HC Deb 18 November 1974 vol 881 cc904-1029

Order for Second Reading read.

Mr. Speaker

I have selected the amendment in the name of the Leader of the Opposition.

3.58 p.m.

The Secretary of State for the Environment (Mr. Anthony Crosland)

I beg to move, That the Bill be now read a Second time.

With this short Bill the Government aim to cut the throat of the Tory Housing Finance Act at a stroke.

The House will recall the main objections which we levelled against that Act when in Opposition. First, we objected to what it meant by way of public sector rent increases. It meant either 50p, or £1, on rents in year 1; and that was to be followed by further 50p increases, imposed by law, year after year, until the so-called "fair rent" was reached. In practice, the increases would have gone on for ever.

I remind the House that 50p in 1971, when the previous Government's White Paper "Fair Deal for Housing" was published, was a very different matter from 50p today. In 1971 the galloping inflation set in train under the previous Government was only just gathering momentum—a momentum which was, of course, intensified by the Housing Finance Act itself. Fifty pence then represented a rise of over 20 per cent. in average unrebated rents, and £1 represented a rise of over 40 per cent. The rise in average earnings at that time was only just above 10 per cent. a year. So our first objection to the Act was that it pushed up rents much faster than earnings, and made the price of one key essential—housing—a factor positively boosting inflation rather than restraining it.

Our second objection was more fundamental. It was that the fixing of rents for individual dwellings was to be taken away from democratically-elected local authorities and put in the hands of those latter-day Star Chambers, the rent scrutiny boards, against whose verdict there was to be no appeal. That is why I said at the time that the Act by excluding a large group of our citizens from democratic protection, offended our basic sense of natural justice". What made the Housing Finance Act offensive was not merely that it took away from local authorities a power which they had always exercised. It was that it transfered these powers from democratic local government to bodies which were also outside the control of the elected national Government—to rent scrutiny boards which were non-elected, unrepresentative and accountable to no one but themselves. That seemed to us to undermine a vital democratic safeguard for the unfortunate council tenant. The Bill removes entirely those features of the Housing Finance Act.

Clause 1 sweeps away "fair rents" in the public sector. It sweeps away the rent scrutiny boards and it sweeps away the system of compulsory, statutory annual rent increases.

For 50 years before the coming of the Housing Finance Act, councillors had conscientiously discharged their responsibilities for setting rents. Elected councillors know their houses, they know their people, and they took their decisions against the whole background of the social and economic character of their community, and in line with the decisions which they took on other public services. They did so in a proper public forum, and they remained to take responsibility for those decision afterwards. Aggrieved tenants—or ratepayers—were free to use all the normal political channels to make a protest, or to seek redress. In the last resort, if they did not like the councillors' decisions, they could vote them out of office. We believe that this is the most proper and satisfactory method of setting rents.

So this Bill restores to local authorities their power to set rents, subject only to the condition that these be "reasonable". The concept of "reasonable" rents was in force for 50 years up to the 1972 Act, and is well understood. It means that councils must strike a reasonable balance between the various interests in their communities. At the lower end, they cannot set rents so low that an unreasonable burden is laid on ratepayers. At the top end, they cannot set rents so high that they actually make a profit out of the provision of council housing. Within those very broad limits, the decision is theirs.

This provision illustrates in the sharpest form the difference in philosophy between the Opposition and ourselves. The authors of the 1972 Act envisaged a situation where many councils would make an actual profit on their housing—a profit on housing which contains an important social service element. That concept—the generation of profit out of socially necessary housing—is one which we on this side of the House reject, and which this Bill will make impossible.

Under this Bill, local authorities will set their general level of rents as follows. They will calculate year by year what income they will need to maintain their housing service, and expand it as necessary. They will receive substantial Government subsidies, which I shall describe later. They must then decide for themselves how the rest of the burden should be borne as between tenants and ratepayers.

But the general level of rents cannot be divorced from counter-inflationary policy. So Clause 2 contains a reserve power of a general counter-inflationary nature. This is not framed in such a way that the Government could make an order controlling the rents of individual local authorities, or individual dwellings. It is not the business of Government to approve or disapprove the rent policies of district council X or Y. What is the Government's business, should it Prove necessary, is to set broad limits beyond which no authority may go in setting its rents.

Mr. Christopher Tugendhat (City of London and Westminster, South)

Can the Minister tell me whether the general points he has made about the Bill will apply to the special position of the Barbican, in view of the fact that I gather from correspondence with the Minister for Housing and Construction that the Barbican was always excluded under previous legislation?

Mr. Crosland

The Barbican was excluded under the 1972 Act. I know that my hon. Friend has written twice to the hon. Member and promised a full and complete reply to this complicated question in a letter which he proposes to write to the Barbican Association.

I turn now to the subsidy structure of the Bill, contained in Clause 3 and, in more detail, in Schedule 1. The hon. Member for Chelsea (Mr. Scott) will, I fear, have to work rather harder in Committee discussing these complex provisions than he did during the Committee stage of the 1972 Bill, when his reticence and taciturnity greatly distressed those of us who were then on the Opposition benches. But I assure him that by comparison with the corresponding parts of the 1972 Act these provisions are no more than a little light bed-time reading.

The underlying principle is that subsidies should be adequate to enable local authorities to get on with the job, without imposing an unacceptable burden on their rentpayers or ratepayers. This job is huge. In many areas there is still an absolute shortage of homes, and no realistic prospect of anyone but the local authorities making good that shortage. London is the prime, but far from being the only, example of such an area. Some areas still have a large number of slums beyond the reach of improvement, which need to be cleared and replaced.

Next, there is the pressing need for more public ownership of privately-rented houses. There are the many families who even five years ago might have aspired to buying a house but have had that aspiration snatched away by the savage increase in house prices in recent years, and who must now look to the local council if they are to have any hope of a home of their own. So the job is huge. We have told local authorities that money, assistance and advice are available on a more extended scale than ever before.

But the assistance must not only be adequate; it must also be purposeful. The Tory 1972 Act provided subsidies for new building in the form purely of assistance to the total deficit in the housing revenue account of each authority. But it did not prove effective. Conservative Ministers, including the right hon. Member for Brighton, Pavilion (Mr. Amery) who we welcome here today, spoke brave words when the measure was before the House. We did not have to wait long to see the reality. In the year following that Act—1973—the number of houses started in the public sector was the lowest since the end of the war.

Today I am happy to say that, largely due to the actions of this Government, the number of houses going into contract shows an increase of 35 per cent. over last year, and this will be reflected in later figures of starts and completions, that point —

Mr. Michael Latham (Melton)

Would the right hon. Gentleman explain why in the first quarter of 1974—that is, under the Housing Finance Act 1972–36,400 houses were started in the public sector, exactly the same as in the first quarter of 1971 under the subsidy structure introduced by Lord Greenwood of Rossendale?

Mr. Crosland

It just shows a certain consistent pattern in these matters. I will look at the detailed figures with the greatest interest, and my hon. Friend the Minister for Housing and Construction will answer the question when he replies. The critical fact is that in contrast to the past three years under a Conservative Government we now see a marked and encouraging upswing in council house building. The subsidies provided in this Bill are part of an overall policy aimed at maintaining just such a trend.

The new subsidy system comprises five elements—the basic element, the new capital costs element and the supplementary financing element, all to be paid from 1975–76 onwards; the high costs element, to be paid from 1976–77 onwards; and the special element to be paid for 1975–76 only.

First, an authority's basic element of subsidy for 1975–76 will, subject to certain safeguards, be equal to the amount of subsidy paid to that authority for 1974–75, under the Housing Finance Act. It is intended as a strong base on which to build the other elements.

Secondly, there is the new capital costs element. This will meet 66 per cent. of the loan charges which authorities must incur in buying land, building houses and improving houses. It will also help towards the cost of buying houses—whether houses which have been standing empty, or old tenanted houses—under our policy of social ownership.

It will also be available—this is a special feature—to help towards the costs of putting these old houses in decent order. This should be helpful both to London and to the large industrial cities where the need to take over houses and put them in order is desperate and pressing. Sixty-six per cent. is a rate of subsidy which has never been exceeded in the past. It will continue for subsequent years. It is a gross rate and as such will be significantly better for authorities than the rate in the Housing Finance Act, which was 75 per cent. of the costs, including maintenance, but net of the rent income.

Mr. Peter Fry (Wellingborough)

Before the right hon. Gentleman leaves that point—

Mr. Crosland

I am reluctant to give way too many times because a large number of Members wish to speak.

Mr. Fry

Will the right hon. Gentleman say whether the 66 per cent. subsidy will be based on the loans pool rate, which I estimate is now 10½ per cent.? If a council is borrowing at 13 per cent. to build new houses, instead of being a 66 per cent. subsidy it reduces to about 50 per cent.

Mr. Crosland

It will be on the pool globe rate. The cost of the subsidy will be about £110 million next year and £225 million in 1976–77.

The third subsidy is the supplementary financing element—and this is relevant to the question of the hon. Member for Wellingborough (Mr. Fry). This is designed to help with the refinancing of old debt. As local authorities repay old, lower interest debt and have to replace it by new borrowing at higher rates of interest, their loan charges will obviously rise. These additional loan charges will carry a rate of subsidy of 33 per cent. This seems to us a fair proportion of the burden to be shared between the tenant, taxpayer and ratepayer, and it is not too far from the additional relief given to an owner-occupier when—as used to happen so often under the Conservative Party—the interest on his mortgage rises.

Fourthly, the high costs subsidy is to be paid from 1976–77. It will give additional help to those local authorities whose costs per dwelling are significantly higher than the average. The authorities qualifying for this element of subsidy are likely to be primarily the inner London boroughs and the GLC, which are operating in areas where costs are, and historically have been, generally substantially higher than average.

It has, however, become clear that quite a number of authorities will be facing particularly large cost increases in 1975–76, compared with this year, on a scale which warrants additional financial support. The high costs element, which is designed to do a different job, would have helped some but not all of these authorities. Accordingly, the special element will be paid to local authorities with such additional costs in order to help to close the gap between housing revenue account income and housing revenue account expenditure and take some of the burden off rents and/or rates. This special element will be paid in 1975–76 instead of the high costs element, which will now be paid from 1976–77. Those authorities which might have expected to qualify for the high costs element as described in the earlier proposals—primarily the London authorities—will benefit at least to the same extent by the special element, and, in addition, authorities outside the Greater London area with increasing costs will also receive additional aid.

This special element subsidy was not in the Bill as introduced in July. It results from our further consideration and consultation with the local authority associations. Rents will remain frozen until the end of the financial year. But steep increases immediately after the freeze would be quite unacceptable in the light of the Government's counter-inflationary policies and we want to avoid putting local authorities in a position where very sharp increases are inescapable.

The special element will put an average and prudent local authority in the position of being able to balance its accounts if it makes a moderate increase in its rate fund contribution and a moderate rent increase. By "a moderate rent increase" I mean an increase which will certainly mean that the average tenant will have suffered a smaller increase in rents in two years of Labour government than he would have suffered in one year alone under the Conservative Party.

Of course, rents cannot remain frozen for ever. Costs of maintenance and repair are going up all the time, and there are the needs of an expanding building programme to be met. The Exchequer will help with generous subsidies, and the ratepayer will continue to contribute at the local authority's discretion. However, a good part of the money must inevitably and rightly come from rents. But, at the same time, rents are a key price of particular significance in the context of the social contract. Our main weapon for keeping them under control is the level of Government subsidy. The subsidies provided in this Bill will enable local authorities to hold rent increases to moderate and reasonable levels.

I turn to the question of the private rented sector. Clause 7 of the Bill implements the Government's commitment—I quote from our manifesto— to ensure that rent increases in the private sector will be limited by Government action". It does so by providing for the phasing of increases in "fair rents".

The Government have not yet made decisions about a long-term policy for private sector rents—about whether we keep the present system, or amend it, or repeal it. We shall be considering all these matters, and I shall say a word later about the general review of housing finance which we are undertaking. But in the interim we believe that something needs to be done about increases in "fair rents". At the moment, the whole amount of any increase falls to be paid in a single year. A tenant can easily get a demand for an extra £1, £2 or £3 a week, payable in one lump, and this can impose an intolerable burden.

We are providing that increases exceeding 40p a week—apart from increases attributable to increases in the cost of providing services—should be phased in two or three annual stages according to size. The details are set out in Schedule 2. I know that some of my hon. Friends, including my hon. Friend the Member for Salford, East (Mr. Allaun), have argued that this provision does not go far enough and that we should impose a rigid ceiling on the allowable percentage increases in "fair rents". But, with respect to my hon. Friends, they underestimate the difficulties and overestimate the advantages of what they propose.

As to the difficulties—and we have looked into this matter in detail— such proposals would be appallingly hard to draft. Moreover, they would create a growing and confusing gap between the "fair rent" of a property and the recoverable rent—that is, between the "fair rent" and the rent which the landlord was entitled to collect. This would undermine the whole basis of the "fair rent" system.

But all this would produce very little advantage. "Fair rents" have on average been rising at 7 per cent. a year—a good deal lower probably than many of us supposed. Under the proposals in the Bill, it will be very seldom indeed that annual increases approach the present rate of general inflation. Therefore, private rents will be a restraining factor in the total inflationary situation, and the Government and I think that this is a strong and adequate safeguard of tenants' interests and is certainly strong enough as an interim measure.

Mr. A. J. Beith (Berwick-upon-Tweed)

Will the right hon. Gentleman give way?

Mr. Crosland

I would rather not give way, not out of any discourtesy, but this is a complicated Bill and many Members wish to take part in the debate. I dare say that the Committee stage will be sufficiently long to satisfy the hon. Gentleman and anybody else.

I come to the question of controlled rents. Section 35 of the Housing Finance Act introduced an indefensible provision whereby controlled rents were decontrolled by bands of rateable value, irrespective of the condition of the property. This enabled many landlords to reap a windfall gain which they had done absolutely nothing to earn. We bitterly opposed this in Committee and promised in our manifesto that we would put a stop to further decontrol on homes without basic amenities. The Bill implements that pledge by providing that no controlled tenancy will cease to be controlled by reference to its rateable value. The only way decontrol will be allowed to occur to a sitting tenant is if, first, the property is brought into good condition, having regard to its age, character and location, and, secondly, it is provided with all the basic amenities for the sole use of the occupier.

Some landlords will not, for a variety of reasons, take the necessary steps to improve their property to the standard at which it qualifies for decontrol. In that situation we do not want tenants to suffer unnecessarily. We certainly do not, above all, want the property to be allowed to rot, so that when it is finally taken into municipal ownership there is no option left but to demolish it. So we are giving landlords who carry out repairs to controlled dwellings the right to raise the rents which they charge by 12½ per cent. of their expenditure on repairs completed after the Bill comes into force. That provision is, of course, modelled on the existing provisions for the increase in controlled rents in respect of improvements. Like them, it relates to the landlord's net expenditure, excluding any improvement grant he might have received. Like them, it entitles the tenant to challenge the increase in the courts if he thinks the repairs are unnecessary or excessively costly.

Before closing, I should like to draw the attention of the House to one more provision of the Bill. Schedule 4 consigns to history the default provisions of the 1972 Act. The only practical basis for any local government legislation is one which recognises the status and responsibilities of democratic local authorities, but the basis of the Tory Act was that of giving orders, and of having penal sanctions to enforce those orders. Local authorities simply cannot and should not be treated in that way. People's respect for the law is inseparable from the law's respect for people. The 1972 Act treated councillors as puppets. That it was defied in consequence was deplorable but not, alas, surprising.

The week before last in my statement on late implementation I told the House how we intended to carry forward our policy from the position laid down by my right hon. Friend the Prime Minister on 4th April. Now I add to that statement the proposed removal of these unwise—and now unnecessary—provisions of the Housing Finance Act which helped to bring about the unhappy situation we inherited.

I turn briefly to the longer term. The subsidy provisions of the Bill are of an interim nature. They established a system which will ensure that local authority building does not flounder for lack of money, and which at the same time will keep rents at a tolerable level. But it leaves many issues untouched. I was astounded to find, on taking over as Secretary of State, how flimsy was the basis on which Government housing policy was then built. No one had any clear idea how many houses the country needed, or where. No one seemed to have compared the Government help given to owner-occupiers on the one hand and tenants on the other. Perhaps less surprisingly, there was no attempt to see how we could achieve greater equality in the distribution of the housing we have available.

I am convinced that we need a firmer foundation than that for housing policy. I am, therefore, setting up within the Department a searching and far-reaching inquiry into housing finance. The aim is to get back to fundamentals, to get beyond a housing policy of "ad hoc-ery" and crisis management, and to find out precisely what needs to be done if we are to get on top of this desperate social problem for once and for all.

So discredited is the Housing Finance Act that I thought the Bill would receive an unopposed Second Reading tonight but, judging by the Opposition amendment, that is not the case. That being so there is one question which we are entitled to have answered by the Opposition. It is a question about which the right hon. Member for Finchley (Mrs. Thatcher)—who soars to greater and greater heights—uncharacteristically remained silent during the election campaign, but I hope that the hon. Member for Chelsea will reveal a new style of open opposition by telling the House the answer this afternoon. The question is: what is Conservative policy on council rents?

If the Opposition divide the House this evening, one thing at least will be clear. They will prove that they are prepared to vote to keep their discredited Housing Finance Act on the statute book and that beneath their rhetorical guff about national unity they are still willing to stir up the fires of conflict between council tenants and the rest of the nation—in contrast with Labour's policy of bringing equal help to all types of housing tenants—owner-occupiers, council tenants and private tenants.

The hon. Member for Chelsea made his debut at Question Time last Wednesday, when he once again suggested that the Labour Party had it in for the owner-occupier. That shows an extraordinary nerve. Under the Labour Government of 1964–70 the proportion of owner-occupiers for the first time exceeded 50 per cent. Under the Conservative Government of 1970–74 house prices doubled, the mortgage rate went up inexorably from 8 per cent. to 11 per cent. and we ended up with a total mortgage famine and the private house building programme in a state of complete collapse. Let the hon. Gentleman ask any owner-occupier or would-be owner-occupier whether he would prefer the experience of 1964–70 of that of 1970–74. He would get an unambiguous answer.

I believe that the Conservatives are capable of far worse than that. The House will recall the original intention behind the Housing Finance Act. It was clearly announced, not by the then Secretary of State for the Environment but by the Chancellor of the Exchequer. The object was to bring about a reduction in Government help to council tenants, to lead to a saving in public expenditure on housing subsidies of from £100 million to £200 million a year by the middle of the decade. We know the reality turned out differently. In the years following the passage of the Act inflation went through the roof. The rapid inflation in local authority costs meant that subsidies did not decline as they were intended to decline.

Let us be under no illusion that the Conservatives would have let that situation continue had they by any mischance been returned to office. Faced by the need to pay for the extravagant promise of 9½ per cent. mortgages, the Tories would, of course, have gone back to their original intentions and cut help to council tenants to the bone. As Government help went down, so rent increases would have gone up. Increases of 50p would long since have become a thing of the past. The years of the Housing Finance Act would have been remembered by tenants as the golden age of stable rents. Increases would have become steeper and steeper, and we would have been talking about increases of pounds a week. How they would have squared that approach with any pretence of an anti-inflationary policy, let alone with their talk of national unity, completely escapes me.

I believe that the large majority of the House will join me in rejecting the whole Tory approach. I commend the Bill to the House.

4.27 p.m.

Mr. Nicholas Scott (Chelsea)

I beg to move to leave out from "That" to the end of the Question and to add instead thereof: this House, while recognising the pressing need for houses, declines to give a Second Reading to a Bill which will do little to meet that need, but will back-track instead to a system of indiscriminate subsidies, haphazard rents, and the certainty of further burdens for the ratepayers. The rules about the declaration of interests were changed during my temporary absence from the House, so first, I had better declare an interest as the totally unpaid chairman of a voluntary housing association in case that interest in any way impinges on the Bill or on what I have to say.

The Bill is important for itself—and the right hon. Gentleman has told us some of its implications—and also because, as I think he recognises, it illustrates a difference between the approach of the two parties to housing. We can all agree that there is no higher social priority than housing, and we both see the tackling of the housing black spots that still deface our society as, in a sense, preventive medicine. By investing money in housing we can avoid having to spend money on other aspects of the social services, because the strains which flow from bad housing can put a burden on every other branch of the social services.

We all want to make progress in this field, and, indeed, we have made progress. Anyone who, like me, has been a parliamentary candidate or a Member of Parliament for a London constituency for the better part of the last 20 years will acknowledge that there has been substantial progress in housing, but the revolution of rising expectations affects housing perhaps more than any other social area. People's housing expectations are continually rising. Not since the days of Harold Macmillan's time as Housing Minister can either party be really satisfied with its housing record. As a result there is still widespread dissatisfaction on housing—

Mr. Dennis Skinner (Bolsover)


Mr. Scott

I will give way to the hon. Gentleman, but I had hoped that he would allow me to finish the sentence.

Mr. Skinner

Perhaps the hon. Gentleman has the answer at the end of his sentence, but perhaps he has not. Is he aware, when he talks of the so-called golden era of Macmillan, that the real boom in house-building—the biggest ever boom—was in the Labour Government in the period 1966–68 when more than 400,000 houses were constructed on average over three successive years? The reason we were able to do that was that we put a complete clamp on office building and diverted those resources to housing. That is what we have to do again.

Mr. Scott

I do not think that we are likely to agree on that.

Mr. Michael Latham

Will my hon. Friend refute the sedentary remarks made by the right hon. Gentleman the Patronage Secretary about our housing record? It was the right hon. Gentleman who remarked in 1970 that the Labour Government did not give to the housing programme anything like the attention that was necessary.

Mr. Scott

We regret that we are only able to hear the Patronage Secretary from a seated position.

The Parliamentary Secretary to the Treasury (Mr. Robert Mellish)

I was seeking to ask the hon. Member for Chelsea (Mr. Scott) how he could defend the Conservative Government's record from 1970 to 1973.

Mrs. Elaine Kellett-Bowman (Lancaster)

The right hon. Gentleman wanted to stand the whole thing on its head.

Mr. Scott

In the course of my speech I shall be dealing with the wider issues of housing policy as well as with the particular question of the Second Reading of the Bill. There is widespread dissatisfaction with the record of both parties on housing, and it is all the more depressing that the Labour Party should have produced a package of policies which are so irrelevant to the nation's housing needs.

Labour seems to have put at the top of its batting order the provision of security of tenure for all furnished tenants. This has dried up the supply, as was fore- cast would happen. The Labour Government has also sought an extension of municipalisation which nobody wants and they seek to indemnify those who would flout laws passed by Parliament during the passage of legislation in Standing Committee on which the Secretary of State for the Environment and I served. If these are the priorities which the Labour Government set themselves instead of house building and the improvement of older homes, then the whole nation will judge them harshly.

Mr. A. W. Stallard (St. Pancras, North)

Will the hon. Gentleman accept that what dried up the supply of furnished tenancies was the activities of the winklers and speculators who found they could get much more for properties with vacant possession than for properties with tenants in occupation? That was the real cause of the drying up. The Labour Government tried to protect the few remaining furnished tenancies in the only way they possibly could.

Mr. Scott

I suspect that Time Out may be read rather more on the Labour benches than it is on the Opposition benches, but I must tell the House that in its most recent edition, in an article on the 1974 Rent Act, one sees in the fourth paragraph: The situation realy hit me when I walked into an accommodation agency a few weeks ago. They had neatly pinned up the Department of the Environment's advice on the new rights of furnished tenants, and written above it, 'This is why we have no flats for you'. That is the effect of the Labour Government's Act and the advice they have given. It is Labour's Act and their advice which has dried up that supply.

Mr. George Cunningham (Islington. South and Finsbury)

The hon. Member for Chelsea (Mr. Scott) fought my previous constituency, both times unsuccessfully, in the 1950s. He said a moment ago that the desire for municipalisation was one possessed in the Labour Party but not among tenants. Is he aware that many people in that constituency petitioned the council to have the housing in which they were tenants taken over by the council because they recognised that, despite all the protection in the law for tenants, municipalisation was the only effective way in the long run of their being secure from the winklers and property companies mentioned by my hon. Friend the Member for St. Pancras, North (Mr. Stallard)?

Mr. Scott

The truth of the matter is that the vast majority of people want to own their own homes. That is the direction in which our housing policy will be aimed.

The Labour Party likes to consider itself a radical party. As this Bill again makes clear, Labour is still hidebound by the findings of the 1885 Royal Commission on Housing of Working-Classes and Labour's thinking on housing has not moved much beyond that.

I see the aims of housing policy as trying to meet the changing needs of the people and where possible of anticipating their hopes for the future in terms of the homes they wish to occupy. Every survey which I have seen shows that about 75 per cent. of our people want to be able to own their own homes, and we should be bending our efforts to that end. That is why we put forward the election package we did in October as the central unshakable foundation of a housing policy based on choice.

Of course Conservatives are not opposed to council housing but if we see that as high a percentage of people as possible are able to own their own homes, then councils and the voluntary housing movement will increasingly be able to concentrate on housing the needy and the elderly and on progressing with slum clearance. They could also concentrate on helping the young, single people who are being squeezed out of furnished accommodation as a result of the Rent Act. This will be possible simply because councils will be allowed freedom to concentrate on these aspects because more people will own their own homes.

I hope that when councils and the voluntary housing associations operate on this scale, they will remember that whereas it is easy for us to talk of housing policy through our end of the telescope, for most people what is involved is their homes. Therefore, we should look at housing policy on a human scale.

The Secretary of State for the Environment has already mentioned some exchanges in Question Time last week and there were two interventions which I found most interesting. The Minister for Housing and Construction, as reported in column 390 of the OFFICIAL REPORT on 13th November, clearly envisaged a time when all rented accommodation would come into social ownership. Then there was an interesting intervention by the hon. Member for Lambeth, Central (Mr. Lipton), who suggested that the time had come for the Greater London Council to take over all housing powers and responsibilities in London and to remove those powers from the boroughs. Labour Members must understand the increasing resentment of people at bigness and the lack of identity that can flow from it. This is true of industry as it is of housing.

Mr. Stallard

It was the Tory Party who went in for reorganisation.

