§ 4.10 p.m.
§ Mr. Ted Rowlands (Merthyr Tydvil)
I wish that we were debating as attractive a subject as the one that we have just been discussing. Unfortunately this is a far less attractive subject, namely the rôle of a housing commissioner with particular reference to Merthyr Tydvil. The Housing Finance Act made provision for the appointment of such commissioners and two have been appointed, 1888 one in the constituency of my hon. Friend the Member for Bedwellty (Mr. Kinnock) and the other in my constituency.
Throughout the debates when the Housing Finance Bill was going through the House I emphasised the autocratic, arbitrary and basically undemocratic nature of the Bill, with its undue interference in local democracy and the usurpation of responsibility for such sensitive issues as rents which were given over to a handful of appointees of the Minister, estate agents, valuers and solicitors who have the final say in fixing the rents of 5 million families in this country and over 250,000 council house families in Wales. These bodies would be unacceptable to any elected representative body.
The story of Merthyr Tydvil puts into sharp relief the essential undemocratic and autocratic nature of the legislation. Merthyr had endeavoured to tell the Minister over and over again that it had introduced a rent scheme of its own in 1968, having first consulted in detail the Welsh Office civil servants and having faced hostile meetings of its own tenants to explain the scheme.
The scheme made annual increases in rent until the so-called standard rent level was reached. Implicit in the whole system—and this agreement was made—was that when the standard rent levels were reached there would be a period of stability and no further increases in rent. That was the agreement made between the borough and its tenants in 1968. That was why the borough council felt that it could not implement a further hefty increase in rents. What the Government were asking of it was that it should break its word and go back on the agreement that it had made with the people whom it represented. I can think of nothing more damaging to local democracy or to the principle of constitutional representation enshrined in local government than that sort of demand upon the elected representatives of Merthyr Tydvil.
We requested that the Minister should meet a delegation to consider the possibility of directing a nil increase. That request was effectively turned down and the Minister consequently appointed a housing commissioner. Since then we have witnessed something close to a comic opera in the way the proceedings have gone. It would be comic if it were not so serious, if it were not for the fact 1889 that what has been involved is a rent increase of over 20 per cent. That is an increase in one of the basic costs in the family budget, the cost of a roof over their heads—and this is during the period of a wage freeze.
The housing commissioner appointed to impose the Government's will upon Merthyr Tydvil consulted local officials and made a submission to the Secretary of State for Wales, requesting that the average increase should be no more than 26p. He stated that there were no comparable private rents to use as a basis or any other way in which he could determine the rents. He said that the experience of the local rent officer was so minimal as to be of little help or guidance. He based his submission on the use of gross values.
It must have come as a terrible shock to the Secretary of State and to the Welsh Office to find that the man whom they appointed—not one whom we had chosen, who could be said to be representative of the council or the tenants—had actually reached a conclusion not far from the one reached by the Merthyr Borough Council, which was that our rents were already high enough. A week or so after the housing commissioner's submission to the Welsh Office and the Secretary of State to the effect that the increase should be no more than 26p, the Secretary of State rejected the advice and recommendation of the man he had appointed. The housing commissioner had recommended no more than 26p; the Secretary of State imposed a 55p increase. What is disgraceful is the manner in which it was done and the basis upon which this whole charade was conducted.
The Secretary of State gave two reasons in his decision letter for rejecting the housing commissioner's submission. First, the method of gross valuation was not applicable because it was slightly out of date, by a year or so, and secondly, perhaps most importantly, as the decision letter says, it could not be used as a basis for determining individual fair rents.
Having received the so-called benefit of that advice, however, the commissioner, people and tenants were not treated to any explanation of how the Secretary of State had arrived at the 55p increase. 1890 If he does nothing else, I hope that the Minister will tell us in some detail how the sum of 55p was decided. The decision letter and directive was a disgrace—a blatant example of government by edict which has become an unfortunate feature of the way in which the Government approach many things.
I wrote to the Secretary of State a month ago asking for the sample of fair rents which he had used and the valuations which he had used to arrive at the 55p increase. I am still waiting for an answer. Rent levels in Merthyr have been arbitrarily raised by an average of 55p without the courtesy of a decent explanation. As the letter said, the rents can be challenged and new valuations can be made, but that does not and should not absolve the Secretary of State from the duty and obligation to explain how he arrived at the 55p increase.
