RENT SCRUTINY BOARDS

HC Deb 25 July 1973 vol 860 cc1687-97

3.25 p.m.

Mr. James Lamond (Oldham, East)

I am grateful to Mr. Speaker for his kindness in selecting this subject for discussion. I make no apology for returning so soon to the subject of rent scrutiny board's decisions on council house rents which was discussed last week in our debate on inflation. The subject is of such importance to more than 5 million householders that it is well worth another airing.

Rent is an important element in the cost of living of all council house tenants. This month we have reached a new stage in the Government's persecution of council tenants. In embarking on the Housing Finance Bill the Government made their objective clear, and we have now moved a considerable way along the road outlined in the Act. First in Lees, then in Royton, which are both close to Oldham, now in several other urban district council areas in the North-West, reports have been received from the rent scrutiny boards which have been considering the proposed rent levels for the coming three years. These reports have caused the Opposition and council tenants to become alarmed. Everything that was said in the debates on the Housing Finance Bill by the Opposition has been borne out. Rents will be two-and-a-half to three times what they were in October 1972.

Lees Urban District Council, which forms part of my constituency, is one of the smallest councils in the country, and it has 199 local authority houses. What has happened there is a pointer to the future that will have repercussions throughout my constituency, from there throughout the North-West and possibly through the country.

Lees Urban District Council which, I am pleased to say, became for the first time Labour controlled in 1971, is a responsible authority. It is not militant, it does not try to act unlawfully and it has complied completely with the Act. It has fought on behalf of its tenants and it has had lengthy correspondence about the Housing Finance Act with the Minister, culminating, first, in the refusal of the Minister to receive a deputation from the council to discuss the implication of the Act and, secondly, in a letter from the Department of the Environment of 3rd May 1973 which contained the phrase: I am afraid I see little point in continuing this correspondence". In other words, even further correspondence has been denied to the council. However, the council complied and increased rents by an average of 90p per week for all its tenants. Six or seven tenants still object to the increase and are withholding payment.

The council submitted its proposal to the rent scrutiny board after full consultation with the local rent officer. This officer has considerable experience of the rents charged locally for private dwellings and, by consulting him, the council was acting in accordance with the recommendations of the Francis Committee. The council submitted a full list of the proposed rent increases, understandably keeping them to the minimum because it has no deficit on its finance housing account. The council has no wish to increase rents There is no financial pressure for an increase. The tenants certainly do not want an increase. There is no indication from the ratepayers in the urban district that it is necessary. However, the Government are hell-bent on increasing council house rents and they set up rent scrutiny boards, including that in Manchester, to consider the councils' proposals and either to accept them or to make counterproposals.

Lees was the first urban district council to receive the report, and it was shocked by it. Its tenants and the tenants of surrounding authorities were shocked by it. The reactions published in the Oldham Chronicle indicate that the tenants in the surrounding areas clearly understand the implications for them, and, as many people in Oldham are refusing to pay the 90p increase levied last October, their reaction is likely to be a refusal to pay a further increase.

Let me give some examples of the proposed increases. The rent of a two bed roomed house in Lees was increased in October 1972 to £2.02. The proposal by the council for the new rent was £2.50. The rejoinder from the scrutiny board was that the rent should be £3.25–75p above the 48p proposed by the urban district council. The rent of a three bed roomed house was, according to the urban district council, to be increased from £2.06 to £2.75. The rent scrutiny board thought that it should be £3.85. The £2.06 includes a 90p increase imposed in October last year. Therefore, the rents have doubled. In fact, they will be 2½ to 3½ times what they were only a few months ago.

The Lees Urban District Council, at its meeting yesterday, decided to make representations against the rents which the scrutiny board has substituted for those submitted by itself. A letter of protest is to be sent to the Prime Minister by the council. The Secretary of State is to be asked to vary his direction under Section 62(4) of the Housing Finance Act so that increases of less than 50p may be made. However, the council cannot hold out much hope of an acceptable response from the Minister because of its experience—a refusal to meet it and, finally, a refusal to carry on correspondence.