Mr. Scott

There is still increasing resentment on this subject and people want to control their own environment. This applies with particular force in housing. Because this personal dimension is so important, we seek to put emphasis on home ownership. About 51 per cent. of our people at the moment own their own homes. In Australia and Canada the figures are about 70 per cent. and I see no reason why we should not set that sort of target in this country.

The Secretary of State for the Environment is fond of criticising our proposals. He ought to know that the 9½ per cent. mortgage pledge would have cost about £180 million to £200 million. But the right hon. Gentleman had already announced extra help of £350 million for council houses, of which £200 million is earmarked especially for municipalisation. If those resources are available, we would very much rather they went to help young couples buy their own first homes than to enable councils to go into the market place and buy.

Mr. Stephen Ross (Isle of Wight)

I wonder whether the hon. Gentleman sees people similar to those whom I see on Saturday mornings, who are on incomes of £40 to £50 a week and have savings of up to £1,500. They are quite unable to purchase even the most miserable hovel at £8,000. If there is no rented accommodation for such people, what hope have they?

Mr. Scott

It is precisely because the Conservative Party wishes to help those people to buy their own homes that we put forward the proposals that we did in our election manifesto.

The Bill sees council housing as the main vehicle of the Government's housing drive. We do not, because we do not believe that to be the people's choice. People see the security, the element of saving, the protection against inflation and the freedom which come from owning their own homes. That is what makes home ownership attractive and important. From the cost point of view, too, there is no doubt that the nation would be better off if it concentrated on expanding home ownership rather than, as in this Bill, on council housing.

The debate about relative benefits will doubtless continue for a long time. But I hope that the Secretary of State gave his attention to the January report of the Housing Research Foundation on home ownership for lower income families. That showed that in terms of a £10,000 house, which is the average cost—

Mr. Stallard


Mr. Scott

—whether it be in the public or the private sector—[Interruption.] If—

Mr. Deputy Speaker (Sir Myer Galpern)

Order. The hon. Member for Chelsea (Mr. Scott) is looking towards the Chair, apparently for some assistance. I know that it is customary to indulge in a degree of rough and tumble, but I hope that hon. Members will try to keep it at a reasonable level.

Mr. Scott

I do not object to Opposition Members having a go at me. It is when they have a go at each other that I object.

The cost to public funds in the first year of launching someone into council tenantry as opposed to home ownership is in the ratio of 3 to 1. It is estimated that £280 is the average cost of option mortgage tax relief to help someone to begin to own his own home, whereas the cost to public funds in the first year of launching someone into council tenantry is no less than £900. If we talk of launching people into these two alternative types of accommodation, we give three times as much if we launch him into council tenantry than if we launch him into home ownership—and it is new homes which matter.

The Secretary of State is fond of quoting figures about the relative average benefits to council tenants and to owner-occupiers buying their homes on mortgages. He always omits to point out that in dividing the total amount of tax relief which goes to help people to buy their own homes, it has to be divided not just by the number of people currently getting the benefit of that relief but by the total number of people who are buying or have bought their homes on mortgages. In council accommodation, we have more or less permanently to subsidise the accommodation. In the case of owner-occupiers, we do it only over the period of the mortgage, which at the most will be 25 or 30 years.

The Bill is also trailed to repeal the Housing Finance Act. The Secretary of State spoke in rather colourful terms about his aim of doing that. I am sure that the right hon. Gentleman remembers with pleasure the time that we spent in Committee considering the Housing Finance Bill, and I look forward to serving with him on the Standing Committee which considers the present Bill and to approaching the task of improving the legislation in the constructive spirit which he and his colleagues showed towards the Housing Finance Bill. The time that we spend in this Committee will be of the same sort of order. I am sure that the right hon. Gentleman will not wish to deprive himself of the pleasure of having a replay of our previous contest.

What does the Bill do? The twin arches of the Housing Finance Act are a national system of rebates and allowances and the extension of fair rents, which had already been introduced by the Labour Party to private tenants, to council and housing association tenants.

If the Bill becomes an Act in its present form, the rebate and allowance system will be retained, as will fair rents for private tenants and housing association tenants. The main effect will be to replace fair rents for council tenants with what the Government are pleased to call "reasonable" rents.

The Bill also changes subsidy arrangements. We are grateful to the Secretary of State for his partial explanation of what these are, but I shall ask for a little further explanation about them later. It phases private rent increases and ends decontrol by reference to rateable value. There is a great deal of technical detail which we shall look forward to exploring in Committee.

At one stage during the Committee proceedings on the Housing Finance Bill, I was invited to become acting PPS to my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery). The Bill took on a fresh flavour when I saw the briefing notes from which Ministers were working. It may not be proper for hon. Members serving on the Standing Committee to see a Minister's brief notes, but there is a lot to be said for hon. Members dealing with a technical Bill of this kind having a somewhat fuller Explanatory Memorandum than is customary. Perhaps the Secretary of State will consider that suggestion.

What does the change from "fair" to "reasonable" mean for council tenants? At present, under the Housing Finance Act, the rent depends on the standard and amenities of accommodation, with rebates and allowances for those in need. The aim of the Housing Finance Act was to see that families occupying similar accommodation with similar means paid similar rents. That was the basis of the fair rents system. It is that which is reversed by this Bill. Instead, the rent paid will depend, as I see it, on the state of the housing revenue account of the housing authority concerned, and that is likely to be capricious, anomalous and unfair between different families.

If a rent system is to be fair, surely it should be reasonable between three parties: the tenant who has to pay, and the ratepayer and taxpayer who have to subsidise the rent. Now we are to have a system whereby, if a local authority has a large stock of new houses, it will have to charge higher rents than if its housing stock is tilted to older houses. But individual families occupying similar accommodation and having similar means may be asked to pay vastly different rents, depending on the local authority area in which they live. To me, that has the smack of a truly haphazard system of rents.

Will "reasonable" rents be lower? The Secretary of State began to give us an answer, but I am not sure how far he got. Are they likely to be lower, or are they likely to rise more slowly than fair rents would have been liable to rise? Perhaps the Minister for Housing and Construction will say what Clause 1(2) means when it inserts: In determining rents for their houses, a local authority shall have regard to the terms of their rebate scheme under section 18 of the Housing Finance Act 1972. At the moment, the subsection sticks out like a sore thumb and appears to have little meaning. I suspect that it can only mean that, having had the benefits of a rebate scheme, a "reasonable" rent is likely to be higher than it would otherwise be.

On 5th November, my right hon. Friend the Member for Finchley (Mrs. Thatcher) spoke of the flats which at present are being built in Westminster, the cost rent of which is no less than £55 a week, whereas a fair rent has been set which is of the order of £10 of £11. What would be regarded as a "reasonable" rent? It seems unlikely to be any lower than the fair rent set under the terms of the 1972 Act.

Why have the Government set about this change? If fair rents are good enough for private tenants and for housing association tenants, as they still think they are, then why are they not good enough for those who live in municipal accommodation? It is not because council tenants are poorer than private tenants. We know that on balance they are not. Indeed, that would be irrelevant now that we have a national system of rent rebates and allowances.

The right hon. Gentleman took particular offence at the possibility that local authorities might sometimes make profits out of their housing revenue accounts. I could see no argument against that, particularly when, under the 1972 Act, those profits were to be creamed off and used in the areas of greatest housing need. If that was objectionable to right hon. and hon. Gentlemen opposite, why could they not simply have introduced a Bill which would have allowed local authorities to spend any surplus on their housing revenue accounts on any other desirable social objective, such as help for the disabled locally or any other laudable objective that local authorities might set themselves and agree with central Government?

The Secretary of State thought that local democracy ranked very strong. He talked about it in rather colourful terms. However, rents are now frozen by order from the Government. There is power in Clause 2 to limit increases as part of the counter-inflationary package. Therefore, the increase in local democracy is pretty limited under the terms of the Bill.

Perhaps I might ask another specific question which the hon. Gentleman will answer in winding up the debate. If such an order is made on a local authority, where will the burden fall? If rents are to be held down, and therefore the housing revenue account for a particular authority is to be kept down—and there is no subsidy in the Bill which I can find—will the burden again be on the poor ratepayer to meet any extra burden stemming from this provision?

I do not believe that the Bill has been introduced to repeal this part of the Housing Finance Act for any of those reasons. I believe that it stems from the hidebound thinking of the Government and the pressure put upon them from below the gangway because the Tories dared to attack one of the sacred cows of the Tribune Croup by extending fair rents to all tenants, including those in council accommodation.

I believe that because haphazard rents stem from the Bill the subsidies will also be indiscriminate. The right hon. Gentleman took us some way along the line in explaining these subsidies, but I should like him or his hon. Friend in winding up the debate to explain still further. The July version of the Bill in the Explanatory and Financial Memorandum referred to total subsidies for 1975–76 of £465 million. That figure has been increased in this Bill to £700 million. No fewer than four new subsidies are being introduced by the Bill. My hon. Friend the Member for Chingford (Mr. Tebbit) had a Written Answer on Friday which showed that existing subsidies for 1974–75 are already running at £692 million.

I do not think that the Government can have it both ways. Are reasonable rents or rate contributions going to be higher than envisaged so that we can get four new subsidies out of a miniscule increase in the total subsidies to be paid or, as seems more likely, are the subsidy figures in the Financial Memorandum wildly out of line so that the total burden on the taxpayer is likely to be well in excess of the figure mentioned? We should like an answer to that question when the Minister winds up tonight.

The Government have clearly decided to subsidise council housing rather than home ownership. I disagree philosophic- ally with that, but there are grave practical objections as well. The Government now appear to see local authorities as the main agents for future house building, as the sole buyers of development land, as the sole source of grant for those who wish to develop and the virtual monopoly providers of rented homes. It will be too much of a burden for local authorities to do all those jobs. If they were to do them properly it would mean the creation of too massive a bureaucracy and still greater burdens on ratepayers. My hon. Friend the Member for Southend, West (Mr. Channon) will return to that theme in more detail on Wednesday. I do not want to trespass on his territory.

Surely we should be seeking to diversify our efforts in housing. We should be trying to spread home ownership to more people. We should try to envisage an increasing rôle for the voluntary housing movement both in renting and in providing a bridge from renting into home ownership. There should be a far more imaginative use of co-ownership schemes to get people into home ownership. We should not be sinking into the quagmire of more public ownership, which is expensive and largely unwanted.

I want home ownership for all who can afford it so that local authorities and the voluntary housing movement can launch an attack to meet the needs of special groups, and I want to attack the problems of the million of older unfit homes and to tackle the housing black spots which are still a disgrace in our society.

In our Bill, which was largely taken over and made into legislation by the Labour Government during the summer, housing action areas featured large. I was hoping that by now we might have begun to see some housing action areas being designated by local authorities. There is certainly a crying need for them. Perhaps the Minister in winding up will tell us when we are likely to see the first of these areas. I have heard rumours that local authorities throughout the country are ready to designate and are anxious to get ahead with the work, but that they have been held up by delays in the Department of the Environment.

Above all, we should be getting home building and home improvements going again. We need urgent Government measures to ensure that the building starts begin to rise and that the improvement grant figures again begin to rise instead of steadily decreasing. I am sad that the ragbag of policies that we have so far had on housing from the Government, of which the Bill is yet a further sad step, will do little to achieve these aims.

4.58 p.m.

Mr. Stephen Ross (Isle of Wight)

The Liberal Party's views on this complicated subject have been clearly set out on a number of occasions, but particularly in a policy document, "Forward with the Liberals", published in 1973, on which we fought the last two General Elections, and in which we said: The Liberal Party approves the principle of economic rents offset for those on low incomes by Government benefits. For this reason the Liberal Parliamentary Party supported, with major reservations, the White Paper 'Fair Deal for Housing'. They felt unable to support the proposals set out in the Housing Finance Bill, however, and consequently voted against it. These proposals which eventully passed into law, involve means-tested rebates on a colossal scale. Liberals not only object to the number of means-tested benefits on grounds of principle, we also appreciate that the take-up of means-tested benefits by those eligible is low. We advocate that the offset against economic rents should be through a housing credit as part of the tax credit system."— I do not think that we shall get that yet but it is a long-term aim— In addition, the financial provisions of the Housing Finance Act are such that the Government is, in effect, operating its initial scheme of rent rebates and allowances at the expense of ratepayers and better-off council tenants. The Act involved a loss of local authority freedom and autonomy. The Liberal Party believes that local councils should retain their freedom and autonomy within the framework of national policy. They should continue to determine levels of rents, rebates and balances of profit and loss. They should continue to exercise their local judgment on local needs. In the last analysis, they should have primary responsibility for the public sector. If larger administrative units are required, they should be modelled on a regional basis."— I suggest to the Secretary of State, who is just leaving the Chamber, that he should think of the housing problem on a regional basis.

A further Liberal objection to the old Act is levelled at its failure to provide for a housing repairs account. This could mean that local authorities will tend to skimp repairs if higher spending entails drawing deeply on the rate fund to support housing revenue. Councils with a progressive attitude towards tenants and with a desire to improve and modernise property will be penalised. There is a far greater need for renovation and repairs to existing stocks of houses. I could produce photographs of no fewer than 50 properties in the county town of Newport in the Isle of Wight that are standing empty and rotting.

We object also to the imprecise formula for calculating fair rents. It does not take enough account of the difference in circumstances between the public and private sectors.

Dealing with this Bill we note from Clause 1 that Parts V and VI of the old Act are to be repealed and housing authorities are to have the opportunity again to fix the rents of their own council dwellings. This move is to be welcomed and the gesture will be appreciated throughout local government circles.

Part V of the Housing Act 1957, which I have studied, is not very explicit in its definition of a reasonable rent and, despite the opening remarks of the Secretary of State which I shall read with interest, I suggest that this is the matter to which the Government should pay more attention in Committee.

What is to be the rôle of the rent officer in future? Is he to be consulted by local authorities on the question of fixing reasonable rents? The idea of a rent officer was set out by a previous Housing Minister, Mr. Richard Crossman. The rent officer has a lot of knowledge of what is involved and can pass on a great deal of useful advice. As the Association of Municipal Authorities rightly said in its memorandum when referring to Clause 2, the restriction of rents in the furtherance of counter-inflation policies must not be permitted to contribute to the inflation of rates. No doubt this matter will come up again during our debate on Wednesday.

Clause 3 provides for no fewer than five elements of subsidy. I was grateful to hear the comment by the Secretary of State. It is almost impossible for a layman to comprehend the complicated nature of these different payments. I am grateful for the right hon. Gentleman's explanations and I shall refresh my memory on them later.

When are we going to make a clean sweep and devise a more straightforward and more clearly understood system such as we have been calling for for some years? One can only comment that the capital costs element fixed at two-thirds of the permissible cost does not look high enough to get things moving. The supplementary financing element does not take account of all the increases that it should. It should include repairs and maintenance, while the special element subsidy, which is welcome, needs further elucidation. Perhaps we shall get that in Committee.

Perhaps the strongest criticism of the Bill is against Clause 4, which deals with rent rebates. Local authorities will have to find from their own limited resources 25 per cent. of the cost of this service. This is bound to place increased pressure on them, as will the costs of administration. Should not the Government now accept the responsibility for bearing a higher proportion of the cost involved? I accept the argument that some costs should fall on local authorities, but what about 80 per cent., or even 90 per cent. of the total being found by the Government? Inevitably, the poorer areas such as the far West, the North and Wales will have fewer resources in the rate fund to bolster rebates yet those are the areas in which the largest number of people will apply for them. On a different scale, the same will happen in London. The poorer boroughs with poorer tenants will get caught both ways.

The Bill discriminates against the private sector in that the provisions of the Counter-Inflation Act will apparently still apply to this area of housing provision. Moreover, the relevant clauses which rightly make it possible to phase rent increases appear extremely complicated and I am sure need further elucidation. I should not like to have to advise private landlords on this matter. [Interruption.] Let us face the fact that there are still some decent landlords. I receive many letters from old ladies, as I am sure other hon. Members do, who were left a house because its purchase originally was regarded as a wise investment, and they still have tenants on low rents. It will be difficult to explain parts of the Bill to them. One would need to be a genius to do so.

As far as I can discover, there is no statutory requirement for local authorities to maintain a repairs account. I do not know whether that is in fact so, but I do not see any provision for it in the Bill and if I am right the omission is to be regretted.

Subject to those strictures, I give a cautious welcome to the Bill and intend to support its Second Reading later this evening.

If I may now deal with the amendment tabled by the Official Opposition, I should like to remind them of the words of my hon. Friend the Member for Cornwall, North (Mr. Pardoe) on 15th November 1971 during the debate on the Housing Finance Bill. He said: The Government"— that is the Conservative Government— have introduced what they fondly imagine is a radical reform. It is nothing of the sort. The Bill will not build more houses. It will not house homeless families. It will certainly not provide decent homes for all families at a price within their means. It will virtually nationalise all public housing, taking away the effective control of housing from local councils while paying lip service to the idea of local housing. It is, in effect, a means of swopping the sources of subsidy finance, but local rates are totally inadequate to bear the burden.

The Bill will seriously reduce the real standard of living of a great number of people. It will force many on lower incomes to take cheaper houses which are too small and in the wrong place. It will create in housing two nations. In one will be those who are forced to buy on mortgage houses they cannot really afford, and in the other will be those who cannot afford the rent and will have to go cap in hand for a rebate; two nations—a nation of debtors and a nation of beggars."—[OFFICIAL REPORT, 15th November 1971; Vol. 826, c. 100–1.] How prophetic my hon. Friend was, and how wrong my hon. Friends would be today to take seriously the amendment tabled by the official Opposition.

I was grateful to the hon. Member for Chelsea (Mr. Scott) for his summary, but I thought earlier on that we were treating the housing problem nothing like seriously enough. The situation is tragic. Of course it is the local authorities who will have to take the strongest measures to deal with the problem. No one in the private sector will be able to tackle this. We want increased home ownership, and we want private housing to get off its feet, but the situation now is that nobody earning less than £70 or £80 a week has a hope of getting a mortgage to buy a home, so people must look to the local authority for housing.

I was grateful to the Secretary of State for what he said at Brighton when he spoke about low-cost housing and mobile homes. Let us get on with the job of providing them, and get on with it quickly. Even in a place such as the Isle of Wight there are over 3,000 people on the waiting lists. Last Saturday I met a young couple. They have been married for four years. Both of them have night jobs. They return from work in the mornings and get into the same bed that the mother of the husband has just vacated. She is aged 66. They have to do that because there is nowhere else for them to go. Before local government reform they were told that they were top of the council's waiting list. But now that there is a bigger authority they have been told that they have not got a hope in hell of getting better accommodation unless they have a family. This young couple are sensible, and they have not had a family. They will wait until they have decent accommodation.

The other day I met a young man who had come out of the RAF. He has to commute to Winchester. He earns £45 a week. He had £1,500 saved and lie was trying to buy a house for £8,000. He could not get a mortgage. He has had to apply for a council house. Meanwhile, his wife is sleeping in the front room of the house of his inlaws, aged 80 and 81, and an elderly aunt. They are living in very inadequate accommodation. His wife is having treatment from her doctor. What fun can it be for this man to go home after his work to that sort of situation?

Many of these people are having nervous breakdowns. We all know about these cases. We cannot be jocular about the situation. Therefore, I welcome the Bill and I welcome anything which will enable councils to provide more low-cost housing, because we must do something now.

5.11 p.m.

Mr. Frank Allaun (Salford, East)

Unlike the hon. Member for Chelsea (Mr. Scott), I think that this is a really excellent Bill. However, I shall confine my remarks to two serious defects which I hope will be eliminated before the Bill becomes an Act so that it becomes an even better measure.

In the Labour Party's election manifesto, published a couple of months ago, two new housing pledges were introduced. The first was that controlled houses lacking basic amenities should remain in control. It was scandalous that under the Conservative Housing Finance Act these houses should have been withdrawn from control. Indeed, since 10th October 28,000 landlords have issued rent increase notices for this class of house. I am very glad that this, fortunately, will no longer occur and that these houses will remain, as they should, in rent control.

There was a second pledge, however, in our manifesto. That was that the Government would ensure restriction of rent increases for all other tenants—who, of course, are the overwhelming majority of private landlords' tenants. This will not take place unless we amend the Bill. Indeed, for private tenants the situation will be pretty much what was under the vicious Conservative Housing Finance Act. There is only one concession: that rent increases, instead of taking place immediately, will be phased over three years. Some of the rent increases were phased over three years even in the Tory Housing Finance Act.

Thousands of landlords of this class have recently issued rent increase notices to their tenants. I know of cases in which rent assessment committees have agreed to these increases, and sometimes to very big increases of up to £400 a year. If my hon. Friend the Member for Paddington (Mr. Latham) catches your eye, Mr. Deputy Speaker, no doubt he will give the House some evidence on that point.

What is happening is in complete conflict with the Government's declaration of intent regarding their policy of countering inflation. Their counter-inflation policy surely means that rent increases should not occur, and certainly not on this scale. I was very dissatisfied with the remarks of my right hon. Friend the Secretary of State on this matter when he did not concede what I hoped he would. I am appealing to him and the Minister for Housing and Construction to have another look at this matter before the Committee stage. My right hon. Friend did not even go as far as the Minister for Housing and Construction went on 13th November when, in reply to a Question from me on this point he said We are still considerinig whether some form of restraint on individual cases might be practicable."—[OFFICIAL REPORT, 13th November 1974; Vol. 881, c. 388.] I want to make it clear that I am not satisfied with dealing merely with individual cases, but at least that is better than not dealing with any cases at all.

No doubt the Conservative Opposition will cite hardship cases concerning little landlords. The Liberal spokesman did that, although it is usually Conservative Members who take that line. We have all had letters on this subject, but I suspect that behind the skirts of the little landlord hide the big property boys, who will make millions of pounds out of rent increases.

I appreciate the fact that some little landlords do not make a fortune out of their houses and that some suffer hardship. But what about the far greater number of tenants who suffer hardship? The establishment and big business support the big property owners. It is time that we Labour Members stood up for the tenants, who seem to have very little on their side. Indeed, we can cite pathetic cases of private tenants. In some cases, they are having to leave their homes because they cannot afford the new rents which are being imposed by the landlords.

Another argument which we shall no doubt encounter this evening and in Committee—some of us hope to serve on the Committee, and I am staking my claim—is that landlords are hit by inflation. My right hon. Friend referred to the rate of inflation in this country. There is a difference between a landlord using the excuse of inflation and a manufacturer using the excuse of inflation. It is true that a manufacturer, at a time of inflation, must pay more for his materials, machinery, wages and so on. I hasten to point out to my hon. Friends that I have not joined the ranks of the employers. However, there is a distinction between the employer and the landlord. The landlord does not have to face these increases except in one respect—repairs. I shall come to that matter shortly. His property has not risen in cost. Some of these properties were built a hundred years ago for £70 or £80, and the tenants have been paying rent ever since. His costs have not been increased.

Mr. Michael Latham

Come off it.

Mr. Allaun

The hon. Gentleman says "Come off it", but it is perfectly true that the original cost of the house has not increased. The costs for many of the people who inherited these houses perhaps a generation ago have not been affected by inflation, so I hope that the hon. Gentleman will not say "Come off it" again.

Mr. Michael Latham

Surely the hon. Gentleman appreciates that the fact that landlords are not getting any increase in rent, because of the rent controls which have existed for the last 50 years, is the direct cause of slums and decay in housing in this country? That is what the discussion is all about.

Mr. Allaun

That does not affect the point I am making, that the costs of the landlord are not affected by inflation, with the exception of repairs. On repairs, there is a case, although, believe me, many landlords do not do any repairs at all.

There is a solution in the Bill regarding controlled tenants. It is a solution for which some of us have pressed for many years—that where the landlord does repairs he should be allowed to charge 12½ per cent. of the cost of the repairs, which would mean that in eight years he would have recovered all he had spent, although I would have thought that repairs are part of the reason for paying the rent.

If such a system can be introduced for controlled tenants, as it is in this Bill and as it is for improvements, then why can it not be introduced for all the other tenants, particularly if the landlords are made to produce their receipts for repairs expenditure? Incidentally, they are required by rent assessment panels to produce their receipts, although they are not so required by rent officers. That is a minor point, but it needs clearing up. I cannot see why there is not a basis here for dealing with repairs.

It will also be argued that some landlords are losing on their properties. If they are, let them sell them to the local authorities who can rent them to people on their housing waiting lists. When cotton shares fell in the 1920s the Government did not rush to those who had made a bad investment and make up their income. Why therefore should a Government rush to the assistance of landlords, particularly when they have neglected repairs over the past generation?

I want to deal in two minutes with another point, regarding subsidies for local authorities. The city treasurer of Salford, Mr. William Shaw, a very authoritative and much-respected city treasurer, has worked out that our council will be £500,000 a year worse off under the subsidies proposed in the Bill. This afternoon I spoke to the leader of another big city council who told me that, as things are, that council will have to raise its rents by 50p a week next April and by a further 75p a week in the following April.

I admit, and welcome, the fact that a further subsidy has been introduced in the Bill which will apply for 1975–76. But I very much doubt whether it will cover the deficit to which I have referred. Moreover, local authorities do not know how this proposal will work out. Earlier this afternoon I attended a meeting of leaders of local authorities and they asked that as soon as possible my hon. Friend the Minister, or his civil servants, should explain the operation of this extra subsidy.

The city treasurer of Salford points out—I am sure that this applies to other cities; I am not making a particular case—that the 66 per cent. or 33 per cent. of grant towards the increased interest burden will amount to less than the 75 per cent. grant that applied previously. He also points out that there is no subsidy in the Bill towards the increased cost of repairs and management, which is particularly important where there are blocks of local authority flats.

I therefore conclude by pleading with my hon. Friend the Minister and my right hon. Friend the Secretary of State to concede on these two issues, because that would go a long way to relieving hardship which would otherwise be imposed on private and council tenants. If such relief were attained the Bill would become one of the great housing measures of this century.

5.26 p.m.

Mr. Peter Emery (Honiton)

May I first of all, even in his absence, congratu- late my hon. Friend the Member for Chelsea (Mr. Scott) on his return to the House and upon taking over responsibility for housing in the Shadow Cabinet. I am delighted that we in the Opposition consider that housing is of such importance that it should have a separate portfolio in the Shadow Cabinet, as a separate responsibility. This is better than housing being combined within another Department. Perhaps the Minister of Housing himself might believe that what I suggest is not such a bad idea.