As a result of this arbitrary edict and directive, confusion and muddle have followed. I have great sympathy with the poor beleaguered housing staff who have had the odious job of trying to make sense of the peremptory order from the Welsh Office. Instructed to raise 6,000 rents by 55p, but with no information or advice on the basis of that decision, how was the commissioner to do it? What he has done, in fact, is to use gross values as a basis for distributing the rent increases. That was the reason which the Secretary of State gave as to why he could not accept the original advice of the commissioner. I quote from the letter from the Welsh Office to the commissioner:… gross values cannot be used to determine individual rents.However, probably because he had no other basis, the commissioner has used the basis of gross values.
The people of Merthyr Tydvil are completely baffled. The Welsh Office rejected gross values as a basis; the commissioner used it as a basis. What are we to accept?
The imposition of the increases has created some absurd anomalies. Let me give the example of two houses on the Machlin estate with identical rents ever since they were built and which are identical in size, in character, in the nature of their rooms and in the amount of garden space. The rent of one has been increased by 10p more than the house 1891 next door. I wrote to the commissioner to ask why. His answer was that the house on which the larger increase had been imposed was an end house. I have not found a tenant in Merthyr Tydvil or anywhere else who believes that an end house is an advantage or has amenity value. It has no side entrance. Because of the open plan system on the estate, more people tramp across the front lawn than happens with other houses. Why should tenants in end houses have to pay higher rent increases than people in other houses?
Equally seriously, by applying this method unadulterated and without checking and looking carefully at the individual properties, some tenants who have made improvements of their own have been charged or levied with extra increases, which is contrary to Section 50 of the Housing Finance Act. Tenants' improvements should be disregarded in the calculation of rent increases.
The Minister must answer this fundamental point: what is the basis of the way in which this business has been carried out? Why is the basis of gross valuation not the method which the Welsh Office was willing to accept but was the method which the commissioner used to impose rent increases throughout the borough?
I turn to the point concerning rent rebates. So much has been made of it by the Government that it deserves much closer examination. I suspect that what we shall get in reply is some kind of eulogy about how effective the scheme is—assuming that the Minister of State answers at all. I want answers to my questions and not the ones which he wishes to answer.
In their actions over rent rebates, the housing commissioner and the implementation of the scheme, the Government have assiduously attempted to exaggerate the value of the benefits of the scheme. No one has denied that some people benefit from the scheme, but in Merthyr 2,200 tenants are in receipt of supplementary benefit and will in no way be new beneficiaries under the Housing Finance Act. There have been 351 successful applications for rent rebates and those people are in receipt of £1.37 rebate. If one contrasts that with the scheme in operation before the housing 1892 commissioner came to power, one sees that 256 tenants received a rebate of £1.3.
I do not minimise the importance of the benefit to those in receipt of the new rebate, but let us put it into perspective. When the full rent increases are in operation, with full rebates, the take-up in Merthyr is likely to be between 600 and 800 tenants—these are tenants other than those on supplementary benefit, who have their rent covered by supplementary benefit. Against this supposed benefit, the large majority—over 3,000 hardworking families, who have brought up children often in periods of great strain and financial difficulty—will carry the full brunt of the increases. The overwhelming majority will face an unnecessary and unjustifiable increase.
In addition, as a result of the revaluation of rates, it looks as if a large number of tenants could also face extra rate increases over and above the average. This comes at a time when the Government are pushing through their unfair wages Bill. If the Government want to give proof of their intention to hold down the cost of living, they should announce suspension of rent increases, including those imposed in Merthyr, and withdraw the commissioner. The imposition of the commissioner and the unnecessary increases in rents have done and will do nothing to help solve the serious housing problems facing Merthyr and other local authorities.
We have in Merthyr over 1,000 people on the waiting list, which is still growing. Last year was a very bad year for council house building in Wales. It has fallen to war-time levels. Instead of persecuting local authorities whose only crime is to stand up for the people they represent, the Government should devote their energy and resources towards helping authorities like Merthyr to tackle the genuine and pressing housing problems so as to provide decent homes for all their people at rents they can afford. That is what the Government did not do in 1972. A change of heart and policy is required for Merthyr and the rest of Wales in 1973.
§ 4.24 p.m.
§ The Minister of State, Welsh Office (Mr. David Gibson-Watt)
I am glad the hon. Member for Merthyr Tydvil (Mr. Rowlands) raised this matter because it gives me the opportunity to put the record 1893 straight and at the same time to correct a few misconceptions that appear to be current in the area of Merthyr and, indeed, in the constituency of the hon. Member for Bedwellty (Mr. Kinnock) at Bedwas and Machen.