I wish to make some points about the report from the Manchester Rent Assessment Panel. The report lists over 30 dwellings which the panel inspected in Lees before arriving at its decision. When I read the list annexed to the report I was impressed. I thought that at least the board had gone into the matter fairly thoroughly. However, I understand that only two of the eight members of the board inspected the dwellings. I do not consider it totally honest, and certainly not thorough, if only a quarter of the members of the panel are prepared to carry out the inspection expected of them before making their decision. The council tenants and the council in Lees support that view.

There is a marked difference of opinion between the council and the scrutiny board about how much should be allowed for heating in the rent of some special purpose accommodation. The council has been in the habit of charging a fixed amount on the rent for heating in flats occupied by elderly people. The council had proposed that this charge should be 45p per week, but the rent scrutiny board's assessment for heating is £1.30 per week—a considerable difference. The council has therefore made a careful examination of the cost of providing heating. The board's assessment at £1.30 is considerably above the actual cost and cannot be justified. It exceeds the actual cost by as much as 35 per cent.

The report mentions that the council has relied on its consultations with the rent officer in determining the fair rents. Surely that is the proper procedure. I should have expected that after the council had done that and arrived at the figures, which were in line with the proposals of the rent officer, those figures would be accepted, but they have been turned down.

It is interesting to note that it is considered that the council may have had insufficient regard to the effect of inflation. If the House were crowded, as it sometimes is, there would be gasps of amazement from my hon. Friends at the inclusion of such an observation. If this is not an example of inflation feeding on inflation, I do not know what is. We are all, including the Government, doing our best to contain inflation and inflationary tendencies, yet rent increases are proposed far above what the local council proposes because the local council is said to have had insufficient regard for the effects of inflation. Is the Minister prepared to say that inflation is to continue at the present rate? If he is not, he should take some action on this observation.

These unnecessary increases in rent will undoubtedly result in further wage claims. There are many newspaper reports about what has been happening, including one report in the Eastern Evening News about a case in Norwich in which 50 per cent. of tenants are being forced to ask for rebates. If there are similar proposals there from the rent scrutiny board, that percentage will rise to 75. It is ludicrous that this level of application for rent rebate should be necessary.

Inflationary tendencies will be increased by such proposals. There is a comment in the Labour Weekly from a constituent of mine saying: if the Government is going to let rents go up willy nilly so should they let my pay go up willy nilly. I got a £3 rise in April of which £1 went in tax, 90p in rent rises—forced by the Government—and the other £1 or so has gone to meet the rise in the cost of living. With this new rent threat and the incredible rise in the cost of living still going on I will need a £5 rise to stand still. I wish to help the Government. I suggest to them that this is an excellent opportunity to carry out the Prime Minister's claim to cut prices at a stroke by freezing rents at a stroke and cutting back on the pressure on working people, for rent is an element of the cost of living from which they cannot escape.

3.40 p.m.

Mr. Frank Allaun (Salford, East)

I want to make two points showing how the rents of millions of families will be affected by what we are discussing this afternoon. Lees was "let off" by the Minister last October with an increase of less than £1. It was required to impose an increase of only 90p, following an examination of its case. The council objected to this because it did not want to increase the rents even by 1 p. It did not need to do so. It increased them, unwillingly, having been given the impression that that was the limit of the increase. It is now told in this first decision, which we fear will set the pattern for further heavy increases, that there will be another increase.

There are 180 local authorities throughout the country, many of them very large, such as Birmingham, Newcastle-upon-Tyne, Salford and so on, which were "let off" with less than a £1 increase last October and were clearly given the impression that the Minister felt that was a fair increase and there would therefore be no further increases. The former Minister for Housing and Construction made great play in the House of the fact that he was "letting off" Newcastle-upon-Tyne with less than £1. He quoted other cities and created the impression that the Act would not be nearly as severe as some of us were saying.

By this move he took the steam out of the opposition to the Act which at that time was mounting fiercely. Many councils were saying that they would not implement it. It is now clear that those councils, who have between them millions of tenants, have been taken for a ride. They have been deceived and the councillors and their tenants will be bitterly angry when they see what has happened.