Mr. Julius Silverman (Birmingham, Erdington)

If what the hon. Gentleman says is correct, why did the administration of which he was a member introduce the Department of the Environment which embraced as part of it the former Ministry of Housing and Local Government?

Mr. Emery

The hon. Gentleman has been in the House long enough to know that it is possible to have a single Department in which there is more than one Cabinet Minister. There are many illustrations of that—in this Government as there were in the Government of which I was a member.

Turning to the Bill, I believe that, overall, it will increase the housing problem in this country rather than ease it. The Bill sets out to ensure that in the long run local authorities can maintain rents at a level well below the market rents for council properties. I cannot believe that is in the interests of tenants of private rented property, or in the interests of tenants in council property, and it is certainly not in the interests of the nation as a whole.

To sweep away a fair system of fair rents that went right across the board for everybody must be a massively retrograde step. The Bill sets out to ensure that we create a special new area of privilege, providing a section of society which has a special advantage over its fellow men. This is now to be the long-term position of the council tenant. It is hardly a step towards national unity, as was implied by the Secretary of State.

I wish to give an illustration of what I mean as it affects my constituents. I held a surgery last Saturday, and probably many other hon. Members did, too. At that surgery I encountered two separate cases, involving people from different parts of my constituency. In each case there were complaints that people were selling their own house to move into a council property. I cannot believe that is the intention of the Bill, nor can it be of any benefit at all towards dealing with the type of housing problem facing us at present.

I now put to the Minister a direct question arising out of the Secretary of State's speech. The hon. Gentleman will recall that in their interim proposals the Government gave an undertaking to the local authorities that there would be a major reform of housing finance. I gather from the Secretary of State that he is about to set up a committee to fulfil that promise. Will the Minister tell us when he winds up how he envisages the structure of that committee's report fitting in with the Bill?

It must be remembered that the Bill is not to cover only a limited period. Indeed, on certain aspects dealing with the counter-inflation restrictions, the local authority associations have urged that it should be limited. But it is not. What worries me, therefore, is that we shall have the Bill on the statute book, a committee will sit for, perhaps, a year or 18 months, and then the exigencies of parliamentary time will ensure that whatever he the outcome, that major review of housing finance will be left hanging around for many years thereafter. Those who may serve on that committee, and certainly those who may wish to give evidence to it, have a right to know at this stage where the Government see the outcome of its review fitting into their legislative programme on housing.

The Secretary of State claimed that when he took over his Department there had been no attempt to see the relationship of aid for housing in the private sector in conjunction with aid for housing in the public sector. He made some criticism on that account, and he suggested that there should be equal help to all types of housing, in whichever sector it might be. In my view, however, the Bill proceeds in precisely the opposite direction. It will ensure that the problems in the private sector are massively increased. Indeed, it will create a short-term disaster for the private housebuilding industry.

Let us make a comparison between the average local authority rents and average payments on new mortgages. For this purpose, I take some figures provided by the Housebuilders' Federation. Annual net payments on average new mortgages in the United Kingdom were about £208 in 1968, and the average annual weekly rebated rents on local authority dwellings in England and Wales were about £99 in 1968.

Let us now look at the increase year by year from 1968 to 1973. The annual net payments on average new mortgages rose as follows: £208 in 1968, £232 in 1969, £253 in 1970, £296 in 1971, £360 in 1972, and £480 in 1973. On the other hand, in that same period the average annual total of weekly rebated rents for local authority dwellings in England and Wales rose as follows: £99 in 1968, £107 in 1969, £120 in 1970, £130 in 1971, £150 in 1972, and £167 in 1973.

I know that those are averages, but to make any sensible comparison one has to use averages. Moreover, one can see more easily from those figures than from any other example I could give the way that life is becoming more and more difficult for somebody who wants to own his own home and wishes to take out a mortgage to do so. Here again, therefore, we see that aid is not being directed towards those people—80 per cent. of the population—who prefer to own their home if they can possibly have the chance. It is being given to assist public sector housing as a whole.

There will be a direct effect on the number of new homes built and available in the private sector. According to the Department of the Environment's own figures for July to September, 1974, right up to date, housing starts in the private sector are 55 per cent. lower and completions 33 per cent. lower than in the same period in 1973. I do not necessarily blame the Government for the completion rate, although one would certainly have hoped that they would keep it up. The rate of starts on the other hand, is absolutely their responsibility. They cannot duck this responsibility as they so frequently try to blame the adverse housing situation on the last Conservative Government.

Housing starts in the private sector, as I say, were 55 per cent. down. Indeed, I believe that there is no chance of private housing starts being up to the level of 110,000 by the end of this year. If that is the outcome, of course, they will be 50,000 fewer than in any of the worst years in the last 10 years.

The consequence will be increasing financial liquidations among builders. There will be a lack of employment and growing unemployment among people in the building trade. There will be a falling demand for building materials and the inevitable consequences in the associated industries. Moreover, the pool of housing available to the nation will be that much smaller.

All that is to be contrasted with the Government's approach stated to the House and to the nation, that they would do everything to ensure that there was an increase, not a decrease, in the pool of housing available for everyone.

My major criticism of the Bill is that the Government are returning to subsidising "buildings" rather than subsidising "people in need" with the object of meeting each person's individual housing requirement. It does not make sense thoughtlessly to subsidise bricks and mortar. It makes far greater sense to subsidise those who are in need so that they may be put into whatever bricks and mortar are available to meet their housing need. That is my principal criticism of the Government's whole approach, and it is a fair criticism to make, since they are entirely misunderstanding the nation's true requirements in trying to tackle the housing problem.

Mr. John Ovenden (Gravesend)

Will the lion. Gentleman carry that argument a little further and oppose the present system of tax relief on mortgage interest, which gives relief based upon the price of the house and is in no way related to the means of the buyer?

Mr. Emery

It must be directly related to the means of the buyer because it is only according to the income and means of the buyer that the amount of relief can be given. However, I shall meet the hon. Gentleman's point directly. No matter whether in the public or the private sector, I believe that the aid should be related to need. I regard that as absolute, and I am not willing to back down, whether it has or has not been done before. I believe that to be the right way to handle the £700 million which will be going into housing subsidies under the Bill. There are about 5 million council properties in the public sector, which means that in England and Wales the individual figure will be some £140 for each property now in existence. That is a pretty high level of help, irrespective of how it will be used.

I come now to another question for the Minister. The Association of District Councils is somewhat concerned about the restrictions being placed on the level of increase which its constituent authorities may charge on rents, that is, that they must be related to and should not exceed the pooled historic cost of the totality of their housing. The association has suggested to me that a local authority might well decide that it was reasonable to limit rents to pooled historic cost in certain circumstances.

However, if this had the effect of keeping rents at a very low level compared with those of neighbouring authorities or with market rents, it could be reasonable for local authorities to fix rents at a higher level"— than pooled historic cost. The association says that freedom should therefore be restored to authorities to allow them to have the power to repay from the housing revenue account rate fund contributions which had been made to the housing revenue account in former years. If the Minister in reply will comment on that aspect, the association will be glad.

The increases in house prices and mortgage rates over the past years have led to a substantial widening of the gap between the average net costs of servicing a new mortgage and the average weekly rebates on the rents of local authority houses. As a result, families which wanted to buy their own homes have almost certainly decided instead to rely on local housing programmes and to stay in local authority housing because of the much lower costs involved. The truth has been concealed in our subsidy system, progressively so with the increase in inflation.

Let us take the case of a man on a lower income renting an average new house costing, say, £10,000, which is not unusual for a council house at the moment. Initially, the rent is at about £6 a week. To make it possible, subsidy averaging over £20 a week from the rates and taxes is paid for that individual. The gross total cost is, therefore, between £1,300 and £1,400 per annum.

If that man buys a similar house, the gross annual cost to him is just over £1,180 compared with the £1,300 to £1,400 a year for the rented home. In other words, in terms of gross costs, it is much better for him to be buying his own home. But that is denied to him because he could not claim, in buying that house, the subsidy of approximately £20 a week which he would be getting in council property.

Indeed, he has to find, first, the initial deposit, substantial or otherwise, if he wants to buy, and he must also pay a weekly gross repayment, depending on certain variable factors, of about £18 a week. The option mortgage scheme subsidy and the tax relief available to him, totalling about £6, reduce the repayment, but the repayment is still more than treble the rent which he is called upon to pay if he lives in council property.

How dare the Secretary of State say that he believes there should be an equality of help to both the private sector and the public sector, when this Bill sets out to do the opposite? It is socially divisive. I believe that we shall see an increase in the overall housing problem and a decrease in the total number of homes built over the next few years because of the action set out in the Bill. The Bill is introduced, I am sure, with good intent—I am not criticising the intent behind it—but I believe that the analysis of the situation by Ministers is so shallow that it will make the situation worse rather than better.

5.45 p.m.

Mr. Julius Silverman (Birmingham, Erdington)

The hon. Member for Honiton (Mr. Emery) mentioned people who want to be owner-occupiers or potential owner-occupiers but have gone on the council waiting lists. That is happening in Birmingham, which has a council house waiting list of about 30,000 families. New applicants are joining it at the rate of more than 200 a week. There is no doubt that a substantial number of them are young couples who have not the slightest possibility of getting a mortgage. Privately-owned houses have been priced out of the market to such people and they are going on the council lists, not because it is cheaper to do so but because it is the only thing they can do. That is a point which must be borne in mind.

The City of Birmingham is being very active in this situation. The local authority is buying up private houses from builders who cannot sell them otherwise and is disposing of them at 100 per cent. mortgages to those who can afford such mortgages or is using them for council waiting list purposes. Surely that is to be commended. If it is correct, as it is, that people are going on to the council lists who might have tried for a mortgage in other circumstances then it is simply because it is the only thing they can do at present. But with a waiting list of 30,000, many of them will have to wait two, perhaps three, years before they can qualify for a council house.

Mr. Emery

Would not the hon. Gentleman agree, therefore, with the whole contention of my argument that if these people could afford it and were given the same kind of help as they get by moving into council property, it would be in their interest, would decrease the Birmingham housing waiting list, and would be in the nation's interest to give them that help and ensure that they could buy their own homes rather than go into council property?

Mr. Silverman

I do not agree. In the first place, the average mortgagor is receiving in relief more than the average council tenant. That is a fact. That disposes of the first part of the hon. Gentleman's argument.

The hon. Member for Chelsea (Mr. Scott) believes that the housing problems can be solved by an extension of owner-occupation, as does the hon. Member for Honiton. I am certainly not against an evtension of owner-occupation, but it is fatuous and impracticable to suggest that the housing needs of hundreds of thousands of our people who cannot possibly hope for a mortgage, the people who are in real need, can be dealt with by any other method than by a massive extension of council building and council housing.

Mr. Marcus Fox (Shipley)

Is the hon. Gentleman saying that the only solution to this terrible crisis in housing is to extend council house building and that the private building industry has no part to play?

Mr. Silverman

The private building industry is, for the most part, building for the councils at the moment. The direct labour sector is very small. I am certainly not against any method of extending owner-occupation and building houses for private ownership. What I am saying is that for the people in real housing need, who are the nub of the problem, the only solution is a massive extension of council building. For that reason I welcome the Bill.

Mr. Stephen Ross

Does the hon. Gentleman agree that the private sector should now be concentrating, as I believe it is at long last, on the establishment of low-cost housing, such as timber-framed housing? When it can bring the price range of such property down to £6,000£7,000, it will have a rôle to play but until that happens we must look to the councils.

Mr. Silverman

That is a technical building problem. I am not against that idea, if it can solve the problem, but there are all sorts of difficulties with prefabrication. I do not know of any prefrabricated system which is significantly cheaper than the conventional system of housing building. In the past, prefabricated and system-built methods have been used not so much for price reasons as because site labour was in short supply. My right hon. Friend the Secretary of State said in a recent statement that he is prepared to consider any method, including prefabricated systems, which will help to solve the acute housing shortage, and I, too, am prepared to consider any method.

Some of the subsidies provided in the Bill are generous, but not all of them are. I want to voice the opinions of some of the local authorities on the matter, and to ask a few questions. Is the special element simply a substitute for the high-cost subsidy—that is, an increased subsidy for high cost which will embrace more than the subsidy proposed in the original Bill, which I understand provided relief and assistance only for London?

The Minister for Housing and Construction (Mr. Reginald Freeson)

The answer is "Yes" in relation to the coming financial year. Thereafter, the original system comes into operation.

Mr. Silverman

That means that in substance the special element is a special subsidy for the year 1975–76, and that for that year it will replace and increase the high-cost subsidy.

There is also the question of existing loan charges, where there is provision for a 33 per cent. increase in the rate of interest. This will be of some assistance if interest rates increase, which may or may not happen. There are various factors at work. What local authorities are much more interested in is some provision for inflation in the cost of repairs and management, which they are very worried about. There is no provision for any contribution to that inflation. The local authorities have to meet the whole of any increase resulting from inflation.

I turn to the rent rebates system. There is a good deal to be said for the overwhelming part of the rebate being paid by the Exchequer, because it is a form of relief, like supplementary benefit or family income supplement. There is a powerful case for at least 90 per cent., not 75 per cent., being paid by the State. There is no justification for saying that the cost of administration should be borne entirely by the local authority.

A number of other matters still have to be cleared up. We do not know what the high-cost element or the special element will be. We do not know what will be the special increase in the basic subsidy which can be provided by the Minister under Schedule 1.

The local authorities still wish to know about quite a number of matters concerning administration. They will have to prepare their accounts and make their other preparations well before 1st April. Several matters may still be questions for negotiation with the local authorities. They want to know what the Minister has in mind, because part of the Bill is more or less a framework within which the details have to be filled in by orders or ministerial action. I hope that information will be available soon.

I personally welcome the 66 per cent. relief on new loan charges, which will be of great assistance. My right hon. Friend is right to concentrate his assistance upon new building. Without the great assistance being given to local authorities, they will find it practically impossible to build at all.

With some reservations, I think that on the whole the Bill is very good. I welcome it, and the passing of the Housing Finance Act, which, apart from its effect on rent, was a gross affront to local democracy. It will pass unlamented, except by some Conservative hardliners, and I notice that even they in their amendment do not propose the retention of the Act, which is now a passage in history. I hope that this Bill will be carried decisively.

5.58 p.m.

Mr. Michael Latham (Melton)

The hon. Member for Birmingham, Erdington (Mr. Silverman) has great experience of housing matters, and has served on Standing Committees considering housing Bills. The hon. Gentleman raised some important technical points, and because the Minister will no doubt reply to them tonight, or in Committee, I do not wish to comment on them. I disagreed with the hon. Gentleman when he dealt with the more theoretical than practical questions, and I hope that those points of disagreement will come out in my speech.

The Bill represents a further stage in the public sector housing policy pursued by successive Governments since 1919. That policy can be summed up in three ways. First, there is the view taken by every Housing Minister since Arthur Greenwood in 1930, and especially the late Mr. Richard Crossman in the 1965 White Paper on Housing, which is that it is possible to meet the demand for rented housing by building more council houses, but that that policy will continue only until all the slums are cleared and the demand met. Once that is done, it is said both in the 1965 White Paper and elsewhere, council house building can come to an end.

The second premise is that the reason why that demand has not been met so far is a shortage of financial or possibly industrial resources. It is said that if more money is provided, and the building industry is energised, the problem will be solved.

The third premise is that the price of privately-rented accommodation must be held down to avoid exploitation of the tenant. But it is said that that is to be only a temporary solution, as the public sector alternative will soon take over from private landlords.

These are the three premises on which housing policy has been based, at least since before Greenwood. I have no hesitation in saying that each premise is incorrect. History and experience have shown that to be so and the Bill will only serve to make the housing problem worse, not better.

The Bill seeks to spend several hundred million pounds on council housing in 1975–76. That figure surely should make us pause. Parliament has been voting housing subsidies since Addison's Act in 1919. These sums must now be running into hundreds of thousands of millions of pounds. Yet, so far from achieving the wish of Arthur Greenwood or his son, now Lord Greenwood of Rossendale, or the late Richard Crossman or any other Housing Minister that the slums should be cleared and the need for council housing vitiated, the truth is that the situation has steadily worsened.

In 1971 an inquiry was set up into the nation's housing stock. It reported to the then Minister, my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery). A similar inquiry was established in 1967 which reported to Mr. Greenwood. The 1971 inquiry found that there were 1.2 million dwellings unfit. That was 7 per cent. of the housing stock. Most of them needed immediate demolition. It also found that 2.9 million dwellings, or 15 per cent. of the total stock lacked one of the four basic amenities—an indoor lavatory, a fixed bath, a wash basin or running hot and cold water. This meant that one in five of our fellow countrymen were living in conditions ranging from bad to impossible. The survey covered only England and Wales and the situation in Scotland, as we know, is far worse.

Perhaps most depressing of all is that the 1967 survey showed that 72,000 council houses were already unfit and needed demolition. I do not think that the 1971 survey dealt with this aspect. Yet this dire state of affairs still existed in spite of colossal expenditure and effort on council housing. In 1951 there were 2.5 million council houses in Great Britain —18 per cent. of the stock. In December 1973 the figures were 6 million and 31 per cent.—one of the largest proportions of public housing in Europe. Vast estates circle our great cities of London, Birmingham, Leicester, Liverpool and Salford. Tower blocks thrust into the skies. Half the architectural profession and innumerable planners are employed by local government. Yet the waiting lists grow longer and those already in council houses grumble that their properties are inadequately repaired. The truth is surely that throwing money at the problem as this Bill seeks to do deals only with symptoms and not causes. Our whole national housing policy has just grown like Topsy and has done so in a disastrous way.

In 1915 Asquith's Government first legislated to hold down rents for private property. This was a temporary measure to stop profiteering during the First World War. That temporary measure is still with us and the Government want to make it more extensive in the Bill. In 1919 Addison's Act first provided finance for publicly-rented housing—again as a temporary measure and to house soldiers coming back from the war. It is on the record that the House considered then that the measure would be in the tradition of the nineteenth century public health Acts, that is to say to provide competition for private builders building speculatively to let. It would keep up private standards which would have to be raised to meet municipal competition. Both of those rationales were erroneous and impossible. Once the State had taken to itself the power to fix the price of the private product and had provided a subsidised alternative it destroyed the free market.

This is where a second set of very important statistics comes in. In April 1951 there were 6.2 million privately-rented dwellings, constituting 45 per cent. of the total stock. In December 1973 there were 2.2 million, or 14 per cent. Municipal competition has destroyed the private market but it has not been and never will be able to make up the difference. That is because of what I can only call Gresham's law on housing—that bad houses will drive out good.

If restraint is put on the market supply of one type of construction—privately-rented housing—it is absolutely impossible to plug the gap by providing a dif- ferent type of subsidised housing. As fast as subsidy is given the ill effects of the control require another control and thus another subsidy. That is why local councillors are always complaining to hon. Members that they need more powers to solve the housing problem. When they get them they discover that the powers are inadequate and that they never will be adequate.

As a related factor, the Bill continues the confusion of policy between "need" and "demand". Strangely enough, the late lamented National Plan was quite right about this in 1965 when it said, on page 171, that it is almost impossible to quantify the need for housing". That is still true. But actual "need" for subsidised housing—that is to say, for those people who are unable to pay the market price for their accommodation —which is only another way of saying that they are not paid a living wage—is a fixed and limited datum. It is possible to examine it scientifically and make appropriate provisions. But potential demand—which is continually confused with need—for subsidised accommodation is limitless. Local authority waiting lists will never get any shorter since they represent potential demand. Both the price of houses and the supply are limited and the inevitable consequence is a shortage of accommodation and a rationing by queue.

The truth is that rent control on the one hand and subsidised municipal building on the other are not a cure for housing, as my earlier statistics proved. They are actually the cause of it because they create shortages. That is why the Bill, which intensifies both, is so monumentally irrelevant and will merely spend more public money without dealing with the roots of the problem.

Nevertheless, if we must proceed further down the subsidy roads—I accept that the Labour side believes that that is how to deal with the problem—it becomes increasingly necessary to reach some degree of all-party consensus. If not, we shall go on wasting time in Parliament after Parliament, repealing each other's Acts.

Although I believe that rent control is hopeless and damaging, I know that the Labour side believes in it. No attempts by Conservatives to decontrol private properties will revive the private market. Landlords will always sell with vacant possession, because they fear that a future Labour Government will freeze rents. For exactly the opposite reason the Left-wing policies on land and betterment have failed because landowners will wait until the Conservatives return in the hope of a new situation.

Such indecision in these vital matters is no longer tolerable. It is high time we had a Select Committee aimed at reaching some degree of all-party agreement on housing and land. With the catastrophic decline in the privately-rented sector there is now the greatest possible danger of the nation polarising into owner-occupiers on the one hand and council tenants on the other. At the present rate of decline there will be no new privately-rented accommodation in 1996. The trouble is that the present rate is increasing.

Since the State can never catch up with that decline, students, young marrieds and single people will have no hope of finding a home. There are therefore two ways in which, I suggest, we could halt the tide of decay. Both of them would retain controls and security of tenure, so as to meet the concern of the Labour Party. I hope that the Government will consider them.

First, the fair rents systems for privately-rented housing could be scrapped and replaced by a new "indexed rents" basis. Pending the abolition of the rent officer-rent assessment committee system, which settles fair rents, landlords would submit to the rent officer a statement of the economic cost of maintaining the building in a satisfactory state or, if necessary, putting it into a satisfactory condition. If no agreement could be reached on these costs the local authorties' quantity surveyors would be empowered to make a binding determination. Once this had been established a rent would be fixed reflecting the economic cost, rebates being available to the tenant as appropriate. That would be subject to annual permitted increases of rents on the basis of an index, published by the Department of the Environment, that would reflect increases in building and maintenance costs. It would include an allowance for a pre-tax return of an agreed percentage to the landlord above the current rate of inflation. The increases would be permitted only if the maintenance had been carried out.

My second suggestion is that the existing security of tenure would be maintained. However, if a developer were prepared to provide new accommodation to let at reasonable rents, whether for students, young marrieds or single people, a tax depreciation allowance would be available and he would be allowed to raise his loan capital from public sources at specially cheap rates of interest, as has happened in West Germany. Such a deal might be done with local government as part of an office development or shop development under Section 52 of the Town and Country Planning Act 1971 if the developer agreed to provide some cheap rented accommodation.

Alternatively, it might be done speculatively. The developer would convey the freehold of the site to the local authority and receive a head lease for 99 years. That system would be conditional on an agreed level of rents and probably on the basis of so much per square foot. It would give some financial incentive to the developer, it would ease the burdens on local authorities, and it would help a section of the population which often cannot afford to buy and which has no hope, for years, of getting a council house.

I am glad that my hon. Friend the Member for Chelsea (Mr. Scott) will be leading his right hon. and hon. Friends into the Lobby tonight. I believe that this is a gravely mistaken measure. Far too often have we passed this sort of Bill. It is time to recognise that there is no future for the badly housed in taking this sort of course.

6.12 p.m.

Mr. Arthur Latham (Paddington)

I trust that the hon. Member for Melton (Mr. Latham) will excuse me if I do not take up his argument in detail. I have a very serious constituency situation that I want to impress upon the Government Front Bench. I should be interested to learn whether in the hon. Gentleman's general condemnation of attributing public funds towards housing he would wish to exclude owner-occupiers from either present tax relief or the rather extraordinary proposals of his right hon. Friend the Member for Finchley (Mrs. Thatcher).

Mr. Keith Stainton (Sudbury and Woodbridge)

The election is over.

Mr. Latham

Yes, the election is over. I understood that the right hon. Lady's pledge was meant, and was something to which the Opposition were committed if they won the election. I should be interested to know whether the hon. Member for Melton feels that it is sufficient to advance the philosophy that he has put before the House and to dismiss the period between the Rent Act 1957 and 1965, when Rachmanism was halted, by saying that the system did not work because landlords feared that there might be a future Labour Government. I would have thought that some of his philosophy had been given practical application during those eight years, to the considerable detriment and hardship of many tenants throughout the country, and especially in Paddington.

A considerable part of the remarks of the hon. Member for Chelsea (Mr. Scott) were devoted to extolling the virtues of home ownership. As I understand it, the Bill deals with two aspects of rents. To extol the virtues of some ownership in the present situation is rather like saying that everyone should have a new car and that public transport should be abolished. The conflict between home ownership and continued local authority building is spurious against the background of the total collapse of both housing programmes over the past three and a half years. I do not think that anyone has done other than to assert that in the present situation there is conflict or competition between building to rent or building to sell. The point has already been made that those without homes are concerned because the only option that they can see open to them is some prospect and hope of a home that they can rent.

As a dedicated opponent of the Housing Finance Act I could not do other than welcome this repealing measure. As my right hon. Friend has indicated, I am conscious that there must be more comprehensive legislation somewhat later. I accept that what he has produced is to a large extent a holding operation. I do not wish to appear to be in any way ungrateful to him for what he has introduced. The freeze which obtained under the counter-inflation order was welcome, and the prospect of continuing the present freeze for the time being is also welcome.

I acknowledge that in housing matters Paddington is not typical of all areas, but it is not unique. The remarks that I wish to make about the Bill as it concerns my constituency are not peculiar to Paddington but relate to other constituencies and conurbations other than those in the London area. In Paddington less than 10 per cent. of the available housing is owner-occupied property. As the hon. Member for Chelsea knows full well, there is a substantial holding by the local authority. There is a larger proportion of private furnished accommodation and an even larger proportion of private unfurnished accommodation—indeed, a far higher proportion than in most constituencies. There are housing associations such as the Paddington Church Housing Association in which the hon. Member for Chelsea has declared an interest. There are the Church Commissioners and private landlords ranging from the Freshwater type to the latter-day Rachmans, with others of a rather different ilk in between.

There is within the constituency virtually every type of rented accommodation apart from the agricultural tied cottage. Therefore, I am able to apply the test of how the Bill will affect my constituents who live in an extraordinarily wide range of rented accommodation. Without in any sense wishing to be carping to my right hon. Friend the Secretary of State and my hon. Friend the Minister for Housing and Construction. I must tell them that the Bill will not do enough for my constituents. It will not be good enough for them.

