HC Deb 27 July 1977 vol 936 cc613-5
6. Mr. Gow

asked the Secretary of State for the Environment what is his latest estimate of the cost of subsidies for council house rents during the current financial year and during the year ending 5th April 1979.

Mr. Freeson

I estimate that in 1977–78 central Government and rate fund contributions to housing revenue accounts in England will total about £1,220 million, plus about £320 million for rent rebates. The corresponding figures for 1978-79 are £1,230 million and £370 million.

Mr. Gow

Do not these escalating figures contrast with the Government's new commitment to bring about a substantial and continuing reduction in the share of resources required for the public sector? What proposals has the right hon. Gentleman to bring about a more realistic and more fair policy of allocating housing subsidies?

Mr. Freeson

In the first instance I can only refer the hon. Gentleman to the Green Paper that was published recently, which sets out proposals for new subsidy arrangements and policy changes. That will be followed by a great deal of consultation.

The hon. Gentleman is wrong to speak about escalation. The figures arc now running fairly stably. If anything, there is a small reduction because of the announcement I made about a month ago in the House to switch £30 million from the subsidy provision—that is the original subsidy provision for this year in the public expenditure White Paper—to investment in rehabilitation work by local authorities.

Mr. Flannery

Does my right hon. Friend agree that the myth that has been propagated for many years that council tenants benefit at the expense of private owner-occupiers should now be laid to rest? Is it not a fact that major concessions are made to private householders and that it is the council tenants who suffer?

Mr. Freeson

Speaking in global terms, the assistance being provided to local authority tenants and, to some extent, to private tenants by way of supplementary benefit and rent allowances is in line with the global provision by way of tax relief to home owners. In those global terms they are equally treated, although one can argue about the detailed application within each sector and the way in which the money is provided by way of general assistance.

Mr. Rossi

Why are the figures that the right hon. Gentleman gave the House about £300 million less than the figures given in the 1972 public expenditure survey that was carried out by the Government? What is the average amount by which council rents would have to be raised to meet the policy set out by the Chief Secretary to the Treasurey last November, namely, that the proportion of costs met by rebated rents should be increased from 43 per cent. to 50 per cent.? By what figure will total subsidies be reduced when that policy is implemented?

Mr. Freeson

The hon. Gentleman has asked three questions that are partly erroneously phrased. His reference to the Chief Secretary's statement of last November was inaccurate. The figures to which reference was made were forecast figures at that time. Trends in interest rates and other factors are volatile. In fact, interest rates have come down. A 1 per cent. change in the interest rate can make a difference of about £140 million on the bill. We need only to have changes up and down sharply during the year to get significant changes in the total figures. That is the general answer to the first part of the question.

It is not possible to establish what the position will be in terms of total subsidy spending in the public sector two or three years from now, because we do not know what the interest rates will be and we do not know what the rate of change may be in other factors, such as house building, house purchase, rehabilitation, and the like.