The second point is that hard on the heels of the first decision in Lees comes a second decision in Northwich Urban District Council, Cheshire. There 2,000 council houses, just like the houses in Lees, are to have their rents roughly doubled compared with what they were last October. For instance, the rent on a typical post-war house is to go up from £2.58 to £4.68 plus rates in both cases.

The Minister may say that these are low rents. But the council did not want or need to raise the rents even by 1p, because it was not in deficit on its housing account. Secondly, hundreds of other councils with similar rents will now presumably have to suffer similar increases. Once again the councils are told that they have been paying insufficient regard to current inflationary trends. In Lees that was one of the criteria on which rents were to be fixed, according to the Act. Is it right that houses built perhaps 25 years ago and paid for then should now suffer rent increases because the pound is sinking?

The Minister will remember that we were accused of scare mongering when we said that rents would double under the Act. We said that we were only quoting the Government's own estimate circulating privately in the Ministry. It is now clear that our worst fears are confirmed and that average rents are being doubled. These decisions and the next instalment of the increase—which this October will amount to 50p—will be bitterly opposed by the trade unions, the local authorities, the tenants' associations and the Labour Party.

3.45 p.m.

The Under-Secretary of State for the Environment (Mr. Reginald Eyre)

This debate, initiated by the hon. Member for Oldham, East (Mr. James Lamond), relates to the working of the rent scrutiny boards, and I think that it will be helpful if I describe the process leading up to the determination of fair rents under the Housing Finance Act.

As the House is well aware, this is a statutory process and takes place in accordance with the provisions of Part V of that Act. The House may like to be reminded of the details of the system.

First the council makes a provisional assessment and publishes it. Councils are required to make arrangements for adequate general publicity and to notify each individual tenant of its proposal for his dwelling. Any tenant may then make representations to the authority and the authority must consider those and, if it thinks right, re-assess the proposed fair rent for the dwelling. The authority must then submit the assessment—revised, if it thinks fit, in the light of the tenants' representations to the rent scrutiny board. The board then has the duty to consider the fair rents in the assessment and either to confirm or amend them.

The board gives its decision by reporting to the authority. The authority must publish the board's report at its principal office. If the board in its report disagrees with some or all of the fair rents proposed in an authority's assessment, the authority then has a two-month period in which to make representations to the board. I wish to emphasise this point because it will be a matter for the local authority in Lees and also the local authority in Northwich, which were mentioned by the hon. Member for Salford, East (Mr. Frank Allaun).

The board must have regard to those representations and it concludes its operations by amending or declining to amend the assessments in its report. Where the board disagrees with an authority's assessments, the fair rents are determined only after the authority has been given two months to make representations and after the board has considered any representations made within that period. The rent scrutiny boards play a closely defined and limited role.

Mr. Julius Silverman (Birmingham, Aston)

To make the situation clearer, perhaps the Minister would add that the rent scrutiny boards are the final arbiter, that there is no appeal against their decision, and that it is entirely what they say that goes.

Mr. Eyre

It is true, as the hon. Gentleman said, that it is the duty of the rent scrutiny boards ultimately to determine the fair rent. The boards are essentially checking the fair rents proposed by the council. In doing so, they apply the criteria for determining a fair rent for council dwellings set out in Section 50 of the Act. With a few minor differences, these are the same criteria as those used in determining a fair rent for a private rented dwelling as laid down in the 1968 Rent Act.

Mr. Reginald Freeson (Willesden, East)

Will the Under-Secretary of State for the record clarify the point whether rent assessment committees in the private sector are required to take account of inflationary trends in the economy as distinct from specific rises in costs in running a housing service, compared with the situation in terms of the rent scrutiny boards? Will he make clear that, although in the private sector the rent assessment committees act in public, the rent scrutiny boards undertake all their considerations in secret?

Mr. Eyre

I shall come to the first point raised by the hon. Member for Willesden, East (Mr. Freeson) a little later in my speech. On his second point, it is true that there is a difference in the process followed in the two boards, but the hon. Gentleman has taken part in many debates on this subject and knows that the difference is that the detailed proposals in the public sector are put up by the local authority after taking into account all the representations of the tenant. These are considered by the rent scrutiny board which then operates publicly in announcing its decision. The results of its deliberations are reported fully in public.