I get the impression from the Bill and from various statements that the Department is likely to be more concerned about rents that are unreasonably low than rents which are unreasonably high, unless, as my right hon. Friend indicated, the local authority is making a profit. The Bill will repeal the Housing Finance Act and it will then throw my constituents to the mercy of Tory-controlled Westminster City Council. That is not likely to represent any great advance for my constituents.

I hope that in Committee the Bill will be strengthened, or that the Minister will give some indication of the criteria that will be adopted to decide when a local authority is fixing rents at too high a level, so that they can be regarded as unreasonable.

In commenting about rents in the private sector I shall try briefly to give some of the evidence to which my hon. Friend the Member for Salford, East (Mr. Allaun) referred. As the Minister knows, I have for some time been sending him details of rent registrations in my constituency which are very much higher than those which existed previously. He will know that the 5 Courts Tenants Association is concerned with Westbourne, Hatherley, Burnham, Palace and Windsor Courts. The hon. Member for Chelsea, who used to represent a Paddington constituency, will know that the courts are in the southern part of Paddington. The 5 Courts tenants tell me that in Moscow Road rent increases have been demanded from £800 a year at present to £1,400, which would represent an increase of £600 a year.

The Minister may well say that these are simply applications for higher registrations, and that it does not follow that these rents will be subsequently registered. He has been saying this to me about a number of instances I have quoted over a period of weeks and has sought to allay fears I have expressed by placing some reliance on the rent officer and the rent assessment committee. The fact is that already in one case there has been a new registration, raising the rent from £600 to £900. This has happened, and it is too late to take action about it.

In another case, it is anticipated—I think, on the basis of recent performance, with reasonable certainty—that rents at present ranging between £800 and £900 in those 5 Courts will be raised to £1,200 a year. I ask my right hon. Friend, in view of his opening remarks, to bear in mind the size of increase I have described. Lest he should suppose that this is an exceptional case, I draw his attention to another group of properties—St. Mary's Mansions, comprising 120 moderate flats, not exceptionally modest but not exceptionally lavish, where, so far, 24 have been re-registered recently.

I have sent to the Minister for Housing and Construction a complete schedule showing what has been happening over the past 18 months. Let me take four examples which the Minister will know are not exaggerated but are fair and typical. The first concerns Flat No. 9, where the previous rent registration was £525. The rent officer proposed £675 but the rent assessment committee has recently decided that the rent should be £960 a year—exclusive of rates and other charges. In another case, the rent was £700, the rent officer proposed £850 and now the rent assessment committee has decided on a figure of £1,160. In another case the rent was £700, the rent officer proposed £880, and the committee decided on £1,060. In another case the rent was £565, the officer determined £725, and the committee fixed £900.

From these examples and others which I have supplied, and others which I can supply, it is no exaggeration to say that the effect of phasing upon those tenants, faced with an average increase in the higher cases of £450 in their rent registration, will be that they have to face an increase of £150 plus £150 next year and £150 in the third year. My right hon. Friend referred to the problem of £1, £2 or £3 per week but in my constituency the figures are £3, £6 or £9. The problem is three times as great as he was prepared to recognise.

With the Housing Finance Act—we had a memorable time together on the Committee on that measure—it was sufficient, given the Tory Party's prejudice against council tenants, for the Tory Party to tighten the screw as fast as it could. It felt that there was a limit, and that that limit was £1 a week for council tenants and 50p a week per year thereafter. If that was bad enough as a ceiling for the Tories with the Housing Finance Act, why is it not good enough for a Labour Government to apply to private tenants?

We have rightly argued on many occasions that there are not two or three kinds of animals—owner-occupiers, private tenants and local authority tenants. They are basically the same people, with the same problems, entitled to the same consideration and help. If it was right to have that limit under the Tory Housing Finance Act, why does my right hon. Friend not agree to a ceiling for rent increases for private tenants?

I note that in the Bill he proposes a 40p floor. I am disappointed that he proposes no ceiling. If, none the less, he is unable to accept the argument for a ceiling in the rent increase, he might at least consider whether some condition can be inserted in the Bill in Committee which would improve the position with rent assessment committees. My feeling is that while rent officers' proposals in my constituency have been somewhat high, rent assessment committees have been proposing even more extortionate increases. Could there not be some system of appeal introduced into the Bill? Could there not be some measure of control—some means of moderating what the rent assessment committee is doing?

My hon. Friend the Minister for Housing and Construction will recall, in writing to me on 23rd August, using a stock phrase that appears in many other letters, when he talked about the London Rent Assessment Panel. He said: The Panel is quite independent of the Department in the way it carries out its statutory duties and is answerable only to the courts. The fact is that it is only answerable to the courts on certain legal points. It is answerable to the Council on Tribunals but that has power to deal only in terms of the panel's doing something improper. The panel is not answerable to anyone in terms of general policy and the rent levels it applies.

There seems to be no regard for tenants when, as appears to be happening in this case, the rent assessment committee goes haywire in the determination of rents. If it is not possible to introduce this measure of control, will my right hon. Friend consider the possibility of introducing within the Bill a proposal for altering the composition of rent assessment committees? At present, there are two professionals against one lay member. Might there not be merit in suggesting a fourth lay member, namely, a representative of tenants' organisations, although obviously not a tenant of a group of properties that was under consideration?

This might redress the imbalance which seems to exist between the professional attitude and the tenants' interest when rent determinations are settled by rent assessment committees. If that is not possible, will my right hon. Friend take up at least one point from the speech of the hon. Member for Melton and insist that there be some disclosure of rent income and outgoings and capital outlay so that we might apply some different criteria?

One of the battles with the Church Commissioners going on within my constituency and elsewhere at present is that although the commissioners argue about the impoverished curate and the need to increase their income to finance his stipend, they will never publish the figures of original capital investment, their outgoings and incomings, so that the public and their tenants are unable to judge whether there is justice in the rents they may be demanding.

The commissioners have accepted, in many cases at my behest, phasing over five years. They have perhaps been more generous than the Minister is prepared to be at present. That does not alter the fact that at the end of the day those five increments will have been paid and rent levels will have been raised substantially without any economic justification by the commissioners as landlords.

May I place on record a suggestion I made to my hon. Friend the Minister for Housing and Construction informally, on an earlier occasion? I understand that he has to argue in terms of the way in which the Rent Acts, rent officers and rent assessment committees are functioning throughout the country as a whole. I accept, I have no reason to challenge, the figure given by my right hon. Friend this afternoon, to the effect that the average increase is around 7 per cent. Given that 7 per cent. it may be that the provisions of the Bill are perfectly adequate in many parts of the country. But certainly in the housing stress areas, the pressure of higher rents is far greater. If my right hon. Friend is not prepared to amend the general provisions of the Bill, will he agree to look at the concept of declaring rent stress areas in which particular controls would apply and where new criteria may be insisted upon? If he is not prepared to amend the general principle, let him at least acknowledge that there are these special problems which I have quoted in detail. It might be that in making such a provision it would be right for my right hon. Friend to have such a power, subject to parliamentary approval. It might avoid the difficulty of amending a Bill designed to deal with the country as a whole when some of those provisions may not be as relevant as they would be in my constituency, and some others.

If my right hon. Friend is not prepared to consider the other suggestions I have made, may we have some better guidance on some means of determining what is the scarcity element which rent officers and rent assessment committees are calculating? In a recent case about which the Minister knows, because I sent him the correspondence, the rent assessment committee declined to express the scarcity element as a percentage. The tenants directly involved, and other tenants, are completely in the dark about what calculation the rent assessment committee has made.

I have outlined the problem and suggested a number of possible solutions. My constituents do not care whether my suggestions are adopted or better ones are forthcoming from the Government, but they hope and expect action to be taken and their special problems to be recognised.

As the Secretary of State for the Environment knows, there is considerable pressure from the West End of London upon Paddington. It affects the shopping facilities and amenities. There is considerable commercial encroachment on the constituency from the tourist trade. Small hotels go out of business so that large hotels may take over, as has happened in the Sussex Gardens case, in which the Minister has taken considerable interest and has done what he could to help, although his powers are limited. There is the problem of small hotels being formed out of existing residential accommodation, resulting in a loss of residential accommodation. There is the pressure of tourist demands for short-let accommodation in the constituency. It does not require much imagination to understand how all those pressures introduce factors which have effects on rents which may not apply in districts which are not subjected to such pressures.

I cannot ask for the introduction of a special Bill for Paddington, but I can ask for the introduction, in Committee, of discretionary powers in the Bill which will meet this set of problems. The increases are far too high, even with phasing. Also, the new rent levels will be far too high for ordinary people, or even for people above modest means, to continue to live in the district.

As the Secretary of State acknowledged in applying the freeze in council and private rents, these increases are undeniably inflationary. They represent a substantial attack on the living standards of the tenants in these properties, and the higher rents are brought about by extraneous influences which have little to do with the rights of the tenant to a home or the right of the landlord to let it. A false relationship with the investment value of the property is produced, and, unless action is taken now, the consequence will be a change in the social character of the whole neighbourhood of Paddington and those districts closely associated with it.

I remind the House and the Government of the deal perpetrated by First National Finance Corporation two or three years ago, when 110 blocks of fiats, involving 9,000 tenancies, were purchased by that corporation from a number of smaller landlords for £52 million and sold a few months later for £76 million—a profit of £24 million against an expediture of only £300,000 on repairs, giving a net profit per tenancy of £2,333, produced simply by selling the homes over tenants' heads as one would sell sacks of potatoes in a vegetable market.

In spite of that, the Under-Secretary of State had the effrontery to write to me recently denying that there was a relationship between rents and investment value. There may not be a direct relationship, but it is clear that the profit which FNFC was able to make was possible only in the expectation of receiving much higher rents, and that was borne out in the event, because immediately following the transaction some of the properties in my constituency had an additional rent of £300 registered. It would not, therefore, take long for the new purchaser to get his money back and make a sufficient sum to cover the profit FNFC had made without contributing anything to solving the housing problem.

The scandal of homelessness is underlined by the number of empty properties in the London area. If the Minister cannot offer any hope for the tenants on whose behalf I have been speaking, will he be able to incorporate in the Bill a clause which will give hope to other homeless and hard-pressed people, so that 12,000 empty properties in Westminster, instead of standing empty, may be used to accommodate them? Will he also consider introducing in the Bill—although I know that its scope is limited—means of preventing the further loss of residential accommodation for hotel purposes to which I referred?

I hope that the Minister, when he replies tonight or in Committee, will acknowledge that tenants in my constituency have a right to expect that at the end of three years of Labour government they will not be in the position in which they would have been had the Tory Party remained in power—which would be the effect of phasing for them because it would merely put off for two or three years the payment of rents which they could have expected to be extorted from them had the Tories remained in power. Many people will be unable to afford to stay in the district and pay higher rents unless the Government take action now.

I hope that the Minister will offer me some hope that I shall be able to give good news to tenants in Paddington.

6.38 p.m.

Mr. Joseph Dean (Leeds, West)

As someone who has been heavily involved in the question of local authority housing I welcome the Bill in principle. There are, however, some weaknesses in it which will have to be carefully watched.

There is no question that if the nation is to be housed adequately the only authorities which can do it on the scale necessary are the local authorities. It is no good hon. Members opposite saying that they are in favour of owner-occupation when owner-occuption has gone out of the window for most of the people without homes. A person must be in the £70 or £80 pay bracket, with perhaps a substanial nest egg in the bank, before he can even consider buying a modest semidetached house in a not highly-priced area.

The hon. Member for Chelsea (Mr. Scott) has said that there is not a great demand for houses in the public sector. I should like him to consider the numbers of people on the waiting lists in the major conurbations. As a rough yardstick, one can say that for every three council properties there is one person on the waiting list. In other words, in a large authority with 90,000 properties, one would not be far out if one said that, with slum clearance, and waiting lists, 30,000 people or families are waiting to be accommodated.

As building figures have dipped in the past two or three years the waiting lists and the demand for council houses have increased enormously. I do not think that even now we know the true demand for council housing because, unfortunately, some authorities still operate a system in which conditions apply before a person can register for a council house. If authorities were not to impose conditions of registration there would be a greater demand for local authority housing. I realise that the measures will be reviewed after 12 months.

I do not feel that the 66 per cent. will provide an incentive to councils to undertake large new building programmes. They would not look kindly at having to levy rents of £7.50, which is the figure given to me by my local authority. The council works on historical costs, which means that the rents of course will be considerably less.

A local authority with a waiting list of 30,000 families should be thinking in terms of providing 3,000 units a year, so as to get rid of that waiting list within a decade. If local authorities have to find 34 per cent. it will not be attractive for them to go in for large building programmes. When there was an escalation in building costs some years ago, although it was not so large as the escalation over the past five or six years, rather than build new houses small local authorities started to opt out. The nation just cannot afford that.

It is not true that the private sector has a very great role to play. The private sector has been given all the opportunities and has been found wanting. In my constituency a new problem has arisen. The private sector utterly refused to take advantage of any improvement scheme brought forward. I hope that the authority will be able to take advantage of the improvement measures which are already on the statute book.

My hon. Friend the Member for Birmingham, Erdington (Mr. Silverman) understated the case when he spoke of the need to collate the maintenance and general management expenses within an identifiable subsidy. No one has ever funded for the maintenance of council houses at a sufficiently high rate. That is why some are in such a bad state of repair. If maintenance is to be borne solely on council house rents and rates that will be another deterrent to maintaining the houses in a reasonable state of repair.

The last building workers' settlement placed a further burden on a large authority with which I was associated of £750,000 a year. I shudder to think what will be the result of the present building workers' claim. If a substantial settlement is made early next year the effect on the maintenance costs for council houses will be tremendous.

While we are talking about the 66 per cent., I hope it is realised that most of the building programmes will be undertaken in the large conurbations. Those are still the highest-rated areas, and the inhabitants of the large conurbations pay rates which are 20 or 30 per cent. higher than those paid by people who live on the periphery. It is unfair that the people who live in conurbations, who have to live in squalor for which they are not responsible, should be asked to bear an ever-increasing percentage of the cost of clearance. I hope that the Minister will keep that situation under review.

The hon. Member for Isle of Wight (Mr. Ross) suggested temporary homes. We are still trying to get rid of some of the tragedies introduced into the local authority building sector during the last 10 to 15 years. Expensive gimmicks were designed and introduced supposedly to help the housing situation, but we are now trying to get rid of them because they are anti-social. I am speaking of blocks of flats, some with deck access a quarter of a mile long, which have reproduced all the social problems we wanted to get rid of. I know of no one who is happy to accept the type of accommodation referred to by the hon. Member for Isle of Wight as a temporary expedient. People who go into such accommodation and become municipal tenants immediately apply for a transfer. They want the best council housing, to which they are entitled.

A figure has been mentioned of 400,000 houses per year. Of those, 100,000 are of the type of property about which I am speaking. Any industrialised system costs more than 20 to 25 per cent. more than a conventional bricks and mortar house.

There is no better investment for the future than investment in local authority houses. We must forget about these gimmicks. They were designed by architects and planners, and sometimes accepted by councillors who were not themselves prepared to live in them. I want the best that we can reasonably provide for council tenants in cities.

I have sounded the alarm on one or two matters. As the Minister said, in 12 months' time there will be a review. I hope that we shall move away from the 66 per cent. The figure given by my local authority shows that on a house costing £9,000 it would be necessary to find £370 a year, which would mean the rent of £7.50 a week. That is not an incentive for local authorities to up their programmes to 3,000 or 4,000 units a year.

I welcome the principle of the Bill, and hope that the Minister will note the points I have raised.

6.48 p.m.

Mr. John Ovenden (Gravesend)

This has been an illuminating debate because of the different attitudes on housing that have been exposed from both sides of the Chamber. My hon. Friend the Member for Birmingham, Erdington (Mr. Silverman) said that at least the Opposition had not returned to putting forward the Housing Finance Act. It seems to me, listening to the Opposition's contributions this afternoon, that that is precisely what they have done. The whole sense of the amendment is a return to the principles of the Housing Finance Act. Because of the attitude which has been displayed, the choice before us is much simpler than it would otherwise have been.

When we go into the Lobby the question we shall decide is whether at the end of the current rent freeze there should be a return to the provisions of the Housing Finance Act, or whether we should adopt the proposals laid down in the Housing Rents and Subsidies Bill. It is difficult for any of us to make a detailed comparison of the proposals in the Housing Finance Act with those contained in the present Bill. The measures start from different premises and adopt a different approach to the problem of housing finance.

I am pleased that my right hon. Friend the Secretary of State for the Environment is returning to the idea of local democracy in respect of housing and rents. It is essential for the future survival of local government that local representatives should have some say in this vital services, but it is equally necessary that the tenant should have access to somebody who is accountable to him. I am sure that no Labour Member, and, I presume, few people in local government, will shed any tears over the demise of the faceless men in the rent scrutiny boards, or over the departure of the housing commissioner for every waiting in the wings to enforce Whitehall's policy where local authorities could not be bludgeoned into so doing. I believe that the Bill not only marks a big step forward in housing finance but strikes a long overdue blow for local democracy.

In the present parliamentary Session we should judge every measure that comes before us in terms of the effect it will have on our economic problems. The Bill is highly relevant in that regard. It will end the inflationary yearly increases imposed by central Government on local authority tenants. It will stop the inevitable rise of local authority rents to a level beyond the means of the average tenant, with the consequent means-testing on a fantastic scale which such a rise would involve. Few measures can have played a greater rôle in stoking the fires of inflation or of making impossible the achievement of a voluntary pay restraint policy than the provisions of the Housing Finance Act. The present Bill now gives a chance to return to a logical system of housing finance and to a realistic approach to the problems of fixing rents.

The last two years have shown how right were Labour Members in their predictions of rent levels consequent upon the Housing Finance Act. I well recall Conservative statements in this House at the time refuting those accusations. Those two years have also shown how farcical is the concept of fair rents and how ludicrous it is to try to apply to the public sector the commercial principles which apply to the private sector. Those in the House who would seek to pretend that there can be a comparison between local authority housing and private sector housing will have to take on their shoulders the impossible task of determining the rent of 5 million council tenants by reference to a tiny, dwindling private sector. That system has brought about the ludicrous situation in many towns that rents in many thousands of council homes have been determined by reference to two or three comparable houses in the private sector. We all know instances where such a process has taken place.

It has become clear in this debate that the main aim of the Conservative Housing Finance Act was to reduce the amount of Government aid to housing. However strenuously that was denied at the time it has become evident from almost every Conservative speech in this debate. The Housing Finance Act reduced the basic subsidy of £20 a house for each year of the first two years and from then on we were to have a £10 reduction per house. Even the seemingly attractive subsidies and rate fund contributions were to be totally dependent on rent incomes of local authorities. Those subsidies and rate fund contributions to housing would be made only if it proved impossible to squeeze high enough rents out of tenants. Wherever and whenever possible the task of financing new housebuilding and of assisting poorer tenants was to be placed on the shoulders of those council tenants just outside the range of rent rebates or who qualified for only small rent rebates.

We Labour Members believe that this problem is a responsibility of the community as a whole. The Bill guarantees that the contributions towards those activities will be made before rents are determined, and not after.

I am amazed to hear many Conservative Members still advocating that, where possible, council housing should be turned into a profit-making service. The Housing Finance Act not only envisaged that but, in many areas appeared to regard it as the norm. Subsidies were to be eliminated, and profits accruing to housing revenue account were to be used to assist local and central Government and also to subsidise landlords in the private sector. The amount of refund made to a local authority from the housing revenue surplus was to be reduced by the amount of money paid in that area towards private tenants.

I believe that we face a deep and worsening housing crisis, but not worsening for the reasons which have been given by some Conservative speakers, namely, that we are spending too much money on solving the problem. The crisis is deepening because we as a nation are not prepared, and have not been prepared, to devote a sufficient proportion of gross national product to the housing sector.

We have been told by Conservative Members that if only we give the necessary boost to the private sector the problem can be solved. They ignore the facts of the present situation. The housing crisis has become worse in the last few years and housing lists have lengthened because of one main factor—namely, the inactivity of the Conservative Government which led to house prices being allowed to double. Millions of young people who only a few years ago were able to afford their own houses now cannot afford to buy. Many people have registered their names on council waiting lists because it has become impossible for them to buy their own houses. I would have more sympathy for the Conservative view of the situation if it were not expressed at the end of a period of Conservative Government during which mortgage rates rose from 8½ to 11 per cent., and at the end of whose period of office mortgage rates were on the brink of rising to 13 per cent.

The Bill provides a good basis for tackling the housing problem. It gives the necessary incentive to local authorities to increase and sustain the level of building. I appreciate the problems mentioned by my hon. Friend the Member for Leeds, West (Mr. Dean) in regard to the costs accruing to local authorities, but I hope that in his reply the Minister will make clear how he envisages the new high-cost element of the subsidy assisting in these cases.

It was said by the hon. Member for the Isle of Wight (Mr. Ross) that the contribution towards new capital costs was not high enough. We ought to take account of one other weapon in the Government's armoury which, I hope sincerely, will come before this House shortly. It is the public ownership of building land, which will present enormous relief to local authorities and lift from their shoulders a very heavy burden in financing their future housing programmes. We must look at the 66 per cent. in that light. If there is a case for a higher figure—and there may be in the interim, before public ownership of land becomes effective—I hope that my hon. Friend will consider it.

One effect of these proposals is to remove the uncertainties under the Housing Finance Act about future finance for new building. The threat was there in the Housing Finance Act that the system to assist with rising costs could be reassessed at any time with a view to reducing the subsidy paid to local authorities. It was also made clear in the Act that the contribution towards rising costs could be limited to a period of five years. That was no guarantee on which to expect local authorities to embark on increased building programmes. This Bill provides much longer-term and stronger guarantees of support for local authorities.

As for the provisions affecting the private sector, there was always a danger that we would underestimate the effect of the Housing Finance Act on the private sector. When we were involved in our arguments about its effect on council tenants we tended to forget that the effect on private tenants could be even worse. I welcome the clause in the Bill which will prevent the further decontrol of houses which are not up to modern standards of amenity. I also applaud my right hon. Friend's action earlier this year in deferring the passing of houses out of control. It was due to have taken place on 1st July. These two actions ensure that the landlords of substandard property will be prevented from cashing in on the present housing shortage.

I support my hon. Friend the Member for Salford, East (Mr. Allaun) in asking the Minister to look again very closely at the phasing provisions contained in the Bill. I ask him to look especially at the effects on those tenants for whom the election of a Labour Government came just too late and whose houses were taken out of control on 1st January of this year. At the end of the rent freeze they face significant rises in three steps in both real terms and percentage terms. I ask my hon. Friend to pay attention to the problems of these people.

Although it is slightly outside the scope of the Bill, I hope that at some time in the future we can have another look at the process of determining rents in the private sector. No one seeks to deny landlords the necessary funds to keep their houses in a decent state of repair, but we would resent and oppose the idea that landlords in some way should be allowed to profiteer out of the rise in property values.

There is much truth in what my hon. Friend the Member for Salford, East said about the level of investment in housing by private landlords, with many private landlords owning property which they bought at very low cost in the distant past. It is quite unacceptable that the rents allowed for that type of property should be based upon today's inflated values. I know of no other form of investment where that type of approach is justified. We must also remember that many landlords who bought controlled housing, even in the immediate past, did so on the understanding that it was controlled property, and that the price that they paid for it reflected the controlled status of the rent. We must not be deluded into being too generous to private landlords. Perhaps my hon. Friend will consider that aspect.

I should like my hon. Friend also to look at the present procedure for determining rents. Many Government supporters believe that this procedure is stacked far too strongly on the side of the landlord, who can afford the benefit of professional advice, and that it is stacked very strongly against the tenant. It becomes even more strongly stacked when we take account of the necessity for a tenant to put forward a fair rent of his own in rebuttal of the landlord's claim of a fair rent. It makes it quite impossible for the tenant to know precisely what action he should take in these circumstances. It makes it very likely that he will settle for the rent proposed by the landlord, in the knowledge that the rent officer can well establish a rent above that figure. We want to look at this system and to make sure that it is fair to both sides.

We have a clear choice before us about the methods by which we should finance housing in the public sector. I hope that that choice will be clear to every hon. Member. I say to the Minister that even those Government supporters who have criticised some of the details of the Bill still applaud the measure as a major step forward from the Housing Finance Act.

7.6 p.m.

Mr. Cecil Parkinson (Hertfordshire, South)

I listened with great interest to the hon. Member for Gravesend (Mr. Ovenden). I must tell him straight away that I thought that his descriptions of the Housing Finance Act and of the motives behind it were a complete travesty of the facts. When the hon. Gentleman talks about the Housing Finance Act producing profits, he makes it sound as though an unscrupulous group of people were out to make profits at the expense of council house tenants. It was intended, however, that the people making those profits would be the local council, and that the only way that profits would be made would be by the council charging a fair rent on the stock of housing that it happened to own. If at the end of the day there was a surplus, the way that the surplus should be used was clearly defined. It was to be used to help those in greater need than the people who had contributed to it. It was not a measure aimed at producing profits—a word which sends Government supporters straight through the roof. The profits, if there were any, would be the natural surplus which would arise from charging fair rents—a concept introduced by the late Richard Crossman—and the surplus was to be used for purposes of which the hon. Member for Gravesend could do nothing but approve.

Mr. Ovenden

The hon. Gentleman appears to have the facts slightly wrong. My understanding of the Housing Finance Act is that the surplus was to be paid to the Secretary of State and that any such sum … shall be paid into the Consolidated Fund. There were provisions later for a refund of part of that to the local authority, but there was no guarantee that the local authority would use that money for housing purposes or, indeed, that the Government would use it for such purposes. Looking at the record of the last Conservative Government, it is far more likely that they would have used it to make hand-outs to their wealthy friends.

Mr. Parkinson

The hon. Gentleman starts by misunderstanding the measure, and he goes on to attribute the worst of all possible motives to anyone in Government. I can understand that coming from the member of a party as cynical as his own. But I ask him for once to think in a more realistic way about what he and his party are supposed to represent—that is, to each according to his need; from each according to his ability. That is an ideal to which I happen to subscribe and which I thought was supposed to be one of the moving forces behind the Labour Party. But the hon. Gentleman's attitude is very simple. He believes that anyone living in a low-cost house is entitled not to have to pay any more, and that it is a person's bad luck if he has not got a house. Blame the landlord, blame the local council, blame somebody.

