HC Deb 15 January 1980 vol 976 cc1443-575

Order for Second Reading read.

4.5 pm

The Secretary of State for the Environment (Mr. Michael Heseltine)

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

Most of the debate arising on the Bill will be about the roles of the public and private rented sectors and the aspirations and needs of tenants. However, the debate will be conducted not by the tenants but by home owners explaining what tenants should or should not want, for the House, on both sides, is largely comprised of home owners.

No one can dispute that the home owner in recent decades has gained immensely from the fact of ownership. The gain has accrued partially from the judgment and thrift associated with the saving to buy, but even more from the tax-free windfall gains that have accrued to virtually everyone once he has bought his own home.

I do not claim that the Bill will improve the opportunity of everyone affected, nor do I claim that it can eliminate harshness or injustice in every case of need or deprivation—for no law that affects well over 6 million families has that capacity. But, for those who rent or wish to rent, it marks a shift of policy direction in marked contrast to recent years and lays the basis for perhaps as profound a social revolution as any in our history. Certainly no single piece of legislation has enabled the transfer of so much capital wealth from the State to the people.

In recent years, in both the public and private sectors, one form of rent restraint or another has placed an intolerable financial burden on local authorities and private owners. In both cases the consequences have been the same. In each of the past five years the construction of new council house building has fallen further and further as the subsidy bill has increased by £100 million a year over that period. Today, local authorities are still reducing their building programmes. The growing problem of under-repair of the existing stock and the additional £1,500 first-year loss that every new house built creates are facts that transcend party politics.

The public sector is following the course long familiar in the private sector, where increasing rent control over decades has forced owners to sell and not to let, or to allow properties to decay.

I understand the abuses which led to the tightness of present controls, but I hope that others will understand and recognise that the price of those controls is now being paid by those living in unmodernised houses, whose owners cannot afford to improve, and by those without homes at all because owners are scared to let for fear of losing possession. It is paid by council tenants waiting for repairs that local authorities have not the money to pay for because of the mounting burden of costs and subsidies placed upon them.

On the credit side, we have stopped the unforgivable abuses associated with the excesses of landlordism. But we have paid a massive price in homelessness and inferior housing. I hope that the Labour Party will remember that it had five years to bring new thought to these problems, five years in which the problems steadily worsened. The Labour Government could not even bring themselves to publish their review of the Rent Acts.

The Bill seeks in a wide variety of ways to break out of the process of decline. The central theme is encouraging the widest response from the largest number of people to help solve their own problems, thus enabling the concentration of public sector resources on those with the most pressing problems.

Principally, we propose to enact the promise of our manifesto that council and new town tenants shall have the right to buy their own homes. We shall enhance the rights and status of the public sector tenants, to whom we offer, for the first time, a tenants' charter. We have proposals for new opportunities in the private rented sector and we shall introduce a new system of housing subsidies and regulate the distribution of taxpayers' support to local government.

Chapter I of the Bill, which deals with the right to buy, has two main objectives: first, to give people what they want, and, secondly, to reverse the trend of ever-increasing dominance of the State over the life of the individual. There is in this country a deeply ingrained desire for home ownership. The Government believe that this spirit should be fostered. It reflects the wishes of the people, ensures the wide spread of wealth through society, encourages a personal desire to improve and modernise one's own home, enables parents to accrue wealth for their children and stimulates the attitudes of independence and self-reliance that are the bedrock of a free society.

The Bill, in its first clause, gives the secure tenant of a public sector dwelling an unequivocal right to acquire the freehold of his house or the leasehold of his flat, provided that he has been a secure tenant for at least three years. There are also arrangements in clause 4 for joint purchase. The limited exceptions to the right to buy—such as groups of dwellings which are specially adapted for the use of elderly and disabled people—are set out in clause 2 and schedule 1. Clauses6, 7 and 8 are concerned with the purchase price. The market value of a dwelling will be determined by the local authority valuer or the district valuer, if the tenant so chooses. The purchase price will be based on the market value less a discount of between 33 and 50 per cent., depending on the purchaser's length of tenancy. If a dwelling is resold within five years, the original purchaser must repay a part or the whole of the discount.

I believe that these are fair proposals. They recognise what is common practice in the private sector—that a sitting tenant often purchases his home at significantly less than its open market value.

