HC Deb 14 June 1978 vol 951 cc984-7
5. Mr. Hal Miller

asked the Secretary of State for the Environment when he envisages that new town and council house rents will be raised to cover 50 per cent. of current public housing costs.

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

The Government's existing rent policy and the proposals in the Green Paper are not related to any particular percentage. Gross rents already meet over 50 per cent. of public housing costs.

Mr. Miller

How is the right hon. Gentleman to get out of the dilemma that if rents are not raised the taxpayer and the ratepayer will not go on footing the bill indefinitely, as his predecessor recognised? Alternatively, if he does increase rents the tenants will not be able to afford them. Is not the way out of the dilemma to sell council houses, especially to those living in older ones on pooled rents?

Mr. Freeson

I have given the answer to the hon. Gentleman that was implicit in his Question—namely, that at present levels the "over 50 per cent. of costs" that he was inquiring after is already covered. Secondly, I find his logic rather tortuous. He suggested that if rents are increased further to reduce the burden on ratepayers and taxpayers it would not be possible for tenants to afford them, yet his answer is to sell them at, no doubt, a higher cost per week, month or year for the persons concerned.

Mr. Loyden

Does my right hon. Friend agree that one of the major problems facing local authorities in terms of housing revenue accounts is not the relationship between the historical value of the properties and the rents being asked for them today but increasing interest charges that are placing a heavy burden on authorities? Does he agree that those charges are charges to which tenants contribute and are not something that is beneficial to tenants? In other words, they are paying the landlords over 60 years for properties built for about one-twentieth of their present cost.

Mr. Freeson

It is true that interest costs on local housing revenue accounts provide a high proportion of the costs that have to be covered by rents. It is also true that as and when they vary up and down they have a marked impact on the level of rate support in contributions to housing revenue accounts and Exchequer support. However, interest charges are covered by all people who borrow, not merely those who borrow to provide rented accommodation. Owner-occupiers are included, too. For a large proportion of local authority tenants the levels of rent that are charged go more to reduce the burden of costs on recently provided dwellings at a higher cost than to pay for interest charges, on any analysis.

Mr. Budgen

Will the Minister confirm that the last time the element of indiscriminate subsidy to council house tenants was increased in a big way was in 1974, when the Government decided to bribe council house tenants with the taxpayers' money to win the October 1974 election? Has he any proposals for similar bribes before the next General Election?

Mr. Freeson

As a matter of fact, the Housing Act 1974 provided for considerable assistance in the provision of increased housing association dwellings and considerably increased assistance by way of improvement grants. The hon. Gentleman may be referring to the Housing Rents and Subsidies Act 1975, which provided a simpler structure to subsidise capital investment to boost the provision of council housing, which had dropped markedly under the Conservative Government. I have no reason to be ashamed of the results of that Act.

Miss Maynard

To come back to the interest question, does the Minister agree that although private owners pay interest they do not pay it over a 60-year period? Will he confirm that people who are buying houses privately get almost as much, if not as much, in tax relief on their mortgages and that it is not only council house tenants who get public money but private industry, at the rate of about £11 million a day?

Mr. Freeson

I shall confine my reply to housing. It is difficult to make absolute comparisons between general financial assistance to the private and public sectors, but, on balance, the kind of subsidy that is provided to owner-occupiers is, on the whole, as great as, and at times in history has been greater than, that which is provided to local authority and housing association tenants.

Mr. Heseltine

If, as the Minister suggests, the proportion of rents to costs is already over 50 per cent., why did the Government's 1976 White Paper on the subject assume that it was possible to achieve economies of £180 million by moving to that target?

Mr. Freeson

First, it did not do so. In any case, the figures provided at that time, to which constant reference has been made and no doubt gave rise to the original Question, were not target figures. They were forecasts which were based on the likelihood of certain interest rates being charged over a given run of months and years. That is always difficult to forecast. A change in interest rates can have a marked impact on the level of aggregate subsidy being paid. That has been the major cause of change.