There is no justice behind the remarks made by the hon. Gentleman. His party's objective in the last Parliament and in the election was to cultivate the good wishes of a large number of council tenants in the hope that it would produce an electoral bonus.

Last week the Chancellor of the Exchequer gave the most accurate costing of an election programme that anyone has ever given. He said that between July and October public expenditure increased by £3,000 million. That was the increase in the borrowing requirement in those four months. That increase was made because of the Labour Party's election programme. That was the sum that the Government spent on trying to buy their way back to office. Now they find themselves in difficulty because they know that they attacked the Housing Finance Act which was a sound measure based, if anything, on a Socialist ideal. Therefore, they are now trying to get themselves off the hook.

The whole of this charade today revolves round the fact that instead of fair rents we are to have reasonable rents. Indeed, we are to have the charade even further dressed up. We are to restore authority to local councils. They are to have all kinds of authority provided they do not want to increase rents, provided they do not go against the counter-inflation policy and provided that they do not do a number of things of which central government disapprove. However, if they attempt to do anything of which central government does not approve, the Government, in Clause 2, reserve the right to stop them. The Government say that they are returning power to local authorities to fix reasonable rents as long as the Minister for Housing and Construction approves of them. What freedom is that?

The Minister for Housing and Construction—I give him credit where credit is due—desperately cares about the housing situation and is motivated by a desire to put it right so far as it lies within his power to do so. His heart is in the right place, but all his instincts lead him to do things which damage the position of those about whom he cares most. Frankly, the Bill will do nothing for the people about whom the hon. Member for Gravesend spoke in his misguided but well meaning speech. The profit about which he was talking—

Mr. Ovenden


Mr. Parkinson

I ask the hon. Gentleman—

Mr. Denis Skinner (Bolsover)

Get a smile on your face. The hon. Gentleman is in opposition now.

Mr. Parkinson

I know that we are in opposition, but, unlike the hon. Gentleman, I believe that one has a duty to be responsible either in government or in opposition. If he learned that and told one or two of his brothers, the House would be a better place. The hon. Gentleman should start to grow up and try to shed at least half the chips off his shoulder. I think that the House would then enjoy listening to him. Indeed, once in a while he should stand up instead of sitting there shouting.

I want to speak about two aspects of the Bill and of the housing situation generally.

Mr. Skinner

I thought the hon. Gentleman might.

Mr. Parkinson

My hon. Friend the Member for Chelsea (Mr. Scott), in a first-class speech, talked about the Conservative Party's policy. Perhaps the Minister for Housing and Construction will listen and learn. If right hon. and hon. Gentlemen opposite had listened before they would not have had such a ridiculous election programme.

The polls—although they make mistakes, they are small percentage mistakes, not big ones—show clearly that 75 per cent. of the public, given the chance, want to own their own homes. Shelter agrees that the best way for a young person to approach his or her housing requirements is by trying to become a home owner. The policy put forward by the Conservative Party at the last election was geared to help in that situation. We said that we would help the first-time purchaser. We set out to hold mortgage interest rates at a reasonable level. These would have been a sensible measures. Hon. Gentlemen opposite do not seem to understand finance. I was an accountant in the City for 12 years.

From an economic point of view the matter is totally unarguable. My hon. Friend the Member for Chelsea gave the basic figures today. In round figures a council house costs £1,000 in Subsidy whereas a privately purchased house costs about £300 in subsidy. We could help three times as many people to buy their own homes. The Minister disagrees. I shall not waste time now. I shall take him outside later and show him on a piece of paper why I am correct in making that assertion. We said that it was cheaper and better for the community. Indeed, it is what the vast majority of people want. We set out to encourage people to own their own homes. Our policy—including the provisions of the Housing Finance Bill—was a step towards that end.

If the Minister will listen instead of groaning before I have had a chance to develop what I am saying, I shall explain why. I shall illustrate what I am saying by giving an example from Kernel Hempstead, the constituency in which I lived until recently. When houses in Hemel Hempstead were first offered for sale very few were interested in buying them, for the simple reason that the rents, as then fixed, made it too good a deal for anyone to want to buy them. Regardless of means people were living in new first-rate houses at very low rents. The Housing Finance Act started to move the rents towards fair rents for those who could afford them. For those who could not there was a very generous system of rebates which protected and improved the position of the poorer sections of the community.

When the Housing Finance Bill was introduced, and houses were again offered for sale in the new town, many people wanted to buy their own homes. While they were on such a very good deal with rents which were well below what they could afford and what the properties could demand, there was no incentive to buy. However, the concept of fair rents put pressure on those who could afford fair rents and could therefore afford to start thinking in terms of buying, to contemplate the alternative. With very low rents there was no such pressure. The net result was that more people became interested in buying houses because they realised that they had been grossly over-subsidised and that it was most unfair on the community at large for them to continue to be heavily subsidised when they could afford to buy.

Mr. Gwilym Roberts (Cannock)


Mr. Parkinson

I will give way to the hon. Gentleman later. The Housing Finance Bill set out to encourage people who could afford to buy houses to think in terms of buying and to take the pressure off community housing. It was of help to those who could not afford the current rents because the rebates were generous. It also encouraged those who could afford to buy to undertake the cost of financing their own homes.

The hon. Member for Swindon (Mr. Stoddart) shakes his head. I have heard him make many misguided speeches about the railways. I hope that his knowledge of housing is slightly better than his knowledge of nationalised industry finance.

Hon. Gentlemen opposite seem to think and to say that if ownership is put into the hands of local authorities the tenants' problems disappear because, instead of evil, grabbing landlords, we have concerned local councillors desperate only to serve the interests of tenants. If I made that kind of speech in Boreham Wood which is a council house dominated area, the tenants would fall about laughing. The Boreham Wood tenants, or about 5,000 of them, have the misfortune of having one of the worst landlords in the country—the Greater London Council.

There are nearly 5,000 GLC houses in that area, and the GLC takes a strange attitude to the tenants. Its basic attitude is simply, "You have no representation on our local authority because you are not allowed to elect councillors to the GLC. Therefore, you must deal with our local office, which will deal with you if it feels like it". Tenants have come to me in droves with their problems because they are totally unrepresented on the GLC. These tenants live 20 miles out of London and the GLC treats them in a way that would guarantee headlines in the News of the World, if private landlords were to take similar action. I am not exaggerating.

The Under-Secretary of State for the Environment loves to talk about Manchester. I invite him to take a trip up the A1 and address a meeting of 200 or 300 GLC tenants about the improvement that results from being a local authority tenant—notably a GLC tenant—rather than the tenant of a private landlord. If the hon. Gentleman were to do that he would receive a hot reception, because if someone does things in the name of the local council he can be more inhuman, less caring and infinitely harder than most private landlords would dare to be. The idea that we should create an even bigger empire for these municipal tycoons to manipulate, and that this would promote social justice is one which my constituents would find a sick joke indeed.

The plain fact of the matter is that the GLC, as an absentee municipal landlord, has about 100,000 houses outside its area. Many other local authorities have housing estates in areas or districts other than their own, and they treat their tenants in a most offhand and callous way. Boreham Wood is perhaps as good an argument against any extension of municipal ownership as I have come across. From my council tenants' point of view, the sale of council houses and the opportunity to get out of the hands of the uncaring local authority was an opportunity which hundreds of them wished to take.

A meeting was held to complain about the Housing Finance Bill. There are about 5,000 tenants with homes in the town, and 16 people turned up at the meeting. They were mainly local Labour Party activists. Another meeting was held in the same town about the sale of council houses. On this occasion, nearly 300 people turned up. There was no great resentment against the Hous- ing Finance Bill. Any objection that there was was fostered by the ignorant and evilly motivated such as the hon. Member for Bolsover (Mr. Skinner). The basic fact is that the measure was—

Mr. Bob Cryer (Keighley)

On a point of order, Mr. Deputy Speaker. Is it in order for an hon. Member to refer to another hon. Member as having evil intentions and evil motives? The hon. Gentleman is being grossly unfair.

Mr. Deputy Speaker (Sir Myer Galpern)

It is difficult to ascertain or substantiate any such intentions, therefore I do not think any hon. Member should be afraid of a criticism of that kind. One does not know what hon. Members are thinking at any given time.

Mr. Parkinson

That is one of the nicest things that anybody has said about the hon. Member for Bolsover for a long time. Far from being upset, he should have felt flattered.

I did not intend to make a long speech, and that is still my intention. All I say is—

Mr. Skinner

Take your hands out of your pockets.

Mr. Parkinson

The hon. Gentleman is demonstrating how kind I was to him in my earlier kindly description of him.

The Government have got themselves firmly on to a hook. They know that the vast majority of the public want to buy homes. They know that the Housing Finance Act was a fair and fundamentally reasonable measure. They know that the weakest in the community were protected, and more than protected. Their position was improved by that measure.

Mr. Skinner

Declare your interest.

Mr. Parkinson

I do not own any property that I rent to anyone. The Government know that that Act—[Interruption.]

Mr. F. A. Burden (Gillingham)

On a point of order, Mr. Deputy Speaker. Is there anything that can be done to stop the hon. Member for Bolsover (Mr. Skinner), who is sprawled on the bench below the Gangway, from continually and ridiculously interrupting speakers?

Mr. Deputy Speaker

Attempts have been made for the past 150 years to do exactly as the hon. Gentleman wishes. No one has ever succeeded yet.

Mr. Parkinson

I appreciate the concern of my hon. Friend the Member for Gillingham (Mr. Burden) for my parliamentary health, but I must tell him that the hon. Member for Bolsover does not bother me.

The Government misrepresented the Housing Finance Act, as they did so many other measures. That measure had objectives which any sensible Socialist should have been proud to endorse. It was introduced with the idea of helping those who needed help and ensuring that those who did not need it contributed to the welfare of those who did. The Government attacked those measures for electoral reasons, and now we see their answer.

The Bill will do nothing to help those who do not have homes. It will not restore any freedom to local authorities. The Bill merely gives the appearance of restoring freedom. The Minister will be firmly in control of any measures that are taken. The Bill passes over to ratepayers a potentially huge burden. The Government consistenly call for the control of rents while watching rates soar, and the Bill could contribute to further rate increases.

The Bill is a pallid measure produced by a Government with a bad conscience. They know that they are replacing a sound and well thought out measure that would have moved the nation's housing subsidies on to a sensible basis. The Bill will do none of those things, and I hope that tonight the House will vote against it with enthusiasm.

7.28 p.m.

Mr. Tom Litterick (Birmingham, Selly Oak)

I welcome the conversion of the hon. Member for Hertfordshire, South (Mr. Parkinson) to civilised morality, but I had grave doubts about his interpretation of it in the 20 minutes that followed his declaration of a new-found faith.

The hon. Gentleman repeatedly told the House—and I suppose he believes it—that the majority of people would dearly love to own their own houses. I do not suppose there is much evidence to indicate the contrary, but, having said that, one has not said anything of any consequence, and it is a matter of some astonishment to me that any Conservative Member should never appear to have heard of the concept of effective demand. Most people, if they were asked, would love to spend their holidays in Bermuda. Most people, if they were asked, would love to be rich, or have a win on the pools, or something equally tempting. It is nonsensical to talk in these terms. Of course people would like to be well off. Of course people would like to have it cosy, but most people have a sense of reality which tells them that what they can have must be related to the means that they can command.

The problem of housing is ultimately and fundamentally one of income, which is why there is, and historically why it was determined there should be, a public sector in housing. We live in an unequal society, in a society in which there are a small number of people who have command over the goods and services, and a large number of people whose means to command goods and services are, to say the least, extremely constrained. It is with this great majority that the House should be primarily concerned.

Unfortunately, it was with the former minority that the hon. Member for Hertfordshire, South appeared to be most anxiously concerned. That, very shortly, illustrates the differences between Members on the Government side of the House and Opposition Members.

The simple fact is that half of the population of this country live on incomes of less than £170 a month. The average price of the average house, however one defines that, is apparently £10,000 or £11,000. At current rates of interest this would mean a monthly outgoing of between £70 and £80 in mortgage repayments. If Opposition Members are being sincere—and honest—in their protestations that everyone should own a house, it seems to me that they should come clean on the other half of that statement, which means that they should be advocating high wages. I have not noticed that Opposition Members have been particularly articulate on that subject. Indeed, during their last period of office they spent a good deal of time and energy in doing the opposite—holding down wages. If we are to have what was once called a property-owning democracy we must have a community of people who can command enough income to have significant property. We do not have such a society. It is not yet a fact of life.

Therefore, the supply of publicly-owned property for renting must be one of our urgent considerations, and will continue to be so into the foreseeable future. It is a waste of the time of this House to go on pretending that there is some kind of magic wand which can be waved and which will produce an entire society of suburban would-be Tory voters who are ever so happy about the fact that they are well off.

Mr. Parkinson

The hon. Gentleman is misrepresenting the Opposition. We recognise that there is and will be a continuing demand for municipally-owned houses, but what we say is that we do not see how one is helping the homeless by maintaining people who could afford a fair rent at a lower rent than they can afford. The hon. Gentleman has said nothing so far which attacks that. It is not that we do not accept the need for social housing. What we say is that we do not accept the need to keep people on over-subsidised rents in that housing. It might help them, but it does nothing for the homeless for whom the hon. Gentleman obviously cares.

Mr. Litterick

The hon. Gentleman's remarks bear all the hallmarks of coming from someone who has never lived in a council house and has never had to live on a working man's income and is never likely to have to do so. They betray yet again the appalling sense of unreality on the Opposition side of the House.

The problem for the British people, the problem of the people who live on ordinary incomes and who will never be able to move into the select, residential, owner-occupier areas of their communities, is a problem of income. In the long term, I hope that the House will seek to produce a high-wage economy. A high-wage economy will enlarge greatly the area of free choice that people have in the matter of the command of goods and services, not to speak of command over freedom, and so on.

The Bill is really another short-term measure, as the Secretary of State indicated. In a sense, it is yet another stage in the sort of "ad hoc-ery" of which he spoke in critical terms. It is a sad commentary on the approach of this House to the matter of housing that at this late date we should still be involved in ad hoc-ery in such a major social problem as housing. The Secretary of State has indicated that there is in work now a survey of housing needs, finance and so on. It is lamentable that this survey is in progress only now and was not done many years ago.

Much play has been made by the Opposition of the fact that people want to own their house, but those of us who have had experience in local government know that the demand for rented accommodation is rising, and rising strongly. That is a fact of our experience. In my surgeries the queue of people consists mainly of those who are seeking houses to rent. We know that one of the most powerful factors bringing this about has been the almost revolutionary turn round in the state of the private market in housing during the last five years. The rate at which house prices have risen has been far more than double the rate at which wages have risen. Indeed, in one or two years the relative rates of increase of house prices and wages have been in the ratio of about five to one. With that kind of progress there is absolutely no chance of a significant change in the proportion of the population living in owner-occupied houses.

That brings us back to the rather depressing problem of how we set about providing an adequate supply of housing in the long term. As I have said, the Bill is a short-term measure. It spends much of its time demolishing the legislative debris left over from the previous Conservative administration. We all appreciate that this must be done, but as Socialists we must point out to the Government—I hope that my hon. Friends will do so again and again—that in order to move towards a socially desirable objective it is necessary to have information and to define one's objective in quantified terms.

So far as my knowledge goes, it seems to me that no one knows how many houses we actually need. No one knows, with any confidence, how many houses need to be provided to satisfy the requirements of the British people. It is said "What about the market?" With respect to the hon. Member for Chelsea (Mr. Scott), I would remind him that the market has been tried and, as a mechanism of providing a service, it has failed. That is why the State and the municipalities are in the business of pro-viding housing accommodation on such a large scale. It is in this, as in so many other areas of social need, that the market has failed dismally. It has been a proven failure time and again. That is why we are having this debate. If the hon. Gentleman does not know that, he ought to read something of the economic and social history of his own country.

I conclude by offering a piece of advice to the Minister. I am prepared to sympathise with this measure and to give it my support, recognising that it is nothing more than a stopgap and that till such time as a Minister, or someone like a Minister, is able to say, to the nearest 50,000, that the British people need x hundred thousand houses, we simply do not know what we are doing. That is the state in which we find ourselves today. I look forward to the present Government actually defining the problem for the first time.

7.38 p.m.

Sir Brandon Rhys Williams (Kensington)

I was congratulated by the present Secretary of State on my speech on Second Reading of the Housing Finance Act—not necessarily because he agreed with what I said but because I spoke for only two minutes.

This evening I have to apologise to you, Mr. Deputy Speaker, and to the House, because I have not heard the whole debate. I heard part of the Secretary of State's speech, and I was fortunate enough to hear the whole of the speech of my hon. Friend the Member for Chelsea (Mr. Scott), whom we are delighted to welcome as the representative of the Royal Borough. I am personally delighted, too, to be able to congratulate him on his speech from the Opposition Front Bench.

I do not want to make a controversial speech, but I hope it will be constructive if we take this opportunity on Second Reading of looking at the housing problem in somewhat more depth than would be prompted simply by a detailed consideration of the particular recommendations in the Bill.

By bringing forward this measure the Government are clearly trying to tackle the housing problem in depth, but I feel that they have failed to do so and that much still remains to be done. Much thinking will still be required on housing after the Committee stage and when the Bill has become an Act.

I should like to make three points. The first concerns the case for paying housing subsidies at all. In my view there is a convincing case for paying housing subsidies on a generous scale. I say this because we want to encourage investment to the maximum in this country in fixed assets, and to encourage people to spend less on current consumption. We can encourage them to put money aside through contractual savings schemes for house purchase. It is not only at the personal level but throughout the economy that we need to attract money into investment and away from current consumption. If housing subsidies tend to draw expenditure in that direction they must be right.

We are right to think in terms of over-housing ourselves. If people were left to buy the sort of housing that they could afford without any help, many houses would be built which would be a shoddy legacy to the next generation. It probably takes 20 or 25 years to pay for a house, but we hope that it lasts for at least 100 years more than that. To put up good houses is a wise investment, but to put up what would become the slums of the future is a bad one. So there again there is a case for housing subsidies. But if we are to give generous housing subsidies the money should be distributed fairly. At present throughout the housing field we find capricious relics of former legislation and provisions which are the left-overs of obsolete Acts or shoddy, out-of-date thinking, brought down to us from the past.

In local authority housing, which the Government are principally concerned with in the Bill, we find highly capricious variations from one district to another, and I do not think that the Bill will make that situation any better. The fair rents system may have its faults but it was at any rate an attempt to produce a national scheme, whereas here the Government seem to be reverting to a purely haphazard system of distributing housing subsidies through local government.

I particularly welcomed the aspects of the Housing Finance Act that brought benefit to furnished tenants and to people in unfurnished tenancies outside the public sector. Although the Government have, I believe, sponsored an advertising campaign in recent weeks to try to encourage the take-up of rent allowances in the private sector, my expectation is that it will continue to be pitifully small. I should like to see a scheme—a pilot scheme at all events—whereby taxpayers, or employers on behalf of taxpayers, might be encouraged to provide a statement of the amount of rent being paid and the type of accommodation. This could be put on the tax return so that the Inland Revenue could handle automatically the assessment of eligibility for rent allowances instead of leaving people to make declarations to local authorities.

Over the years taxpayers have come to trust the Inland Revenue, but are still afraid that if they make a complete declaration to the local authority of their means the information may not be treated with quite the same sort of discretion as they would wish. But that is only one reason why applications for rent allowances are so few. The Government owe it to the large private sector to deal with this. I hope that they are giving this matter serious thought from the point of view of simplifying the administrative system, because that is the only way to get their better take-up. We will not get better take-up of rent allowances by advertising, any more than we have managed to get a better take-up of family income supplements. We should try to reform the housing subsidy system as part of a total reconstruction of the cash relationship between the individual and the State.

Secondly, we have to consider the objective of getting a fair balance between ratepayers and rent payers; this, I think, is a phrase which originates from the Department. It sounds a good ideal but it has not been worked out in sufficient detail in the Bill. We shall not achieve a satisfactory relationship between rent payers in municipal housing and ratepayers unless we tackle the whole vast problem of the reconstruction of local authority finance. I appreciate that I am asking a lot, but a lot is required to solve the housing problem. There is increas- ing bitterness and frustration in the relationships between people who have to pay rates and those living in council property. The Government should take heed of the dangers in this division of opinion and bend their minds urgently to the reconstruction of local authority finance.

I have suggested, as have others, that education costs might be taken wholly off local authorities, so that the pressure on ratepayers—which is becoming almost intolerable and which will get much worse next year—might be relieved, at any rate by a transitional measure. We must reconstruct the whole of local authority finance before we can come to a satisfactory relationship between rent payers and ratepayers.

Finally, I remind the Minister of a suggestion that I have made previously. Though I am not specially proud of the details, I am certain that my point is right. There is an unsatisfied demand for short-term accommodation and there is short-term accommodation available; but the market is frustrated by the existing state of the law. I am sure that in the Minister's constituency—I am certain of this in mine—we can find umpteen examples of accommodation not being fully used because one party or other to a potential bargain is frustrated by the terms of the present law. What possible harm could there be in allowing landlords with accommodation to let on short term and potential tenants who are looking for short-term accommodation to come to a valid relationship which could come to an end after a prearranged period of, say, two, three or five years. It would not damage the relationship between landlord and tenant in the public or private sectors who were outside such an arrangement, but it would help ensure that a large proportion of the now empty accommodation in this country could be put immediately to a social purpose. It would also help stop the deterioration of the many empty buildings that we have. I ask the Minister not to approach this matter in a doctrinaire spirit, but rather to look at it again. I have taken the trouble to work out a series of recommendations which I felt were practicable, but they fell under the Minister's whim that there should be no form of tenure which did not confer absolute total security of tenure on the tenant. That was his rostrum. But when he comes to know the subject better, the Minister will realise the force of my argument. I hope that I may have the pleasure in due course of congratulating him on coming to the House with proposals which improve on the suggestion I have made.

I have now said enough, except to say that the Bill does not appear to me to contain anything of substance that will improve the housing situation. If anything it will make matters worse.

7.47 p.m.

Mr. Brian Sedgemore (Luton, West)

When Adam Smith wrote his romantic novel on classic economic theory and the advantages of free enterprise, whatever else he had in mind it was certainly not the provision of housing. I believe that most of the examples in the book concerned the provision of pins. I do not think that any hon. Member would disagree if I were to suggest that the provision of housing is infinitely more important than the provision of pins. It is the total failure of the free enterprise market to cope with housing problems which I would have thought condemns that system more than anything else I can think of.

A little time after Adam Smith died—in 1962, in fact—I moved into the Ministry of Housing and I stayed there until 1967. One of the Ministers there was the late Richard Crossman. I understand that he threatened to publish certain diaries and has caused some heart-burning in the present Government. All I can say is that if those diaries are published, I may publish my own. I wonder whether Richard Crossman's dairy will mention the day when he drove the then tough Permanent Secretary, now Baroness Sharp, to have a little tear drip down from her eye.

There was something important in those years, however, because, as I recall it—I was then Private Secretary to the present Government Chief Whip, who was then the Minister responsible for London housing—the sort of Socialist planning which my right hon. Friend brought in had a significant effect in increasing the building and the supply of houses in London. Further, as I recall it, the housing plan of the then Labour Government succeeded in 1967 and 1968 in advancing our housing programme and pushing completions up to 400,000 houses a year—a figure reached neither before nor since.

I remember also that that was done on the basis of pushing up to a record level not only council housing but private house building. It seems to me, therefore, that there is some cant, humbug and hypocrisy in the Conservative Party's assertion that it is the party that favours the owner-occupier.

It was in that period also, I believe, that I realised that even if one is an 18-stone rather slow-moving whizz-kid in charge of a housing corporation, one should understand that our housing problems cannot be solved just by an appearance on television, letting tears pour from one's eyes, and saying, after being concerned with housing for about six months, how sorry one is for the people who do not have houses, and that the problem is really all rather simple. One is entitled to expect a little better from Lord Goodman in this matter, for there are serious problems here.

There are serious problems of finance and interest rates—problems which may never be solved unless we alter the whole banking and building society structure in Britain. There are serious problems in the provision of land—problems which will not be solved until we bring into community ownership—I think that that is the word now—or into public ownership land needed for development. There are serious problems in our planning procedures. There is the serious problem also of getting rid of the private landlord.

There seem also to be serious problems of logic. I heard one or two hon. Members on the Conservative benches tell us about the replacement cost of houses, council and private, making comparisons regarding subsidies. They told us of figures produced by the Housing Research Foundation which, they say, show that the subsidies on council houses are £1,000 for replacement and that the corresponding figure on a private house is £300, yet in the same breath those hon. Members advise councils to sell off their council houses, reducing their housing stock, so that then, if those councils operate in areas of housing shortage, they will presumably have to build more new houses and meet the same rising replacement costs and the same rising subsidies about which those hon. Members were complaining so bitterly a few moments before. We shall not solve our housing problem by the sort of illiterate merry-go-round madness we hear from hon. Members opposite.

I think that the most distressing event ever to happen in housing in my lifetime was the Housing Finance Act 1972. I was at that time a councillor in the London borough of Wandsworth. I do not think that I can remember such a class-conscious Act, so redolent of hatred. I do not think that I can remember an Act of Parliament so designed to cause direct conflict between central and local government, or an Act designed to cause so much conflict between local councillors and the tenants of their councils.

Nevertheless, I believe that that Act had one useful result in that it brought home again to the Labour movement the fact that in the last resort conscience is more important than the rule of law. If, as a result of the Housing Finance Act—I speak as a barrister—we have learned the primacy of conscience over law, we must all be grateful to whoever it was who introduced it.

If there be a party which favours the owner-occupier, that party is the Labour Party. Let us have no doubt about it. In the past four years, we have seen new house prices rise by 100 per cent. We have seen mortgage interest rates rise from 8 per cent. to 11 per cent., and we all know that when Labour took office in February last they were about to take off to 13 per cent., that further rise being held back by loans and subsidies from this Government. We saw housing starts and completions plummet more than they had ever done, whichever years one takes, going back to 1950 or even back to 1945, and we have seen our housing programme in a state of collapse, or only just slowly picking up. To stand on that record, as the Conservatives do, and say that theirs is the party which favours the owner-occupier is to turn logic on its head.

