Robin	Wood, Rt. Hn. Richard
Sutcliffe, John	van Straubenzee, W. R.	Woodhouse, Hn. Christopher
Tapsell, Peter	Vaughan, Dr. Gerard	Woodnutt, Mark
Taylor, Sir Charles (Eastbourne)	Vickers, Dame Joan	Worsley, Marcus
Taylor, Edward M.(G'gow,Cathcart)	Walder, David (Clitheroe)	Wylie, Rt. Hn. N. R.
Taylor, Frank (Moss Side)	Walker-Smith, Rt. Hn. Sir Derek	Younger, Hn. George
Taylor, Robert (Croydon, N.W.)	Wall, Patrick
Tebbit, Norman	Walters, Dennis	TELLERS FOR THE NOES:
Temple, John M.	Warren, Kenneth	Mr. Victor Goodhew and
Thatcher, Rt. Hn. Mrs. Margaret	Weatherill, Bernard	Mr. Marcus Fox
Thomas, John Stradling (Monmouth)	Wells, John (Maidstone)

Question accordingly negatived.

It being after Seven o'clock, The CHAIRMAN proceeded pursuant to Order [14th November] to put forthwith the Questions necessary for the disposal of the Business to be concluded at that hour.

Clause 2 ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.