I cannot see how there can be any misunderstanding about the status of the Housing Finance Act, but the words and actions of some local councillors suggest that there is. I must, therefore, begin with a statement of what, to right hon. and hon. Members on both sides of this House, is the obvious.
The Housing Finance Act 1972 was passed by this House and received Royal Assent. It is part of the law of the land. It gives no power to any group of people to decide that the law will not apply to them or to other people. But some councillors in Merthyr Tydfil and the urban district of Bedwas and Machen decided the Act would not apply to them. They decided that tenants to whom this House gave the right to rebates should not enjoy that right.
They decided that ratepayers, who were given by this House the right to expect that they should not dig into their pockets to support those who were better off than themselves, should not enjoy that right. They decided instead that their poorer tenants, and the ratepayers, and the law, could go hang so they could keep the rents down for their more well-to-do tenants. They called it "keeping faith".
Housing commissioners were appointed by my right hon. and learned Friend because he was determined that the law should be implemented. That is the rôle of the housing commissioners, as set out clearly in Section 95(7) of the Act and in the order by which they were appointed. Their duty is to carry out, on behalf of and at the expense of the local authorities, the functions under the Act which the councils have failed to discharge. To carry out their duties, they have also been made responsible for the management, supervision and control of the council's housing stock.
The housing commissioner does not take over the functions of council officials. He replaces, for the functions for which he is responsible, the council and its housing committee. The latter 1894 have no authority to instruct him in the performance of his duties, and he is under no obligation to report to them on the discharge of his functions. The officials of the council, in so far as their duties are concerned with the functions within his responsibility, carry out those duties on his behalf and subject to his instruction as if he were the council or the housing committee.
Both housing commissioners have enjoyed the ready co-operation of the officials with whom they work, and I add to theirs my own tribute to the staff of both councils for the long hours and the extra work they have cheerfully accepted in working out rents and rebate schemes, getting application forms out and dealing with them when the applications for rebates came in.
The hon. Member has made a great deal of play in public statements and again today about the fact that my right hon. and learned Friend rejected an application that he should direct an increase of 26p per dwelling in Merthyr instead of the £1 per dwelling required by the Act.
The commissioner had to put forward, in good faith, the case which the officers made. It was not appropriate for him to reject it. It was the job of the Welsh Office to consider the case in the light of experience in dealing with previous cases from some 40 other councils.
Is the hon. Member suggesting that we should not have subjected this application to the same scrutiny as we aplied to other cases? If he is, I doubt whether he would find much sympathy from other council chairmen in Wales.
The direction my right hon. and learned Friend made was that the increase should be 55p. He did not accept that simply taking gross value for rating purpose, minus some deductions, was a proper basis on which to arrive at a figure for fair rents. This basis had been rejected by other councils on the advice of professional valuers.
§ Mr. Rowlands
Will the hon. Gentleman comment on the two points that I made in this connection? First, he has not provided any information to show how the figure of 55p was arrived at in the first place. Second, and more important, he repeated the view that gross values could not be the basis. Why, 1895 therefore, is the housing commissioner using those values as the basis for fixing the rents?
§ Mr. Gibson-Watt
With respect, I listened carefully to the hon. Gentleman's speech. I hope that he will allow me to make mine in my own way. It is my intention to answer his points.
On the facts that were available to him about rent levels and comparable rent levels elsewhere, my right hon. and learned Friend directed that an increase of 55p be made in 1972–73 as a stage towards fair rents, but in order to give the housing commissioner the opportunity to use professional valuers, as other councils had done, he instructed that a professional valuation be carried out.
If that valuation shows that a direction of less than 55p would have been appropriate, the direction will be revised from the date on which it took effect, and, where appropriate, any rent that was overpaid would be refunded. I understand that a firm of professional valuers has been retained and is beginning work at once.
It has been suggested—indeed, one of the councillors concerned has clearly stated so to the Press—that the appointment of housing commissioners absolves the councillors from any responsibility for any loss of revenue caused by the failure of the councils to implement the Act. They should delude themselves no longer. The responsibility for the financial effects of their failure is theirs and theirs alone. The loss of revenue from 1st October 1972 to the date in February when the new rents will be collected, the cost of keeping housing commissioners in their areas, is their responsibility. They have not been absolved from responsibility for their actions, nor indemnified against the consequences. The rôle of the housing commissioner is to save others from the consequences of their default, not to save them.