I had some statistics from the building societies put through my door this morning. Although my Front Bench may not agree, I must straight away state my personal view that building societies should be taken into public ownership on a regional basis. They are not profit- making organisations, there is a great deal of inefficiency in them, and I cannot see any basic public objection to that happening. Indeed, I think that it will happen within the next 10 years.

Let us discuss the problem on the basis of what exists now. I hope that the Government are proceeding with their stabilisation fund and with their housing finance agency, which is to help new house buyers. The statistics put through my door this morning show that the assets of the building societies were £20,000 million. They show that the liquid assets of the building society movement were 18.9 per cent. of that £20,000 million, and that the inflow of funds for the third quarter of this year were about £547 million.

All that seems to me to put the building societies in a more than healthy state, and I wonder why, with their asset structure as such, their liquid asset structure and their current income at so high a level, they cannot be considering reducing their rate of mortgage interest by ½ per cent. or so. I became an owner-occupier for the first time only about eight months ago, and even while I was carrying out my purchase the interest rate was rising by ½ per cent., then another ½ per cent., and then another ½ per cent. That was Tory Britain. The Tories have certainly cost me a packet.

It seems to me that we may well be coming to a time when we have to put some pressure on the building societies to reduce their interest rate. Perhaps my hon. Friend the Under-Secretary of State will have a word with the Chancellor of the Exchequer and the Prime Minister's principal economic adviser, the Chancellor of the Duchy of Lancaster—and perhaps the Governor of the Bank of England—because it is difficult to see why interest rates, as such—it is interest rates which determine mortgage interest rates—are quite so high. Certainly, our interest rates seem to be fairly high by international standards. It may well be that the time has come for those who govern the operation of our finances to exert some general pressure to bring down interest rates, so that we may then bring down mortgage interest rates.

I know all the arguments about the dangers of Arab oil money—petro-dollar money as I think it is now called—disappearing from this country, but if our interest rates are competitive it may well be that the time has come to do something to bring them down a bit, and thus bring down the mortgage interest rate.

Perhaps I could give a bit of hope to the country here, double-edged though it may be. Looking at the current economic calamity around us, and looking at the slight recession in world trade and the basic economic trends, I think it almost inevitable that over the next year or two interest rates will actually fall in this country, and mortgage interest rates will fall as a result. That might make the 9 per cent. offered by the Conservatives look a little silly, since it may well be that interest rates will come down to 9 per cent. or even lower of their own accord. Unfortunately, however, as I hinted earlier, that may well be associated with other economic difficulties.

My next point concerns my constituency, but I am sure that it concerns others, too. I refer to the idea of councils purchasing private property in what are commonly called private areas. I served on the Wandsworth Council. It was the policy of that council—a council described as a Socialist island in private enterprise London—to purchase every private house it could afford. That was a desirable and effective policy. The same policy is now being carried out in Luton, and I have had complaints from residents of private property who say that the council should not purchase property in private areas because it lowers property values. I reiterate that this policy is wholly desirable, and anything the Government can do to encourage it will have my support. It is regrettable that private tenants should adopt this attitude. Luton has 4,000 families on its waiting list and that list is increasing by 6 families a week. Any council which failed to do all it could to purchase housing in those circumstances would be negligent.

On this issue, there is a great divide between the two sides of the House, but I would hope nevertheless for the support of the Conservatives. I seem to remember that it was the Conservative Party that was always talking about "social mix". Sometimes it seems that they are limiting social mix to the sale of council houses to council tenants on council estates. The Labour Government decided to extend that policy to private areas. It is deplorable that people should be divided up according to religion, according to those who have and those who have not been to university, those who have and have not been to grammar schools and those who do and who do not live in council houses. That final distinction is one of the most disheartening and nauseating that I have discovered. My next-door neighbour told me that he was thinking of selling his house and I advised him to offer it to the local council. I do not know why the Conservatives do not support the Government in that policy.

The Bill appears to be a genuine step along the right road. It provides for increased subsidies and will enable councils to hold down their rents, although, inevitably, there will be rent increases. It reasserts the principle of local democracy in housing and because that vital principle has been reintroduced the Bill will have my wholehearted support.

8.3 p.m.

Mr. Tony Durant (Reading, North)

I should like to pick up some of the points raised by the hon. Member for Luton, West (Mr. Sedgemore). He was a little unfair to Lord Goodman's lecture. I had the privilege of being at that lecture. One message that Lord Goodman conveyed, and which we should not deprecate, was that there was a need for passion for the country's housing requirements. Too many times we get ourselves bogged down with Finance Acts and different Housing Acts without tackling the main need, which is more and better housing. I think that that was what Lord Goodman was trying to say. It was a pity the hon. Member was not at the lecture because if he had heard the noble Lord's tone he would not have criticised him.

I am delighted that the hon. Member for Luton, West realises that planning procedures, finance and land are at the root of the principal problems in housing. I hope he will remember that when the Government introduce later Bills which might dry up the supply of land.

The hon. Member criticised the building societies. Surely it was the Labour Government who, in the last six months, ran to the rescue of the building societies and poured money into them. Now suddenly, when the societies are putting their own houses in order and attracting money in order to ease the problem of a Government loan the hon. Member criticises them. He talked about social mix. I agree with him on this point. It is one of the reasons I favour the sale of council houses. One of my principal convictions in life is that we should not think in terms of up the tracks and down the tracks.

I agree with the Labour Member who criticised the Bill for being a slightly ad hoc measure. It is a hurried Bill designed to fulfil some election pledge and must be speeded through in order to satisfy some political motivation. It is a pity these provisions were not embodied in a general housing Bill.

I remember sitting in this Chamber during debate on the Rent Bill in which the previous Labour Government sought to deal with the problems of rented accommodation. I said to the Minister that if the Bill went through there would be a shortage of rented accommodation, particularly for university students. He said something along the lines that I did not know what I was talking about and that what I was saying was nonsense. During the election campaign I had the opportunity of travelling by train in my constituency and I met a number of students. The first thing they asked me was "Who was the nut who passed this Rent Act? It means that we have nowhere to live and we are fed up walking around Reading looking for somewhere to sleep." If that is the sort of housing legislation we can expect from the Government I shall be twitching all the way through at the thought of what it might lead to in housing.

We need to look into the problem of getting more housing instead of directing our attention to bringing in new Acts to stop this and that. I welcome the provision in the Bill which is directed at getting more housing, but I oppose destructive legislation. I agree that subsidies are haphazard, and these provisions could well reinforce that situation and create unfairness throughout the country.

Another point involves local government reorganisation and finance. If we ignore local government finance the Bill will make the difficulties of local govern- ment even worse. We face a serious housing situation. There has been too much interference in housing by politicians of both sides. If politicians had kept their sticky fingers out we might by now have solved the problems. Whenever we introduce legislation it only seems to make the housing situation worse and the housing lists longer and longer.

I think the Bill will create a lack of mobility. This will cause problems because people will find it difficult to move from one part of the country to another owing to fixed rents, low rents and subsidies. They will be reluctant to move just when mobility should be encouraged because of the problems of the north and the desire of the people there to come south or to go elsewhere to work. In Reading companies have great difficulty in finding labour. I am always told that the shortage of housing is one of the principal causes of the problem.

I repeat now my favourite cause. It is that the ratepayers will have to pay again, which is the principal problem with a Bill like this. Eventually part of the cost will be borne on the rates, and pressure on ratepayers is bad enough already.

I hope that the Government will look into the question of housing estates. We have created a society in which enormous housing estates are built by local authorities of all political complexions. Our management of those estates is not very good. We have put too great a strain on local authorities in the efficient running of their estates.

I am not criticising anyone in particular, but the problem needs serious attention. We tend to make an estate, fill it up with people on the housing list and say "Good—lots more people are now fixed up with housing". Then we push on to build the next estate, forgetting those living in the estate we have just built, people who are sometimes suffering from bad bus services and bad repair services and a lack of community centres and other important amenities. I hope that in their long-term examination of housing need the Government will take into account the general management of housing estates. People tend to feel that they are cut off in such estates. I walked round one in my constituency recently and was told by a woman in a block of flats "I cannot even have a decent row with my husband because everyone down the block will hear exactly what I say". We must seriously consider such social problems.

I have deep reservations about the Bill. It will be expensive for local government and will cause immobility and injustice. Therefore, I support the Conservative view of the Bill, and shall vote against the Bill.

8.11 p.m.

Mr. Gwilym Roberts (Cannock)

I am sure that the hon. Member for Reading, North (Mr. Durant) will forgive me if I do not go all the way through his argument. I agree with little of what he said. Perhaps we can find some common ground in his comments about the management of local authority estates, although one of the advantages of local authority building over building by the speculative builder is that local authorities generally ensure that shops and other facilities are put on the estates, whereas many speculative builders are interested only in cramming in as many houses as possible, to obtain the maximum profit.

I do not agree with the hon. Gentleman that politicians should keep their hands out of housebuilding. As politicians, such as they are, are the product of our democratic system, they are the very people who should be concerned with housebuilding and its control. What is the alternative? In whose hands are we to put house building—the builders, the property speculators, the get-rich-quick boys? Are they the people to whom the future of Britain's housing should be entrusted? Whatever may be the failings of politicians, I would much rather have them dealing with the issue than have uncertain gentlemen of the type I have mentioned.

I congratulate the hon. Gentleman on at least not following the line of many of the other speeches from the Opposition benches, which concentrated on the old myth perpetuated by the Conservatives that there is something superior about owner-occupation compared with local authority housing. We on this side also have a responsibility for perpetuating the myth, because we have not advanced forcefully enough the great advantages of being local authority tenants and of developing local authority estates.

My hon. Friend the Member for Luton, West (Mr. Sedgemore) said that he has recently become an owner-occupier. I am sure that he will agree that if Labour control had been maintained in Luton for many years, and there had been vast local authority estates able to meet his need, he would have been one of the first to occupy a local authority house there. We have a duty, which we have neglected, to tell the public at large that the idea that private building is superior to public sector building is a myth. It is true that the majority would like to buy their own house, but that is because they believe the myth. As one of my hon. Friends said earlier, we would all like to take holidays in the Bahamas. The sad fact is that the cost of the average private house for owner-occupation is now beyond the means of 90 per cent. of our population.

Therefore, private housebuilding provides no answer to the biggest part of our housing problem. For a solution to the problem we must look to more and more building of local authority houses for rent. Otherwise, we shall be denying 90 per cent. of the population any chance of obtaining a home.

One Conservative Member suggested that the Housing Finance Act had generated a greater demand for house purchase. He may be right, but what he did not tell us was that as a result of that generation of demand the price of houses over about 18 months nearly doubled, reducing the ability of the vast majority of the population to purchase houses.

Therefore, we come again to the obvious answer that the only possible solution to our housing problem lies with public sector housing for rent.

Mr. Durant


Mr. Roberts

These are the simple statistics of the situation.

In my constituency we have large areas of former National Coal Board land, and other land still owned by the board, great parts of which are suitable for housing development. If the land is ultimately to be developed for housing—which, if it is accompanied by the necessary industry, might be a suitable way of dealing with the land—and if it is to meet the needs of the many thousands of people on housing waiting lists in my constituency, and perhaps help the thousands more in the West Midlands conurbation who are on housing lists, the bulk of the housing development must be local authority housing for rent.

I hope that the Government will examine areas where such development could take place, and consider what form of additional help towards local authority housing should be given to them.

I welcome the Bill because it increases the subsidy available for local authority housing and will, therefore, make an important contribution to local authority housing programmes. But I have one or two doubts about the extent of parts of the subsidy. First, I am slightly worried that the local authorities will find themselves effectively with a lower level of subsidy in real terms because of inflation.

Secondly, while I particularly welcome the special element, there seems to be some limitation on it, as it is confined to one year. The third but certainly not the minor point is that there appears to be no provision for the extension of housing expenditure to areas not covered by the capital estimates. This means that, in the case of services which local authorities have to provide in housing the homeless, for example, there is no special provision.

All these are areas in which the provisions of the Bill could be tightened up, but on the whole I welcome it because it increases the power of local authorities to build housing for rent. But the Bill can only be regarded as a first step towards solving our housing problem. I believe we shall have to have much greater subsidies, and a much greater concentration on the housing drive, if, in the next decade or so, we are to come anywhere near to solving Britain's great housing problem.

8.24 p.m.

Mr. Eldon Griffiths (Bury St. Edmunds)

I hope that the hon. Member for Cannock (Mr. Roberts), who concluded with a plea for ever-larger subsidies, will forgive me if I do not follow him in his remarks, because I want to start with bricks. We have about 750 million bricks standing idle. At the same time, we have seen over the last six months some 20 or more brick-making plants closed down and some 2,000 professional brick makers made redundant. We now have enough bricks to build a wall five feet high from here to Cape Town. That is a measure of the current crisis in the building industry. Yet a year ago there was a shortage of bricks.

Equally, 18 months ago, it was almost impossible to get good building labour, because the industry was flat out. Good "brickies" could command their own prices and the small self-employed builder had order lists as long as his arm. Indeed, the whole building and construction industry was going forward—at high prices, admittedly, but it was thriving and expanding. Today, there is unemployment, and as the Minister, who is a fair man, will acknowledge, that unemployment is bound to grow.

Thirdly, surveying the national building scene, I note houses standing empty all over the country. Some of them are only half built because there is no money to complete them; some are three-quarters built; many others are standing empty because those who would sell them cannot find buyers. I do not know the exact figures, but I wager that scores of thousands of houses cannot be sold because would-be purchasers cannot find the money.

The other feature of the building scene is that, while we have an abundance of unused building materials and of unemployed building labour, along with a very large number of houses unsold, still hundreds of thousands of our constituents are desperately in need of homes. There is no Member of this House who does not know, from his weekly surgery, that the housing problem is getting more serious every day.

This by any measure is an absurd situation. We have the materials, we have the labour, we have many houses and we have also the demand. But we have failed—all Governments have failed—to put these factors together in a fashion that meets the need.

It is fair to quote the National Federation of Housebuilders in discussing the present crisis. I believe that the House will be united in accepting that these figures are correct. In the three months between July and September, private sector starts were 55 per cent. lower than in the same period last year and completions were 33 per cent. down. The federation goes on to say: There is now little prospect of total private starts this year exceeding a level of about 110.000, or more than 50,000 fewer than in the worst year of the past 10 years. The federation concludes: Those involved in the industry believe that that next year's private starts are unlikely to exceed 100,000, and some have suggested that they could fall to a level of only 50,000. Once again this is a desperate measure of the current crisis in the home building industry. I say that as one who occupied a ministerial office in the Department of the Environment for some years. It seems that all Governments have failed to solve the housing problem. There are perhaps many physical reasons. This is a small island with many people and little land on which to house them. That is an intractable reality with which all Governments have to struggle.

Further, there are many secular changes taking place in our society. For example, we marry younger, we have children younger and many of us, thank heavens, live longer. We now need to house four generations in what used to be the span of three generations. There are massive secular changes which add to the basic and intractable shortages of land.

Our people have much greater mobility. More houses are needed because we move around. My experience has led me to conclude that while we cannot overcome the intractable problems concerned with the shortage of land, the density of population and the secular changes in our society our policies by and large have made the matter worse. Why is it that the Germans have not failed to provide their people with housing? I shall not go into the figures as the Minister knows that I am right. The Germans have not failed, by and large the Americans have not failed, but we have.

There are many reasons for our failure and I shall not weary the House with them all. I shall merely list a few. First, our land planning is over-elaborate and far too lengthy. For some time I had responsibility for planning. I was appalled to learn that it still takes approximately 100 weeks to move from the final report of an inspector on a planning decision to the Secretary of State's decision. That is not good enough. Equally, we do far too much nitpicking over the details and thereby delay and damage the building industry. Above all, all Governments have failed to provide stable financial conditions for the industry and for those who would rent or purchase homes.

It is against that background that I have examined the Bill. I have tried to examine it objectively. I have not spoken on this subject in the House for many years. First, the Bill is plainly expensive in that it will cost about £700 million. We hear that we shall be endorsing that sum to be spent on behalf of the taxpayer. Secondly, it is complicated. There are five different types of subsidy to be administered by the over-burdened local authorities. Further, will it build any more homes? I shall not get into an argument but in my view it will build no more homes than would have been built without it.

Will the Bill improve more of the older and decaying homes, particularly those in our great conurbations and in rural areas such as the constituency which I represent? Having had some responsibility for home improvement grants in the previous Conservative administration, which have been something of a success, I do not believe that this measure will improve any more homes than would have been improved without it. Next, will it help the elderly? Will it build many of the one and two-bedroomed small homes for the elderly so that they can be looked after properly? I do not believe that it will.

Will the Bill help to end the under-occupation of far too many of our three-bedroomed council houses which are occupied very often by lonely elderly people who have lost their mate and who find themselves unable to maintain the garden and unable to heat that much room? Will the Bill allow the younger growing families to move into three-bedroomed homes? Having examined the Bill I am bound to say that it will not help to end under-occupation and that it will not provide any more of the one and two-bedroomed homes which are so badly needed by the elderly.

I come to what I believe needs to be done. I will merely list some of the main points which I believe the Bill should contain. First it should try, and Heaven knows it is hard, to restore confidence to the building industry. That is easy to say but desperately difficult to do. I advise the Minister that if he really wants to restore that confidence—and I believe that he does—the first thing he must do is to persuade his colleagues to give up the nonsense of nationalising building land.

That nonsense will not restore confidence nor will it build any more houses. It will not achieve the purposes which the Minister and I wish to see realised. Secondly, the hon. Gentleman should persuade his colleagues, if he can, to use some of the public funds that in my view they are wastefully disbursing on other projects to bring down the interest rate for home owners. I believe that my right hon. Friend the Member for Finchley (Mrs. Thatcher), who proposed this during a little disagreement we had a short time ago, was absolutely right. It is an intelligent use of public funds. It will help the building industry and it will help people.

I suggest that if the Minister were to table a short amendment to the appropriate clause to bring in a 9 per cent. mortgage interest rate he would have the overwhelming support of both sides of the Committee. I suggest that he should provide, and I will presume to commit my right hon. Friends on the Front Bench on this, some help with the deposit. I assure him that his amendment, suitably couched, would go through Committee with no difficulty.

Beyond that the Minister should, through this Bill, require local authorities to offer their council houses for sale to those who wish to buy them and are able to do so. He should use some of the money that local authorities would get from such sales to build more of the one and two-bedroom houses so badly needed by the elderly.

I have tried to look at the Bill to see whether the Minister, who has a fertile mind and a deep conscience on this matter, has been able to think up something in a Bill which contains five different kinds of subsidy that is better than anything the Tory Party had when in Government. I have looked carefully, but I am bound to tell him that I cannot find those new ideas. Therefore I must tell the hon. Gentleman—and I those same property speculators and it—that I believe his Bill will fail because it is founded in political prejudice. It is anti-home ownership and anti-ratepayer. It is the antithesis of sound housing finance.

No doubt the hon. Gentleman will get his Second Reading. No doubt he will go through a gruelling Committee stage. I am sure of that because I am delighted to see that my hon. Friend the Member for Shipley (Mr. Fox) will be on the Committee. I am sure he will make certain that the Bill is examined in great detail. This Bill will not help with the problems of home ownership and homelessness. It will not reduce the queues in all of our surgeries. All that it will do is to advance a little further the creeping control of our people and the creeping waste of their money which is the hallmark of the present administration.

8.39 p.m.

Mr. Bob Cryer (Keighley)

We have had from the Opposition tonight a mishmash of ideas based on no particular distinct political philosophy. Earlier, one Conservative Member, who has, of course, since left the Chamber said that the Bill was an effort to please council tenants, as though the Opposition's efforts in offering council houses at considerably below the market value during the election was somehow totally divorced from a desire to win the votes of council tenants.

Then we had the hon. Member for Bury St. Edmunds (Mr. Griffiths) talking about a surplus of bricks. Does he not think that there are some contradictions in a private enterprise free market system and that sometimes it will break down? In housing it breaks down with monotonous regularity. This is something the Government are trying to eradicate by introducing some Socialist element and some degree of regulation. He should not grumble about these contradictions and then complain about an expenditure of £700 million in an effort to regulate at least part of them.

As for creeping control, the Housing Finance Act was regarded by many local authorities as creeping control by central Government. They were not even allowed to regulate or to assess their rents. They were not even allowed to decide when they should impose rent increases. The rent increases were decided not by local authorities but by the men in Whitehall. The consensus of opinion of local authorities, Conservative and Labour controlled, was that the Tory Government, who introduced the Housing Finance Act 1972, imposed control for purely doctrinaire reasons.

The background of this debate is, by common consent, a situation of crisis in housing. It is worth reminding ourselves and putting on record that in 1973, under the Conservative administration, we had the worst housing situation since 1959. In 1973, 293,000 houses were completed. In 1968, under the Labour Government, 413,000 houses were completed. In 1973 there was an expression of the doctrinaire opposition of the Conservative Government because we had the lowest number of council house completions since 1945. Therefore, when the Labour Government were elected, they inherited a severe and difficult housing crisis, and I do not think that it is a point of argument that interest rates were about to go up to 13 per cent.

Hon. Members in the Opposition have said that high interest rates are bad. So they are. If anyone has doctrinaire opposition to high interest rates, it is the Labour Party. It is a number of years since Dr. Hugh Dalton, who was then Labour Chancellor of the Exchequer, fought the City to get interest rates down to 3 per cent. He failed because of the power of the City. The Labour Party does not stand for high interest rates because the people who benefit from them gain their incomes without contributing to the community. However, when the Opposition talk about high interest rates they might point out, in all fairness, that it was under the Conservative Government that mortgage interest rates increased from 8 per cent. to 11 per cent. and that the Labour Government halted the rise to 13 per cent. only by making a massive loan of £500 million to the building societies.

The building societies have sent to a number of hon. Members—I do not suppose that I am any exception—statistics which clearly show that that loan has helped. For example, in the first quarter of this year the increase in savings was a paltry £135 million. By the third quarter the increase was £547 million because of the increase in confidence among the building societies and investors as a result of the loan. The number of loans on new houses has increased from 24,000 in the first quarter to 27,000 in the third quarter. It is not a matter for complacency, but at least that is a move in the right direction.

In their document the building societies say: The number of mortgages granted rose sharply from the depressed level of the second quarter, reflecting the improvement in net receipts and drawings on the Government loan. £792 million was advanced to 119,000 home-buyers in the quarter. Therefore, the Government have made some effort to improve the situation in the private sector. They have encouraged local authorities to advance mortgages to first-time buyers. They have also allocated £350 million to the public sector.

One characteristic of the Opposition is that they regard the debate as being about the owner-occupier versus the council tenant. It is nothing of the sort. The speeches made by Opposition Members reflect a characteristically divisive attitude. Both council tenants and owner-occupiers face the same problems—increasing costs, the difficuties of getting homes of any sort, the increase in maintenance costs, and so on. It is not a question of for or against.

One factor mentioned by the hon. Member for Bury St. Edmunds is common to both council tenants and owner-occupiers. What will improve our housing situation beyond all recognition is the public ownership of building land. Building land is limited in supply, and it has always been a gross abuse by a privileged minority that when they have got their greedy fingers on to land they have been able to obtain a large unearned capital gain as soon as planning permission has been granted. The Labour policy of taking into public ownership development land at existing use value was one of the most important elements of our policy at the recent election.

That is a pledge that we must fulfil, and one that the Labour movement has been asking about for the past 40 or 50 years. I want to see a measure for the public ownership of development land in conjunction with this Bill as a general attack on the grave housing crisis. It is encouraging to note that the Government have issued a White Paper on the problem.

I welcome the Bill especially because it removes from local authorities, however they are controlled, the requirement to charge a profit-making rent on council houses. The Bill allows a greater degree of flexibility to local authorities. It does not allow total flexibility, but no legislation ever does. The Government nearly always give some powers to a Secertary of State to administer the nuts and bolts of legislation by orders, and this Bill is no exception, but local authorities, for the first time since 1972, will be able to assess their own needs in public housing. My constituency of Keighley is a relatively low-wage area. Wages there, in comparison with wages in the Midlands, London and the South-East, are much lower. That is one of the most important reasons why a local authority, in conjunction with central Government subsidies, should be allowed to assess its own level of rents, without the imposition of a doctrinaire basis from Whitehall.

In contrast to what the hon. Member for Bury St. Edmunds said, the general pattern of the Bill is to encourage local authorities to build public sector housing and to give them confidence. It is regrettable but true that many hundreds of thousands have put down their names on council house lists. We want to encourage people into good homes, either owner-occupied or public sector. It is the price increase and the increased interest rate under the Conservative administration that have forced people on to the housing lists.

My hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) is a welcome addition to the House, and a welcome replacement. As he said, we cannot wave a magic wand and wish people into an income bracket to enable them to purchase homes. There will always be a need for low-cost houses for rent.

We have heard a good deal in this debate about council houses, and indeed, this subject was the centre of a Conservative bribe in the election. I believe that the selling of council houses is a retrograde step. It takes out of stock readily available low-cost housing which cannot easily be replaced. In Keighley, where houses have had to be sold and offered back to the local authority within five years, a certain number of urgently- needed houses have been standing empty, since the process of sale and resale, as against the process of reletting, takes many months.

The Housing Finance Act, which this Bill happily replaces, was the most divisive measure which the Conservative Government ever introduced. Although we have heard from Conservative Members that meetings on the Housing Finance Act attracted only a small number of council tenants I can tell the House that in Keighley there were huge, crowded meetings at which great concern was expressed about the onerous obligations which that Act imposed on tenants. We must remember that that legislation involved penalties if rent scrutineers were obstructed, and that there were means tests which changed as a person's income altered. This was the sort of situation which Labour Members discovered in their constituencies, although Conservative Members do not appear to have had a similar experience.

Conservative Members have said that the Bill should be criticised because we are keeping an election pledge. The Government are more likely to be criticised if they do not keep their election pledges. I am pleased and proud that the Labour Government are keeping on the paths they trod in Labour's election manifesto and are following the line laid down by rank and file members of the Labour Party. If the Labour Government keep on that path we shall have no worries in giving our people an improved housing programme or in facing the people at tha next election.

8.53 p.m.