The Lees council was quite right to consult its rent officer about fair rents registered in the private sector. The rent scrutiny board did not discount this evidence but considered that it provided insufficient single evidence on which to base the fair rents for the authority's dwellings. So it increased the range of this evidence by taking into account also fair rents determined throughout the whole rent assessment panel area.

The task of the board is to check whether the local authority has applied these criteria reasonably and properly to the rents of its dwellings. The board is well placed to discharge this task as its members are drawn from the rent assessment panel, which is the body from which the members of rent assessment committees are also drawn. These committees have functioned satisfactorily, as the Francis Committee found. The members of rent scrutiny boards also consist of laymen, valuers and lawyers, and the board which considered Lees included—

Mr. Lamond

A Tory MP.

Mr. Eyre

—a social worker and a trade unionist, as well as the former hon. Member to whom the hon. Member for Oldham, East referred.

The Secretary of State plays no part in determining fair rents. He cannot instruct the rent scrutiny board on what the fair rents of a local authority's dwellings should be. The board has the knowledge and it looks at the evidence and the facts in each case. The Act gives the board a specific job and the Secretary of State cannot intervene in its performance.

The rent scrutiny boards up and down the country have now received the provisional assessments of most local authorities and are considering them. In some 40 cases boards have issued reports. Lees is one such case. In that case the authority has until 29th August to make representations to the board, and fair rents are not finally determined until after the board has considered any representations made to it by then.

The authorities for which there has been a report by an RSB are generally small authorities and are only in certain parts of the country, mainly in northern parts. So it is not yet clear what the eventual pattern of determined fair rents will be nationally, It follows that some of the assumptions of the hon. Members for Oldham, East and Salford, East cannot be properly made. We do not know whether the rents in the reports which have been issued hitherto, assuming always that in due process they become the determined fair rents, are typical or untypical of fair rents generally.

I want to make clear the difference between the circumstances where the Secretary of State exercises his discretion to authorise a lower rent increase towards fair rents and where the rent scrutiny boards determine the fair rents. In the first case, as regards the exercise of discretion, the Secretary of State has a purely negative role to ensure that rents are not increased substantially over likely fair rents before these are determined. In the case of Lees the Secretary of State exercised this discretion because he considered that the £1 increase last year might cause the rents of some old people's dwellings to exceed the estimate of their probable fair rents. But, in the second case, the rent scrutiny boards fulfil a more positive, if limited, role in actually determining the fair rents of all an authority's dwellings according to criteria laid down in statute.

Mr. Freeson

Which section?

Mr. Eyre

Section 50.

As regards Lees it is perhaps worth noting that this is a very small authority with only 200 council dwellings. The board, in its report, made it clear that the majority of the council's dwellings were of a good standard and well maintained.

Mr. Freeson

Where in Section 50 is it laid down that, compared with the private sector, inflationary trends in the economy should be criteria for fixing upon fair rents in the public sector?

Mr. Eyre

The hon. Gentleman has debated the wording of Section 50 on a number of occasions. I am glad that he has come to this point again as I told him that I would deal with it.

With respect to the board's reference to inflation, the rent scrutiny board takes a decision at a point in time taking into account all the circumstances. The hon. Gentleman knows that that is the requirement of Section 50.

Valuation is not an exact science. A broad commonsense view is what is required. I should stress that the opportunity to challenge the rent scrutiny board's view is open now and until the end of August. If Lees UDC considers that the board has misdirected itself on this or any other point, it is up to it to say so.

I should like to remind the House of two points about the effect of fair rent determinations on council tenants. First, the rent of the dwelling is progressed to the fair rent by stages at an average rate of 50p a year. Secondly, it is the rent of the dwelling which is being so progressed, not necessarily the amount which the tenant actually pays. Those tenants —there are many thousands throughout the country—who cannot afford the increase, do not pay it in full. Indeed, this October tenants who now receive a rent debate will not normally pay any more rent as the result of the increase in the rents of dwellings. Most of them will pay less rent—about 25p a week less —immediately after the increase in the rent of the dwelling than they paid immediately before, because of the further increases in the needs allowance which we have just proposed and will be operatting in October.