If they have misled themselves, because my right hon. and learned Friend did not direct an extraordinary audit into their account, I would remind them that their accounts will be subjected to audit in the ordinary course of events this year, and the councillors would do well to reflect that the powers and duties of the district auditor are precisely the same whether or not the Secretary of State directs an extraordinary audit.
§ Mr. Neil Kinnock (Bedwellty)
The Minister is making a meal of the statement regarding one out of two councils. I should advise him that few, if any, of the other councillors are under any delusion whatsoever. The action that they have taken has been a completely conscious action, which makes total and misleading nonsense of the point he was making earlier about them consciously subverting the law. In these cases they requested that under the law should the commissioners come in to do the Government's dirty work.
§ Mr. Gibson-Watt
The hon. Gentleman uses a lot of words, which he can look at tomorrow in HANSARD, not all of which I have used in my speech. However, I notice he does not deny what I am saying. I am merely pointing out—it is only right that I should do so—the position of the councillors and that the powers and duties of the district auditor are precisely the same whether or not the Secretary of State directs an extraordinary audit. If any of them thought they were free of the danger of surcharge and disqualification they should think again.
I think the time has come for Merthyr and Bedwas to take stock. They have made their feelings known and they have made their gesture. With the passage of time it is clear that the people who suffer from their gesture are some of their tenants and all their ratepayers.
§ Mr. Rowlands
The Minister said he would answer my question. I have waited patiently. Will he tell us whether the gross value which the Welsh Office rejected but which has been used by the housing commissioner to establish individual rents is the right view? I should like an answer.
§ Mr. Gibson-Watt
The hon. Gentleman is less than fair to me. He has taken up a good part of the time. I will, if I may, go on to that part of my speech which deals with this matter.
When my right hon. and learned Friend gives a direction under Section 62(4) for an increase of less than £1 the allocation of increases is left to the discretion of the council. The same must apply to a housing commissioner acting on the advice of the council's officials. A comparison of rateable values between the houses in the council's housing stock 1897 appeared to the council's officials and to the housing commissioner to be a fair way of dividing up the increases, and I have no reason to believe that it has produced any unfairness. The rateable value has simply been used as a basis for comparing one house with another, and that does not in any way run counter to the view of the Welsh Office and other councils in Wales which took the advice of professional valuers that simple gross value for rating purposes was not necessarily the same as a fair rent. Fair rents are matters for rent scrutiny boards to decide after considering professional fair rents assessed by the council. In making their assessments many councils are using professional valuers, and the housing commissioner in Merthyr has engaged a firm with experience in carrying out this work for other councils.
How have the housing commissioners set about their task? They were appointed on 8th December and were in their offices on 11th December. By 29th December they had sought and been given directions to increase rents by less than £1—in Bed-was by 85p and in Merthyr by 55p, the second lowest direction in Wales. The new rents will apply in Merthyr from the rental period beginning on 12th February and in Bedwas and Machen from 5th February. During December the commissioners introduced rebate schemes, and application forms had gone out to all council tenants by the first week in January.
When I met Merthyr councillors last year they expressed satisfaction with their own rebate scheme under which 256 people were getting rebate at an average of £1.03p. On the basis of the rents 1898 charged by the council 381 applicants already qualify under the new scheme for rebate at an average of £1.37p. In the first week in January, under the old scheme, £263 was paid in rebates. In the last week, in January, under the new scheme, but still at the old rents, £493 was paid out.
Let me give the House a few examples—and I emphasise that they are real cases. A family of four were getting a rebate of £1.43 under the old scheme. This week, at the same rent, their rebate is £2.98. They are £1.55p better off this week. A family of six were getting a rebate of 21p. This week their rebate, on the same rent, is £1.39p. They are £1.18p better off. Surely it is this end of the scale that we want to help, and I am sure the hon. Member would agree that it would be wrong to deprive them of that help.
Now I come to the hon. Member for Merthyr Tydfil. May I put these points to him? First, his actions have helped to deprive certain council tenants of rent rebates. Secondly, the default of the council which he has supported is causing considerable concern to ratepayers in Merthyr. Thirdly, members of his own Front Bench, who have not turned up today to support him, do not support the line he has taken. Lastly, as a former Minister at the Welsh Office, has not the time now come when he should advise the council that in the interests of his constituents and his constituency it should now think again?
§ Question put and agreed to.
§ Adjourned accordingly at twenty-two minutes to Five o'clock.