Mr. Nick Budgen (Wolverhampton, South-West)

I am delighted to have the opportunity to answer the point raised by the hon. Member for Luton, West (Mr. Sedgemore), who asked why Conservatives are unable to support the Government's proposals for the acquision by local authorities of houses built for private use. The justification lies in lengthening council house lists. The Government have created their own justification for the Bill since, because of their action, these lists were bound to lengthen, owing to the fact that the market in private furnished accommodation has dried up as a result of the Rent Act 1974.

Furthermore, the proposals for land nationalisation will leave the market in development land in the same bureaucratic muddle as happened in the past when the Land Commission was in operation. As a result the supply of building land will dry up. This may give great satisfaction to Labour Members, but it will be a cruel and horrible blow to young couples who hope to buy their own houses.

Mrs. Millie Miller (Ilford, North)

Conservatives appear to be unaware of the fact that in the Greater London area the supply of private rented property dried up long before the Labour Government introduced their Rent Act. The supply began to dry up when the owners of the huge estates in central and outer London sought to break up their estates to gain huge profits by selling independently. The fact is that the private rented sector was dead long before the Labour Government tried to remedy the situation.

Mr. Budgen

I accept what the hon. Lady says. Government after Government interfered in the market in furnished accommodation and, in an attempt to try to help tenants, it has been made impossible for landlords to get any reasonable return on money in accommodation. As a result, by good intentions, they have done grievous harm to exactly the people whom they want to benefit.

The same will be done by land nationalisation. We shall have another bureaucratic muddle which will dry up the supply of development land. The same is being done by indiscriminate subsidies to council housing. By indiscriminately subsidising council housing, we make it comparatively more attractive than any other form of housing.

We see that for all these reasons the lists for council housing are increasing and will continue to increase. No doubt that situation will give further justification to Government supporters who suggest that the Government should be encouraging local authorities to buy into private estates.

The Opposition believe that that policy is wrong on about every ground possible. It is ridiculous that a Government who rode to power on attacking property speculators should now be bailing out those same property speculators and developers of private housing. It is wrong also because it prevents the prices of completed private housing falling. We find that young couples who in most respects live in a market situation, see the market being rigged against them. When housing might fall in price, it is now in an unhappy situation where the price is being kept up by Government intervention.

The Government's proposals are hideously expensive. The tax relief on mortgage interest payments on an average house is about £280 a year. But the subsidy in terms of rates and taxes on the average council house is now running at about £900 a year. When the great increases in rates come in the spring of next year, I hope that every ratepayer knows how much he is paying out in indiscriminate subsidies to council tenants.

These proposals are also unfair on those who have bought houses on private estates only to find that the other houses are being purchased by the local authority. The original purchasers bought their houses in the expectation that the estate would all be owned by private—

Mr. Bruce Douglas-Mann (Mitcham and Morden)

The hon. Gentleman said that council house tenants were subsidised to the extent of about £1,000 a year. Will he tell us where he gets that information? Perhaps he can also clarify a point made earlier by one of his hon. Friends that council house tenants are subsidised to the tune of £1,000 a year whereas private house owners are subsidised to the tune of only £300. I hope that the hon. Gentleman will make it clear that the private owner-occupier gets the least subsidy in the first year and the heaviest at the end of his mortgage, whereas the reverse is true of the council tenant.

Mr. Budgen

The subsidy of about £900 is based upon a house costing £10,000—

Mr. Michael Latham

Apparently the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) is not aware that the figures about which he is arguing come from the Housing Research Foundation, which is an independent body, and the Minister made no attempt to refute the figures.

Mr. Budgen


Mr. Douglas-Mann

What about the second part of my question? What about the decline in the amount of subsidy towards the latter end of a council tenant's occupation of his house?

Mr. Budgen

I think that I dealt with the first part. I am sure that the House will understand if I try to complete my speech in the time allotted to me.

The proposals are unfair because those persons who buy houses on private estates and find later that the remainder of the houses are purchased by the local authority are faced with declining house values. We are opposed to the Government's proposals in this regard, but not, I hasten to add, because we believe that the council tenant is some second-class citizen. We are a national party or we are nothing. We gain much support from council tenants. I am not suggesting that we do not wish to see council tenants move into private occupation. When council tenants move into private estates the prices of the remaining houses tend to drop because people who own their own homes tend to look after them rather better than if someone else owns those houses, particularly if the someone else is a local authority.

Mr. Gwilym Roberts

The hon. Gentleman made the interesting observation that he was not opposed to council tenants moving into private occupation. Will he equally place on record the fact that he is not opposed to owner-occupiers moving into and becoming tenants of council houses? If he is not opposed to council tenants aspiring to become owner-occupiers, is he equally unopposed to owner-occupiers aspiring to become council tenants?

Mr. Budgen

Certainly not if they wished to do so. No doubt if ratepayers and taxpayers continue to have to give a vast subsidy to council tenants many more people will want to enjoy that subsidy.

I now turn to the proposals by which local authorities are to be encouraged to buy houses which have been completed on private estates. I believe that is wrong because of the way that it is proposed to be done. For example, in my constituency an estate called Wrekin Drive was partially completed. The builder got into financial difficulties and the local authority decided to purchase the remaining houses. People who had purchased the first few houses that had been completed were deeply disturbed by these proposals because, as I remarked earlier, they realised that the prices of their homes would go down. They wished to make representations, but they found that the Minister had given loan sanction for the purchase long before they had any opportunity to make those representations. That again shows that these proposals are not merely wrong in principle, but are being put forward in a dangerous, doctrinaire and dictatorial manner. The proper objection of those who lived nearby were not considered at all.

I believe that these proposals are wrong in every way because they add to the immobility of labour. We are moving towards a period of high rate of unemployment. We must have a more mobile labour force. If an increasing proportion of our labour force is moving into subsidised accommodation it will be even more difficult to reduce the high level of unemployment.

Lastly, these proposals are wrong as a matter of deep philosophy, for the extension of public sector housing will leave many more people dependent upon the whim of the State. It is too great a price to pay so that the Labour Party can, by subsidy, encourage more people to vote for it.

9.5 p.m.

Mr. Marcus Fox (Shipley)

I welcome this opportunity to reinforce the views of my hon. Friends. I have listened carefully to the debate, and as far as I can remember no one on either side of the House has denied that in the housing industry and in housing we face the most critical situation. It seems reasonable, therefore, that any measure introduced into the House should have the desire to restore that confidence that is sadly lacking, and I say straight away that it is incredible that the Bill should be introduced at this time and in this form. There are far more important areas to be tackled than that with which the Bill seeks to deal, but we must remember that right hon. and hon. Gentlemen opposite are full of enthusiasm for subsidies, if for nothing else, and the Bill can be seen as yet another example of their interest in that sort of activity.

We must remember and bear in mind what has been said by the Secretary of State, and I am glad that he has returned to the Chamber because I want to say something about him. Between 1970 and 1974, two measures aroused incredible intensity of opposition. There are no prizes for recalling that they were the Industrial Relations Bill and the Housing Finance Bill. I am sorry that the hon. Member for Bolsover (Mr. Skinner) is not here. Hon. Gentlemen opposite connived at people taking action outside the law, and I am sure that the Secretary of State will not regard it as his finest hour when, last week, he took certain actions to remove certain penalties—but we shall return to that at some future date. I think that the right hon. Gentleman let the cat out of the bag when, early in the debate, he said that the Government intended to cut the throat of the Housing Finance Act at a stroke. That is the justification for bringing the Bill before us today.

I must first question the priorities of the Government. I am glad that the Minister for Housing and Construction is present, because he will have the final word in the debate. I know that we have had a word or two on occasion, but I want to remind the hon. Gentleman of something that he said recently: This report on housebuilders' expectations for 1975 confirms my recently expressed view that the decline in private sector housebuilding has at last been halted. This was the first objective of Government action in this field during the last six months. There is still a long way to go"— the hon. Gentleman is right, is he not?— before we can expect a full recovery in output. But the industry should now look towards a period of increased activity. I expect the hon. Gentleman will want to forget that fairly quickly, but he said then what was the first objective of Government action in this field. Does the hon. Gentleman now say that it is not as important as it was? I understand the Minister says that it is. I put it to him that the situation is even worse. It is not often that the Minister smiles. I must be doing well.

Last week, in reply to a Question, the Secretary of State—and he quoted part of this in his opening speech—said: Up to the end of September 1974 the number of houses completed in the public sector in Great Britain was up by 13 per cent., houses started by 28 per cent. and houses put into contract by 35 per cent. compared with the same period of 1973. The right hon. Gentleman stopped there. He did not go on to quote the rest of his answer which was: Comparable figures for the private sector show falls of 26 per cent. in completions and 52 per cent. in starts. I am deeply dissatisfied with these figures. Despite the rise in council house building and the much healthier flow of mortgages, the position is still highly unsatisfactory. I am urgently considering what further intiatives we might take."—[OFFICIAL REPORT, 13th November 1974; Vol. 881, c. 382.] I do not know about being "dissatisfied". The right hon. Gentleman ought to be ashamed of those figures. He ought to be taking action in that area rather than wasting the time of the House on this Bill. I do not expect hon. Members on the Government side of the House to like this. When I see the hon. Member for Keighley (Mr. Cryer) getting aerated, it does me a power of good. He is my next-door neighbour. I like to see him in that state.

But the Secretary of State for the Environment then gave a gleam of hope. He went to a conference of the National Housing and Town Planning Council at Brighton and said: I find it hard to see how our short-term deficiency in the number of homes can be put right if we use only conventional weapons. Should we not give the most serious thought to an emergency programme of quicker, cheaper homes? Does not "emergency "mean" immediately ", and that the matter should be tackled as a first priority? The right hon. Gentleman went on to say: The total resources we have available for housing are inevitably limited. We all agree with him. We only wish that his actions today were in line with the statements that he has made previously.

What does the right hon. Gentleman intend to do in bringing forward this measure? We can only guess at the increase in subsidies. Many of my hon. Friends have suggested that it could be a much higher figure than many imagine. But we on the Opposition benches are united in the view that whatever the total of that subsidy, the money could have been better spent. Why not spend it in providing homes for the homeless, or in initiating a scheme for newly-married or first-time purchasers?

Before any hon. Member questions me, I do believe that there should be building in the public sector as well as the private sector. The Conservative Party has never been opposed to that. It has been suggested from the Government side of the House that, indeed, we are opposed to public building. That is not so. Would it not have made more sense, however, to get local authorities to review the genuine housing needs of people on their waiting lists and to concentrate their efforts and the Government's efforts on building for those special categories? I know of no survey which has produced the up-to-date situation. Does the Secretary of State wish to intervene?

Mr. Crosland

I am distressed to hear that the hon. Gentleman knows of no survey. After all, his party was in power for three and a half years. That gave the Conservatives a certain amount of time to produce the survey for which he is asking.

Mr. Fox

Agreed—but I think that the Secretary of State will accept that the situation today is far worse than it was a year ago. I am only suggesting that it is in that area of special need that the Government should be taking action. They are doing nothing at present.

As all of us know from our interview mornings or surgeries—call them what we will—the problem which faces us is the heartbreak of young people trying to find a home when we can do nothing to help them. But the Government can certainly do something in this respect by a crash programme. There is no sign of that. There is a lot of talk, but that is all. The one area in which money is proposed in the Bill could certainly be shifted, and it could be used in that way.

I do not wish to quote again from the report of the independent Housing Research Foundation because it must be becoming extremely annoying to hon. Members on the Government benches. [HON. MEMBERS: "Oh."] If hon. Members encourage me, as I encouraged the Secretary of State to intervene, I shall respond. The Housing Research Foundation has given the following figures for total housing subsidies in 1973. Taking all council housing into account, the average subsidy to each council house was £77, whereas taking all owner-occupiers into account, the average subsidy to each owner-occupier was £55. That is an historic fact. If one takes the subsidy figure for the provision of new houses, one finds, as has been said in the debate, that one can provide three times as many homes for owner-occupiers as one can for council tenants.

The Bill shows the Government's thinking in this matter and that they are not prepared to use public money in the most effective way. This is where we see the political dogma once again. What is proposed in the Bill points to that being true.

My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) gave a graphic account of the problems facing the industry. He not only talked about unemployment and the number of houses that have been built and are standing empty, but also gave a graphic account of problems regarding planning. Who can doubt that it is in this area that considerable help can be given to get us over the crisis that we all want to solve?

The Bill contains a number of commitments. It will be seen as a further commitment by the Government towards concentration of all housing action in the provision of more council houses for general need, irrespective of people's resources or requirements. The Bill turns the clock back. It is a return to indiscriminate and costly housing subsidies. Why tamper with the present system which makes full provision for families in need living in council houses to be subsidised? I can see no advantage in any change.

There are generous rebates under the Housing Finance Act. Approximately 1,750,000 tenants are receiving benefits of this kind. Why should the ratepayer and taxpayer generally—including all sorts of people, such as young couples who are struggling to pay mortgages and elderly people in private rented accommodation—be expected to subsidise the rents of better-off council tenants? Yet this is what will happen under the Bill. Apart from land nationalisation, it is the major piece of legislation proposed by the Government in this sector, and the Government's intentions are clear. Top priority is to be given to dismantling the Housing Finance Act and replacing fair rents with so called reasonable rents. The Government propose to create a new subsidy system to operate from 1st April, with the most help going to the building of new council houses, along with the municipalisation of land and houses, and the subsidising of the present debt, and four or five new subsidies are to be introduced.

The Secretary of State's chest expanded when he talked about the new subsidy of 66 per cent. proposed under Schedule 1, Part I of the Bill. He said that it was the highest figure ever for acquisition of land and for new buildings. But in reply to my hon. Friend the Member for Wellingborough (Mr. Fry) the Secretary of State had to admit that the figure was based on the pooled interest rates that local authorities are paying. So if a local authority is paying 13 per cent., which is now the normal figure, and the pooled figure that the Department is prepared to accept is 10½ per cent., which would be quite normal, then the council involved in this new building would receive two-thirds of 10½ per cent., approximately 7 per cent. But 7 per cent. of the going rate of 13 per cent. is not two-thirds as might at first appear, but just over 50 per cent. What sort of incentive will this be to a council to increase the rate of building? The Minister will have time in his concluding speech to confirm that what I say is the case. It seems that what I am trying to elucidate annoys hon. Members on the Government side.

I now turn to other parts of the Bill. A time limit of three years was mentioned in the consultative document, but no such limit is mentioned in the Bill. Today the Secretary of State said that he was setting up a far-reaching inquiry. I take it that when the results of the inquiry are published, what is now being proposed will be amended or changed, otherwise is there any point in setting up the inquiry?

There is an intriguing statement in Clause 1: In determining rents for their houses, a local authority shall have regard to the terms of their rebate scheme under section 18 of the Housing Finance Act 1972. There was no mention of that in the consultative document, or in the Explanatory and Financial Memorandum issued with the Bill. Why are hon. Members on the Government side so coy about it? Are they not prepared to admit that there was anything good in our Act? Cannot they say openly that they accept that it is not a bad yardstick but that they are afraid of upsetting some of their Left-wing friends?

We are to move from fair rents to reasonable rents, so let us spend a little time elucidating what reasonable rents are. If that is to be the accepted yardstick, perhaps a level of rent higher than a fair rent could be seen as reasonable. Perhaps the Minister will confirm that that may be so.

I find Clause 2 intriguing in view of the Government's stated intention to restore the rent fixing discretion of local authorities. It is proposed that there shall be power by order to prevent or restrict increases in public sector rents. The Government already have this authority until 1976. So why bother? One has the feeling that they may well need this order, but what happens when they enforce it? We know very well what will happen straight away. It will play havoc with the budgets of individual local authorities. And who will foot the bill?—the poor old ratepayer again. In corresponding circumstances under the 1972 Act, 80 per cent. of the loss was recouped. There is no such promise here.

I turn next to the problem of the homeless. Will the Minister confirm that there is no intention that councils should be penalised under the Bill in making provision for the homeless? As I read it, one type of authority might well find itself without a subsidy which it previously had in relation to the provision of short-term accommodation and the associated expenditure.

I confirm my party's commitment to the principle of the Housing Finance Act 1972. It is possible that it would have been amended from time to time, but I assert our commitment to the principle, despite the pathological hatred of hon. Members opposite towards it. They claim, among other things, that it was an attack on the freedom of local government because it brought in the fair rents scheme. True, under that Act local authorities are now required to charge fair rents and to provide adequate rebates for families in need—and not before time, either. Our Act did that. But let us not forget that it is local councils themselves who play the major part in fixing fair rents. [HON. MEMBERS: "Rubbish."] I am aware of the rent scrutiny boards and of what has been said in casting doubt on the people who have been prepared to serve on those boards, many of them in a professional capacity, many of them with a knowledge going far beyond that of elected members of councils or, indeed, Members elected to this Chamber.

The only freedoms lost with the introduction of the fair rents system under the 1972 Act were the freedom to charge rents bearing no relation whatever to the value of the property and the freedom to deny rebates to tenants in need. I see nothing, therefore, that I should apologise for from this side.

We saw the situation and took appropriate action to get rid of abuse and to concentrate help where it was needed. We stick to the view, contrary to what the Government say in this Bill, that the fair rents system was right. I must give credit to right hon. and hon. Members opposite here. They initiated it, and we extended it into the council housing field. We believe it to be the most equitable and sensible way of fixing rents in this sector. It puts all tenants, council or private, on the same basis, and it ensures through rebates that no tenant has to pay more than he or she can afford.

Mr. George Cunningham

Will the hon. Gentleman acknowledge that the rent scrutiny boards met in secret, without the tenant having the right to make representations, a right which the private tenant has before the equivalent of the scrutiny board, the rent assessment committee?

Mr. Fox

Of course I would confirm that the rent scrutiny board had the final say. The board is the final arbiter, but I do not accept the criticisms which are always levelled at these boards. I am not prepared to go into detail about their activities, although I know that hon. Members would love to have a debate on the whole matter. Are the Government saying that no Government at any time should call upon the services of any individual who has not served on or been elected at some time to a local council?

We are entitled on Second Reading to ask who wants the Bill. It is not the homeless or the people on the growing waiting lists, and it is not those who accepted the fairness of our Act, and there were many of those—[An HON. MEMBER: "Clay Cross?"] It is that minority of party activists who have never been able to give us credit for anything in our Act, people who had no interest in the merits of our legislation. The hon. Member for Keighley took the trouble to come into my constituency, before being elected to this House, to stir up people's feelings about the Act. He got support from his friends on the trades council and supporters of the Labour Party. The people who were prepared to look objectively at the merits of the Bill could see what he was trying to do.

Mr. Cryer

The meeting I addressed in the hon. Member's constituency was attended by about 300 people representing council tenants there. Does he realise that council tenants would not dream of going to him to discuss the Housing Finance Act because they know they would not get any help from him?

Mr. Fox

Without the votes of many people who live in council houses I would not even be here. The hon. Member for Keighley has no right to suggest that I act only for constituents who live in private accommodation.

We know that a minority of people did their best to destroy that Act. That does not mean that we are not prepared to speak in favour of it now. Of course we care that money directed to these problems should be used to the best possible advantage. I warn the ratepayers that the proposals in the Bill will tip the balance even further in favour of the subsidised well-off council tenant at their expense. Look at the words "reasonable rents". One is not encouraged when one reads the underlying principle of the new legislation in paragraph 4 of the consultation paper, "Reform of Housing Finance", of June 1974. There is no attempt to define "reasonable rents". Perhaps the Minister will be able to help on that when he replies to the debate. I presume that he relies on case law. The courts have held that reasonable rents must reflect a reasonable balance between tenant and ratepayer, subject to conformity with the Government's prices policy, whatever that might be. The only way out is to increase the amount of subsidy that ratepayers must pay towards holding down the rents of council tenants.

We say to the ratepayers, "Be warned". Perhaps when the Secretary of State said last week that he did not expect rates to be increased by as much as 100 per cent.—admittedly he said he was joking—he was considering what the Bill might do. With a rates explosion under way these proposals are a sick joke and it is folly to implement parts of the Bill, which is why we shall seek to amend it in Committee.

I ask the House to support our reasoned amendment. We believe that the Bill shows a total disregard for the national need. It comes after a Budget last week which was aimed at reducing subsidies. No wonder the country has difficulty in believing that the Government are serious about tackling inflation. The Bill is yet a further example of Labour's incompetence to produce a truly national housing policy. My hon. Friend the Member for Melton (Mr. Latham) had much to say on this. The Bill illustrates the fundamental difference of approach between the two parties. The Government believe that it is best to subsidise people as perpetual council tenants. We believe it is better to do that temporarily for as many families as possible and to encourage them ultimately to become home owners. Our overriding concern is to get homes built, and the Bill does nothing of the sort.

9.30 p.m.

The Minister for Housing and Construction (Mr. Reginald Freeson)

We on the Government benches welcome the recent conversion of the hon. Member for Shipley (Mr. Fox) and his colleagues to the sentiments expressed in the last sentence of his speech. Having spent three and a half years operating housing policy as a Government, the hon. Gentleman's party can hardly be said to have shown the success that all their words during that period might have led us to expect. I recall the then Minister for Housing and Construction saying on many occasions, particularly in the wake of the Housing Finance Act 1972, that more houses would be built as a result of that Act and other measures of the then Government. He said that at the end of the day the country would see how many more dwellings the Conservative Government had built than the previous Labour Government had built. We waited and we warned the people, and when we returned to office last spring we inherited the most disastrous collapse in house building the country has ever seen.

We should all pay close attention at least to the possibility, and I believe the probability, that fundamental changes in the housing market have been giving out signals to politicians for a long time. Those changes will require radical reshaping of the way in which we handle all kinds of provision, not just tenanted provision such as we are mainly concerned with in the Bill but other aspects of the housing market.

It does not lie in the mouth of any Opposition spokesman to lecture us about the collapse of the housebuilding market so soon after the Conservatives left office. Perhaps in one or two years' time, when the memories of what they left behind are a little more distant, they will feel justified in lecturing us as they have tonight on the very situation they left behind, and the country may feel that they are justified. The effrontery of some ex-members of the Government who have spoken tonight is past belief. They, not the new Government, are responsible for the situation this year.

It is right that on such an occasion the debate should range rather more widely than the contents of the Bill. We shall go into detail in Committee, and when the Bill returns to the House later. I shall deal with some of the points about the situation that has developed in the past few months, before turning to a number of matters connected with the Bill.

So far there has been a negative reaction by Opposition spokesmen towards the Bill's contents and the policy behind it, as well as to other actions we have taken or are considering. With one possible exception, which I found interesting and curious, and to which I shall return. I saw no sign of any positive recommendations or ideas from the Opposition. Once or twice there were echoes of the General Election campaign. The proposed mortgage rate dropped from 9½ per cent. to 9 per cent., but there was no positive thinking.

With the one exception to which I have referred, the only suggestion seemed to be that as many council houses as possible should be sold as rapidly as possible. That seemed to be the main burden of the Opposition's argument on housing. I know their views about rates, and I hope that I shall have time to come to them. We have many positive social reasons for disagreeing with that one and only policy that seems to have emerged from the Conservatives—the sale of as many council houses as possible, as quickly as possible and below the market value. Moreover, we see that policy as a confession that the Opposition have no ideas for managing and developing a rented housing service. They do not believe in one—that is the truth of the matter. It has become clear in this debate, in many earlier debates and in a number of official and unofficial communications emanating from the Conservative Party in recent years.

Indeed, a few years ago one publication recommended the setting up of a corporation with the remit of selling off all council houses, in lots, on the market as quickly as possible. I recall reading a notable Monday Club publication on housing. No doubt it still has the support of a number of hon. Members opposite, among them former members of the Conservative Government, including some who were Ministers at the Department of the Environment.

We, on the contrary, believe that housing for rent is a positive service, not a residual one to be got rid of or reduced to the minimum. We believe that it is a service which stands on its own merits alongside owner-occupation and other forms of tenure that we are now examining and about which we shall produce recommendations in due time—not long now, I hope. The policies of the Bill are designed to develop that public service in rented housing in the context of other provisions to be established on a bigger scale as quickly as possible alongside it.

One of the main differences between the Labour Party and the Conservative Party is that whereas the Conservatives have talked a great deal about owner-occupation and have sought—I am tempted to say "dishonestly" in political terms—to turn the debate into an argument about owner-occupation when the Bill has nothing to do with if, the Conservative Government did precious little, when disaster struck, to try to resolve the situation, even if only marginally. On the other hand, although we ale still a long way from where we want to go, we have spent a tremendous amount of time in adopting practical measures to try to restore the situation we inherited.

We established the £500 million loan to the building societies, which played a major part in restoring the flow of funds which has resulted in more than doubling the ability to meet the demand for owner-occupation. When we took office eight months ago, lending totalled £150 million a month, and this has risen to £350 million a month, primarily because of the initiative of the Government and the backing we gave to the building societies and to prospective owner-occupiers.

Again, when we took office new houses were being bought at the rate of about 6,000 a month. Building society mortgages are now providing purchasing power for about 10,000 a month. It is still not enough, but at least instead of a decline there is an upturn.

Mr. Stainton

I question the Minister's reference to the source of the funds in building societies. Doubtless the increase was triggered by the £500 million provided by the Government, but otherwise the money is a transfer from the Stock Exchange and elsewhere to the building societies.

Mr. Freeson

I do not know why the hon. Gentleman made that intervention. He repeated virtually what I said. I said that the Government's action had triggered off negotiations with the building societies which we have maintained month by month and sometimes week by week. That is all I claim, but that is an important measure of success in the building society world. There has been help for owner-occupiers. There has been an increased activity in that direction. We shall not leave it at that. There will be further studies. We are in close consultation with the building societies and we have effective liaison machinery. A tremendous volume of analytical information is now available to the Department and the societies. That will help us in future studies upon which we shall embark. Initial steps have been taken in that direction involving the Housebuilders' Federation although we have a long way to go to develop that situation to the fine tuning of analysis and information collection that we have established with the building society movement.

The plain fact is that effective action has been taken in the public sector. By, a variety of measures we have produced not a dramatic increase but an end to the decline in housing starts. Although by no means good enough we have achieved that in the private sector. In the public sector, in addition, we now see an upturn in building. We have a long way to go. When we came into office we inherited a White Paper on public expenditure which postulated about 95,000 new housing starts by public authorities this year. At the end of this year I expect that figure to be in the region of 130,000. That is by no means good enough, but it is a marked increase on what we inherited.

