HC Deb 07 April 1976 vol 909 cc415-7
16. Mr. Arthur Jones

asked the Secretary of State for the Environment what will be the average increase in council rents caused by the cuts in housing subsidies announced by the Chancellor of the Exchequer in Command Paper No. 6393 for 1976–77, 1977–78 and 1978–79, assuming no corresponding increase in rate fund contribution.

Mr. Crosland

No cut is proposed for 1976–77, and subsidy provided should enable local authorities to contain rent increases within a national average of about 60p a week. I am glad to see that this guideline figure is being generally observed. The savings forecast for each of the subsequent two years would be equivalent in England, in current conditions and at constant prices, to an average rent increase of roughly 35p a week net of rebates.

Mr. Jones

In reply to my hon. Friend the Member for Aylesbury (Mr. Raison) on 28th July last year, the Government announced their aim, as stated in Cmnd. 6115—[HON. MEMBERS: "Reading."] If it is a quotation, how can I be expected to do other than read?

Mr. Speaker

Order. It is not customary to quote during Questions. That has been long established.

Mr. Jones

Thank you for that advice, Mr. Speaker.

In that White Paper a figure of 60p a week was referred to as the allowance to cover—as I understood it—inflation in the economy generally. Do I take it that that figure remains the Government's objective for 1976–77, and that beyond that there will be the 35p a week that the right hon. Gentleman mentioned?

Mr. Crosland

I have a great deal in common with my right hon. Friend the Member for Huyton (Mr. Wilson), who has just resigned as Prime Minister, but I do not have in common with him the faintest recollection of what I said on 28th July last year, I regret to say. The position is precisely as I stated it in my answer this afternoon, namely, that we expect that with the subsidies provided the average rent increase in 1976–77 will be 60p and that thereafter the effect of the cuts will be as announced this afternoon.

Mr. Frank Allaun

Is it not a fact that Government subsidies to council house tenants are greatly exceeded by Government subsidies to owner-occupiers, in the form of tax relief? Therefore, will my right hon. Friend resist the proposed cut in council house subsidies, which will add seriously to the cost of living of millions of working people?

Mr. Crosland

We must remember that the owner-occupier was clobbered by the Conservative Government during the years 1971–73, when the mortgage rate went up from 8½ per cent. to 11 per cent. and house prices doubled, and the period ended with a total famine of mortgages. We must not give the impression that over the past few years the owner-occupier has been unduly favourably treated when it comes to comparisons between him and the council tenant. As we discovered in the housing finance review, one can reach 10 different answers according to what one brings into the comparisons. When we publish a document on the subject, I hope that there will be widespread public debate.

Mr. Raison

Will the Secretary of State make absolutely clear what the 35p to which he referred is? Am I right in thinking that it represents an increase of 35p on top of the increase projected for next year? If so, what will be the expected total increase in rents for the next financial year?

Mr. Crosland

I think that the hon. Gentleman means in the next financial year——

Mr. Raison

Next year.

Mr. Crosland

It depends when it starts. I can never remember whether it is 4th April or 6th April. If it is today, it is the next financial year. The 35p refers to an increase bigger than it would otherwise have been. The cuts in consequence of the announcement by my right hon. Friend the Chancellor of the Exchequer in his Budget Statement make it impossible to say what it will be until we know what the rate of inflation is. No Government have ever projected likely rent increases more than 12 months ahead.

Mr. Raison

The White Paper projected a figure which, if inflation rose at a certain rate, would be adjusted. The White Paper, before the current figure was projected, gave a figure from which one can deduce rent increases for next year. Is it one to which we can add the 35p?

Mr. Crosland

The White Paper projected no figure for rent increases; it projected a figure for subsidies. The effect of a given level of subsidies on rents depends centrally on the rate of inflation, and that the Government have not projected.