Mr. Michael Latham

Will the Minister now answer the question which his right hon. Friend promised would be answered? Why is it that in the first quarter of 1974 under the Housing Finance Act 1972 subsidies there were 36,400 council houses started, which was exactly the same figure as that achieved for the first quarter of 1971 under the Act that was introduced by Lord Greenwood of Rossendale?

Mr. Freeson

The hon. Gentleman knows sufficiently well from his contact with the building industry, from statistics and from the assiduous way in which he tables Questions for Written Answer that he cannot judge a year's effort by one quarter's return. I suggest that he waits, if he does not believe what I am saying, for the cumulative figures for the whole year. He can then judge whether I am correct or whether he is correct. I have said that I expect about 130,000 housing starts by public authorities this year compared with the programmed 95,000 starts envisaged by the previous administration.

The Bill is not intended to produce a solution to the housing problem. It would be foolish for anyone to argue that it is put forward to produce such a solution. It is intended to deal with certain aspects of the housing situation. Anyone who tried to argue in such a simplistic way would be misleading the country and not contributing to a full understanding of our problems.

The Bill is a commitment to end the gross interferences in the day-to-day running of local authorities' housing programmes. It is an attempt to reshape subsidies prior to the much more major review of housing finance that we intend to set in train.

We hope that local authorities will be directed more effectively to new building and modernisation. Anyone who studies the subsidies as set out in the Bill and the statements that have been made already about them will accept that the subsidies are aimed in that direction. We cannot know the results before the measure becomes operative. We have heard a lot of talk about motivation, but I am stating our objectives. We have been criticised several times, and quite vigorously, by Opposition hon. Members for shaping the subsidy system on an interim basis so that it moves in the direction of a bricks-and-mortar subsidy. I have no shame in that. That is the very situation we have to tackle—to achieve an increase in the number of housing starts in the public sector as well as in the private sector. The subsidy system we are proposing is designed for that purpose.

Our major policy developments in this area have yet to be initiated, but I hope that the review which has been referred to on a number of occasions today and elsewhere in the past will be completed in about 12 months' time. That is not an absolute commitment. We are not aiming to have a review which takes place over a period of years. We are aiming at one which will be completed in a year or so.

It will be on that basis that we will then go forward with further, more radical changes in housing. The review will go well beyond the question of rents and subsidies, which until now have been the main burden of housing finance reviews. It will aim to cover such questions as methods of investment in housing, needs and demands and how they are calculated, analyses of the ratio and efficacy of total subsidy expenditure in relation to total capital investment in achieving housing objectives, various systems of help to people in all kinds of tenure and housing, relationship of rebates and allowances to the social security system generally and a number of other fundamental questions which go beyond the immediate issues of rents and subsidies with which we are concerned today. A number of points made during this debate will be more relevant at that time—for example, references to the future financing by Exchequer subsidy of rent rebates and rent allowances and other such matters.

I want to deal with some of the points more particularly relevant to the Bill. I first make one observation about the question of fair rents which was dealt with to some extent by the hon. Member for Shipley and others when they came back to the theme: why do we knock out fair rents in the public sector but seek to maintain them in the private sector, as under the 1968 Rent Act? We wish to do so for the reasons we argued in great detail, point by point, during the Committee stage of the Housing Finance Act 1972.

I can sum that up by saying that in our view, as we argued in detail in Committee, the use of the term "fair rents" in the context of the 1972 Act was a dishonest and misleading term. Point by point we showed that the system set down in the 1972 Act bore no similarity to the procedures set down in the 1968 Rent Act for tenants and landlords in the private sector. It was the transference of a label meretriciously from one situation to another to try to mislead Parliament and the public as to the real nature of that Act.

I shall not go over the points argued in Committee. Perhaps we shall have an opportunity to go into some of these matters, not so extensively, in Committee in a few days' time.

Mr. Eldon Griffiths

The Minister talks of a change of label. What he has done in this Bill is to change from the label, "fair rent" to another label, "reasonable rent". Will he tell the House what he regards as a reasonable rent and, in particular, what he thinks it is reasonable to take from the ratepayer, often the poor ratepayer, to give to the often well-off ratepayer?

Mr. Freeson

I am a little surprised by at least part of that intervention, because the hon. Gentleman should know that in adopting the term "reasonable rents" we are returning to the position that existed prior to the Housing Finance Act 1972. The term "reasonable rents" has been hallowed by case law over two generations of housing administration. It has been dealt with to some extent on a number of occasions this evening. If the hon. Gentleman wants this examined and probed further in Committee, I shall be glad to do so. I look forward to his being a member of that Committee.

I turn to deal with a number of points raised in the debate. The hon. Member for Chelsea (Mr. Scott) referred to Clause 1(2). The same point was taken up by the hon. Member for Shipley. It deals with requiring local authorities, in determining their rents, to have regard to their rent rebate schemes. This matter can be discussed in Committee, but, in effect, we are saying to local authorities that the individual circumstances of tenants may be provided for and are provided for in the rent rebate scheme rather than in fixing the general level of rents, which was not the position before the mandatory rent rebate and rent allowance scheme was introduced under the 1972 Act.

The first parliamentary Question which I asked when we went into opposition in 1970 was put to the new Minister of Housing and Local Government. I asked whether it was the Conservative Government's intention to introduce a mandatory rent rebate scheme such as that which had been left on the desk when we left office that year. There is no argument about this matter across the Floor of the House. We left papers on this subject at that time and I was a strong advocate of the introduction of such a scheme.

The hon. Member for Chelsea, by way of illustration, raised a question about a £55 cost rent in Westminster or elsewhere where the fair rent which had been fixed was £10 a week less rates, and so on. He asked what was a reasonable rent. I do not know. The whole point is that in terms of cash figures such matters are being put into the hands of the local authorities and they will depend largely on such considerations as the precise rent pooling arrangements which the local authority decides to adopt as well as the subsidy which it receives for new construction, and so on. It would not be anywhere near the £55 cost rent, but the bracket covered is dependent on so many factors which the local authority will have to examine that I cannot give a cash figure.

Mr. Scott

In other words, we are moving from a system in which people of similar means in similar accommodation in different local authorities will pay broadly similar rents, which will be rebated and have allowances set against them, to a system which will be totally capricious and depend on the state of the local authority's housing revenue account?

Mr. Freeson

That is not so. I suggest that before the hon. Gentleman again makes that statement about common rent levels round the country for similar properties he checks the facts. The so-called fair rent system under the Housing Finance Act 1972 has not established the rational pattern which the hon. Gentleman has suggested in the House and on the radio and elsewhere has been achieved.

The hon. Member for Shipley asked about the £692 million given in a Written Answer last Friday as being the amount of subsidies for the present year, 1974, compared with the £700 million given in the Financial Memorandum to the Bill for next year. The two figures are not comparable. The first figure, £692 million, includes rent rebates; the latter figure does not. The figure for this year which is comparable with the £700 million figure is £525 million, namely, the basic element, as it will be in the Bill, provided for in future. The Financial Memorandum makes this clear.

I turn to the serious points raised chiefly by my hon. Friend the Member for Paddington (Mr. Latham) and, to a lesser degree, by my hon. Friend the Member for Salford, East (Mr. Allaun). I have been seriously concerned with the kind of papers which my hon. Friend the Member for Paddington has been sending to me about exceptionally high rent increases in his constituency. I can give no undertaking tonight, but, as I said in the House last Wednesday in reply to a question, we are examining the matter very carefully. I hope, but I cannot guarantee, that it will be practicable to produce an answer to the problem. We are trying to treat the matter as thoughtfully as possible. I cannot take it further than that this evening.

Several hon. Members touched on the question of subsidy levels. They said that 66 per cent. on loan charges was not high enough. Some said that the 33 per cent. subsidy on the refinancing of old debts—the supplementary element in the subsidy—was not high enough. We shall examine that in greater detail in Committee. We have discussed the levels fully with the local authority associations. Naturally, they want more, but the proposals in the Bill are broadly acceptable. Notional housing revenue accounts that have been put to us from various local authorities showing that they will be worse off in certain respects have been shown on analysis to be based upon a misunderstanding of the figures that will be produced.

I have discussed this individually with some local authorities, including the one which my hon. Friend the Member for Salford, East had in mind. We shall examine it further in Committee. We are dealing mainly with the money available to help with new building. We shall use that money as effectively as we can to achieve that objective.

If there are points that I have not dealt with satisfactorily during the debate, we shall do our best to deal with them as fully as possible in Committee. If hon. Members who are not members of the Committee wish to raise other matters, I shall deal with them as best I can by correspondence. We intend to circulate a note of guidance to members of the Committee when they are appointed to clarify points that might otherwise be obscure because of the legal terminology of the Bill. I hope that we shall get out these notes before the Committee sits next week or, if not by then, as soon as possible thereafter.

The Conservative Opposition, who have raised objections to the Bill and will vote against it, went on record in the Tory election manifesto as follows: We will continue the freeze on rents until the end of the year. When we have examined the reports of the Rent Scrutiny Boards, we will consider how increases can gradually be implemented in the light of our policies for fighting inflation. Not one Opposition Member has referred to that manifesto commitment, presumably to introduce legislation to phase gradually future rent increases. The manifesto did not specify the private or public sector, and we must assume that it referred to rents in general. If that view were argued in the General Election campaign a few weeks ago, why has no reference been made to it in today's debate? Why have not the Opposition gone on record as claiming that they wish to support our proposals for doing precisely what they told the public they would do if they won the election? That is another example of playing politics in General Election terms, and continuing to play politics in the House.

We are concerned with housing policy and with constructive proposals. We shall

continue to receive ideas from any quarter, either from inside the House or elsewhere, to achieve that objective, but we have had precious little help on that score from the Tory Opposition.

Question put, That the amendment be made: —

The House divided: Ayes 252, Noes 315.

Division No. 10.] AYES [10.0 p.m.
Adley, Robert Fox, Marcus Lewis, Kenneth (Rutland)
Alison, Michael Fraser, Rt Hon H. (Stafford & St) Loveridge, John
Amery, Rt Hn Julian Fry, Peter Luce, Richard
Arnold, Tom Galbraith, Hon T. G. D. McAdden, Sir Stephen
Atkins, Rt Hn H. (Spelthorne) Gardiner, George (Reigate) McCrindle, Robert
Awdry, Daniel Gardner, Edward (S Fylde) Macfarlane, Neil
Baker, Kenneth Gilmour, Rt Hon Ian (Chesham) MacGregor, John
Banks, Robert Glyn, Dr Alan Macmillan, Rt Hn M. (Farnham)
Bell, Ronald Godber, Rt Hon Joseph McNair-Wilson, M. (Newbury)
Bennett, Dr Reginald (Fareham) Goodhart, Philip McNair-Wilson, P. (New Forest)
Benyon, W. R. Goodhew, Victor Marshall, Michael (Arundel)
Berry, Hon. Anthony Goodlad, A. Marten, Neil
Biffen, John Gow, I. (Eastbourne) Mates, Michael
Biggs-Davison, John Gower, Sir Raymond (Barry) Mather, Carol
Blaker, Peter Grant, Anthony (Harrow C.) Maude, Angus
Body, Richard Gray, Hamish Maudling, Rt Hon Reginald
Boscawen, Hon Robert Grieve, Percy Mawby, Ray
Bowden, Andrew (Brighton) Griffiths, Eldon Maxwell-Hyslop, Robin
Boyson, Dr Rhodes (Brent) Grist, Ian Mayhew, Patrick
Braine, Sir Bernard Grylls, Michael Meyer, Sir Anthony
Brittan, Leon Hall, Sir John Miller, Hal (Bromsgrove)
Brotherton, Michael Hall-Davis, A. G. F. Mills, Peter
Brown, Sir Edward (Bath) Hamilton, Michael (Salisbury) Miscampbell, Norman
Bryan, Sir Paul Hampson, Dr. Keith Mitchell, David (Basingstoke)
Buchanan-Smith, Alick Hannam, John Moate, Roger
Buck, Antony Harrison, Sir Harwood (Eye) Molyneaux, James
Budgen, Nick Harvie Anderson, Rt Hn Miss Montgomery, Fergus
Bulmer, Esmond Hastings, Stephen Moore, John (Croydon C.)
Burden, F. A. Havers, Sir Michael More, Jasper (Ludlow)
Carlisle, Mark Hayhoe, Barney Morgan, Geraint
Chalker, Mrs Lynda Heath, Rt Hon Edward Morgan-Giles, Rear-Admiral
Churchill, W. S. Heseltine, Michael Morris, Michael (Northants)
Clark, Alan (Plymouth S) Hicks, Robert Morrison, Charles (Devizes)
Clark, William (Croydon S) Higgins, Terence L. Morrison, Peter (Chester)
Clarke, Kenneth (Rushcliffe) Holland, Philip Neave, Airey
Clegg, Walter Hordern, Peter Nelson, Anthony
Cockcroft, John Howe, Rt Hon Sir Geoffrey Neubert, Michael
Cope, John Howell, David (Guildford) Newton, Tony
Cormack, Patrick Howell, Ralph (North Norfolk) Onslow, Cranley
Corrie, John Hunt, John Oppenheim, Mrs Sally
Costain, A. P. Hurd, Douglas Osborn, John
Critchley, Julian Irvine, Bryant Godman (Rye) Page, Rt Hon R. Graham (Crosby)
Crouch, David Irving, Charles (Cheltenham) Page, John (Harrow West)
Crowder, F. P. James, David Pattie, Geoffrey
Davies, Rt Hon J. (Knutsford) Jenkin, Rt Hon Patrick (Redbr) Percival, Ian
Dean, Paul (N Somerset) Jessel, Toby Peyton, Rt Hon John
Dodsworth, Geoffrey Johnson Smith, G. (E Grinstead) Pink, R. Bonner
Douglas-Hamilton, Lord James Jones, Arthur (Daventry) Powell, Rt Hon J. Enoch
Drayson, Burnaby Jopling, Michael Price, David (Eastleigh)
du Cann, Rt Hon Edward Joseph, Rt Hon Sir Keith Pym, Rt Hon Francis
Kaberry, Sir Donald Raison, Timothy
Durant, Tony Kellett-Bowman, Mrs. Elaine Rathbone, Tim
Eden, Rt Hon Sir John Kershaw, Anthony Rawlinson, Rt Hon Sir Peter
Edwards, Nicholas (Pembroke) Kilfedder, James Rees, Peter (Dover & Deal)
Elliott, Sir William Kimball, Marcus Rees-Davies, W. R.
Emery, Peter King, Evelyn (South Dorset) Renton, Rt Hn Sir D. (Hunts)
Eyre, Reginald King, Tom (Bridgwater) Renton, Tim (Mid-Sussex)
Fairbairn, Nicholas Knight, Mrs Jill Rhys Williams, Sir Brandon
Fairgrieve, Russell Knox, David Ridley, Hon Nicholas
Farr, John Lamont, Norman Ridsdale, Julian
Fell, Anthony Lane, David Rifkind, Malcolm
Finsberg, Geoffrey Langford-Holt, Sir John Rippon, Rt Hon Geoffrey
Fisher, Sir Nigel Latham, Michael (Melton) Roberts, Michael (Cardiff NW)
Fletcher, Alex (Edinburgh N) Lawrence, I. Roberts, Wyn (Conway)
Fletcher-Cooke, Charles Lawson, Nigel Rodgers, Sir John (Sevenoaks)
Fookes, Miss Janet Le Marchant, Spencer Rossi Hugh (Hornsey)
Fowler, Norman (Sutton C) Lester, Jim (Beeston) Rost, Peter (S.E. Derbyshire)
Royle, Sir Anthony Sproat, Iain Vaughan, Dr Gerard
Sainsbury, Tim Stainton Keith Viggers, Peter
St. John-Stevas, Norman Stanbrook, Ivor Wakeham, John
Scott, Nicholas Stanley, John Walder David (Clitheroe)
Scott-Hopkins, James Steen, Anthony (Liverpool) Walker Rt Hon P. (Worcester)
Shaw, Giles (Pudsey) Stewart, Ian (Hitchin) Walker-Smith, Rt Hon Sir Derek
Shelton, William (Lambeth, St) Stokes, John Walters, Dennis
Shepherd, C. Stradling Thomas, J. Warren, Kenneth
Shersby, Michael Tapsell, Peter Weatherill, Bernard
Silvester, Fred Taylor, R. (Croydon N.W.) Wells, John
Sims, Roger Taylor, Teddy (Glasgow, C) Whitelaw, Rt Hon William
Sinclair, Sir George Tebbit, Norman Wiggin, Jerry (Weston-s-Mare)
Skeet, T. H. H. Temple-Morris, P. Winterton, Nicholas
Smith, Dudley (Warwick) Thatcher, Rt Hon M. Young, Sir George (Ealing)
Speed, Keith Townsend, Cyril D.
Spence, John Trotter, Neville TELLERS THE FOR AYES:
Spicer, James (W Dorset) Tugendhat, Christopher Mr. Adam Butler and Mr. Cecil Parkinson.
Spicer, Michael (S Worcester) van Straubenzee, W. R.
Abse, Leo Deakins, Eric Howells, Geraint (Cardigan)
Allaun, Frank Dean, Joseph (Leeds West) Hoyle, Douglas (Nelson)
Anderson, Donald de Freitas, Rt Hon Sir Geoffrey Huckfield, Leslie
Archer, Peter Delargy, Hugh Hughes, Rt Hon C. (Anglesey)
Armstrong, Ernest Dempsey, James Hughes, Mark (Durham)
Ashley, Jack Doig, Peter Hughes, Robert (Aberdeen N)
Ashton, Joe Dormand, Jack Hughes, Roy (Newport)
Atkins, Ronald (Preston N.) Douglas-Mann, Bruce Hunter, Adam
Atkinson, Norman Duffy, A. E. P. Irvine, Rt. Hon Sir A. (L'pool)
Bagier, Gordon A. T. Dunnett, Jack Irving, Rt Hon S. (Dartford)
Barnett, Guy (Greenwich) Dunwoody, Mrs Gwyneth Jackson, Colin (Brighouse)
Barnett, Joel (Heywood) Eadie, Alex Jackson, Miss Margaret (Lincoln)
Bates, Alf Edelman, Maurice Janner, Greville
Bean, Robert E. Edge, Geoffrey Jay, Rt Hon Douglas
Beith, A. J. Edwards, Robert (Wolv SE) Jeger, Mrs Lena
Benn, Rt Hn Anthony Wedgwood Ellis, John (Brigg & Scun.) Jenkins, Hugh (Wandsworth)
Bennett, Andrew (Stockport North) Ellis, Tom (Wrexham) Jenkins, Rt Hon Roy (B'ham St)
Bidwell, Sydney English, Michael John, Brynmor
Bishop, Edward Ennals, David Johnson, James (Kingston W)
Blenkinsop, Arthur Evans, Fred (Caerphilly) Johnson, Walter (Derby S)
Boardman, H. Evans, Gwynfor (Carmarthen) Johnston, Russell (Inverness)
Booth, Albert Evans, Ioan L. (Aberdare) Jones, Barry (East Flint)
Bottomley, Rt Hon Arthur Evans, John (Newton) Jones, Dan (Burnley)
Boyden, James (Bish Auck) Ewing, Harry (Stirling) Jones, Alec (Rhondda)
Bradley, Tom Fernyhough, Rt Hon E. Judd, Frank
Bray, Dr Jeremy Fitch, Alan (Wigan) Kaufman, Gerald
Brown, Hugh D. (Glasgow, Pr) Fitt, Gerard (Belfast) Kelley, Richard
Brown, Robert C. (Newcastle) Flannery, Martin Kerr, Russell
Brown, Ronald (Hackney S) Fletcher, Raymond (Ilkeston) Kilroy-Silk, Robert
Buchan, Norman Fletcher, Ted (Darlington) Kinnock, Neil
Buchanan, Richard Foot, Rt Hon Michael Lambie, David
Butler, Mrs Joyce (Haringey) Ford, Ben T. Lamborn, Harry
Callaghan, Jim (Middleton & P) Forrester, John Lamond, James
Campbell, Ian Fowler, Gerald (The Wrekin) Latham, Arthur (Paddington)
Canavan, Dennis Fraser, John (Lambeth N) Leadbitter, Ted
Cant, R. B. Freeson, Reginald Lee, John
Carmichael, Neil Freud, Clement Lestor, Miss Joan (Eton & Slough)
Carter Ray Garrett, John (Norwich S) Lever, Rt Hn Harold
Carter-Jones, Lewis Garret, W. E. (Wallsend) Lewis, Ron (Carlisle)
Cartwright, John George, Bruce Lipton, Marcus
Clemiston, Ivor Gilbert, Dr John Litterick, Tom
Cocks, Michael (Bristol S) Ginsburg, David Lomas, Kenneth
Cohen, Stanley Golding, John Loyden, Eddie
Coleman, Donald Gould, Bruce Luard, Euan
Colquhoun, Mrs Maureen Gourlay, Harry Lyon, Alexander (York)
Concannon, J. D. Graham, Ted Lyons, Edward (Bradford W.)
Conlan, Bernard Grimond, Rt Hon J. Mabon, Dr J. Dickson
Cook, Robin F. (Edin, C.) Grocott, Bryan McCartney, Hugh
Corbett, Robin Hamilton, James (Bothwell) McElhone, Frank
Cox, Thomas (Wands Toot) Hamilton, W. W. (Central Fife) MacFarquhar, R.
Craigen, J. M. (Glasgow, M) Hamling, William McGuire, Michael (Ince)
Crawshaw, Richard Hardy, Peter Mackenzie, Gregor
Cronin, John Harper, Joseph Mackintosh, John P.
Crosland, Rt Hon Anthony Harrison, Walter (Wakefield) Maclennan, Robert
Cryer, Bob Hart, Rt Hon Judith McMillan, Tom (Glasgow C.)
Cunningham, G. (Islington S) Hattersley, Roy McNamara, Kevin
Cunningham, Dr J. (Whiteh) Hatton, Frank Madden, Max
Dalyell, Tam Hayman, Mrs Helene Magee, Bryan
Davidson, Arthur Healey, Rt Hon Denis Mahon, Simon
Davies, Bryan (Enfield N) Heffer, Eric S. Mallalieu, J. P. W.
Davies, Denzil (Llanelli) Hooley, Frank Marks, Ken
Davies, Ifor (Gower) Hooson, Emlyn Marquand, David
Davis, S. Clinton (Hackney C) Horam, John Marshall, Dr Edmund (Goole)
Marshall, Jim (Leicester) Roberts, Albert (Normanton) Thomas, Ron (Bristol NW)
Mason, Rt Hon Roy Roberts, Gwilym (Cannock) Thorne, Stan (Preston)
Maynard, Miss Joan Robertson, John (Paisley) Thorpe, Rt Hon Jeremy (Devon)
Meacher, Michael Roderick, Caerwyn Tierney, Sydney
Mellish, Rt Hon Robert Rodgers, George (Chorley) Tinn, James
Mendelson, John Rodgers, William (Teesside) Tomlinson, John
Mikardo, Ian Rooker, J. W. Torney, Tom
Millan, Bruce Roper, John Tuck, Raphael
Miller, Dr M. (E. Kilbride) Rose, Paul B. Urwin, T. W.
Miller, Mrs Millie (Redbridge) Ross, Stephen (Isle of Wight) Varley, Rt Hon Eric G.
Mitchell, R. C. (Soton, Itchen) Ross, Rt Hon W. (Kilm'nock) Wainwright, Edwin (Dearne V)
Molloy, William Rowlands, Ted Wainwright, Richard (Colne Valley
Moonman, Eric Ryman, John Walden, Brian (B'ham, L'dyw'd)
Morris, Alfred (Wythenshawe) Sandelson, Neville Walker, Harold (Doncaster)
Morris, Charles R. (Openshaw) Sedgemore, B. Walker, Terry (Kingswood)
Morris, Rt Hon John (Aberavon) Selby, Harry Ward, Michael
Moyle, Roland Shaw, Arnold (Redbridge, Ilf) Watkins, David
Mulley, Rt Hon Frederick Sheldon, Robert (Ashon-u-Lyne) Watkinson, John
Murray, Ronald King Shore, Rt Hon Peter Weetch, Ken
Newens, Stanley Short, Rt Hon Edward (Newcastle C) Weitzman, David
Noble, Mike Short, Mrs Renee (Wolv NE) Wellbeloved, James
Oakes, Gordon Silkin, Rt Hn John (Lewish) White, Frank R. (Bury)
Ogden, Eric Silkln, Rt Hn S. C. (Southwk) White, James (Glasgow P)
O'Halloran, Michael Sillars, James Whitlock, William
O'Malley, Brian Silverman, Julius Wigley, Dafydd (Caernarvon)
Orbach, Maurice Skinner, Dennis Willey, Rt Hon Frederick
Orme, Rt Hn Stanley Small, William Williams, Alan (Swansea)
Ovenden, John Smith, John (N Lanarkshire) Williams, Alan Lee (Havering)
Owen, Dr David Snape, Peter Williams, Rt Hn Mrs Shirley (Hertford)
Padley, Walter Spearing, Nigel Williams, W. T. (Warrington)
Palmer, Arthur Spriggs, Leslie Wilson, Alexander (Hamilton)
Park, George Stallard, A. W. Wilson, Rt Hon H. (Huyton)
Parker, John Steel, David (Roxburgh) Wilson, William (Coventry SE)
Parry, Robert Stewart, Rt Hn Michael (H'smith F) Wise, Mrs. Audrey
Pendry, Tom Stoddart, David Woodall, Alec
Penhaligon, David Stonehouse, Rt Hn John Woof, Robert
Perry, Ernest Strang, Gavin Wrigglesworth, Ian
Phipps, Dr Coin Strauss, Rt Hon G. R. Young, David (Bolton E)
Prentice, Rt Hon Reg Summerskill, Hon Dr Shirley
Prescott, John Swain, Thomas TELLERS FOR THE NOES:
Price, Christopher (Lewisham W.) Taylor, Mrs Ann (Bolton W) Miss B. Boothroyd and Mr. James A. Dunn.
Price, William (Rugby) Thomas, Dafydd (Merioneth)
Radice, Giles Thomas, Jeffrey (Abertillery)
Richardson, Miss Jo Thomas, Mike (Newcastle)

Question accordingly negatived.

Main Question put forthwith pursuant to Standing Order No. 39 (Amendment on second or third reading), and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).