Our proposals also recognise the length of time tenants have been paying rent and have, therefore, not accumulated wealth as have home owners. There are countless examples where council tenants have paid more in rent than early post-war purchasers have paid in mortgage repayments. Yet the purchaser of an average house has an asset worth £20,000 or even £30,000, but the tenant has the right simply to go on paying rent. Our discounts will bring home ownership within the reach of many for whom it would otherwise remain an impossible dream.

Mr. Douglas Jay (Battersea, North)

If there are all these arguments for home ownership, why is the right hon. Gentleman treating the tenant of the private landlord as a second-rate citizen and denying him the similar right to buy his own home?

Mr. Heseltine

The right hon. Gentleman will be aware that hundreds of thousands of such tenants in the private sector have already bought their homes. He will also be aware that his party introduced the Leasehold Reform Act 1967, which did precisely what he is suggesting we should now do.

Mr. Jay

The right hon. Gentleman has not answered the question. Why does he discriminate by giving a legal right to the council house tenant and not to the private tenant?

Mr. Heseltine

Because I am acting on behalf of the taxpayer, who has funded the erection of houses in the public sector. I have no such right to act in the area of the private sector owners, who have purchased their houses with their own assets.

Mr. Frank Allaun (Salford, East)

Before the right hon. Gentleman leaves this general principle, which he describes as fair, may I ask whether he agrees that his Government's statistics show that only 1.3 per cent. of all council properties that have been sold have been flats? Who will buy the eighteenth-storey or twentieth-storey flat? Does not the proposal mean that a mother, who cannot keep her eye on her children—if there is a playground for them—will be locked indefinitely in her flat because the house in the suburbs with a bit of garden—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

The hon. Member is making a lengthy interjection.

Mr. Allaun

May I finish my point? Such a mother will not be able to buy a council house in the suburbs with a bit of garden for which she is longing because the transfer will become impossible when council houses are sold.

Mr. Heseltine

I dispute with the hon. Gentleman that the incidence of purchase of flats in the public sector is small, although it may be as small as the figure that he has put before the House. Nevertheless, as he will be aware, I know of only two authorities that have ever tried to sell flats. Therefore, it is not surprising that the flats have not been bought. The hon. Gentleman will be aware that in the private sector there is a ready market in flats. There is no reason to suppose that with proper financial, legal arrangements there should not be an equal market for public sector flats. Anway, we shall find out when the Bill becomes law.

Many tenants exercising the right to buy their home will be looking for mortgages. Clause 1 gives those exercising the right to buy the right to a mortgage. Many of those who buy finance their purchases other than through their local authority. To the extent that they do so in cash or with a private sector mortgage, the greater will be the gain to the public sector. In any case, the local authorities have already incurred the borrowing, which, in effect, means that a grant of mortgage in these cases is simply a recycling of existing public sector debt.

Clause 9 provides powers for the Secretary of State to make regulations determining how the amount of mortgage entitlement is to be calculated. Obviously it will be my intention to ensure that normal commercial practice applies. Clause 15 provides for tenants who cannot afford on financial grounds to buy immediately to receive a two-year option to purchase their homes at the original valuation. For this they will make a returnable deposit of £100. It will enable them to save for the purchase of their homes in the firm knowledge of an established price. That fulfils another manifesto promise.

Tenants wishing to become owners will expect the House to ensure that they have a right to buy which cannot be circumvented or ignored. If Parliament enacts this legislation, it is right to expect all councils and landlords falling within the provisions of the Bill to carry out their duties responsibly and speedily. If it appears, however, that a council is not taking adequate steps to facilitate a sale under the Bill, I shall be able to take over the transaction. Clause 22 gives me the powers and discretion necessary to do so effectively.

Let me say at once to the House that I regard that as a reserve power. I shall use it only when I find that I have to protect tenants from the illegal behaviour or deliberate delaying tactics of the councils under which they live. [Interruption]. As the hon. Member for Salford, East (Mr. Allaun) says from his seden- tary position, it is democracy. We have a mandate to do precisely that.

Mr. W. Benyon (Buckingham)

Is not the difference between the private sector and the public sector the fact that sales that have taken place in the private sector have been done by agreement? What my right hon. Friend proposes now is that sales should not necessarily be done by agreement.

Mr. Heseltine

I take my hon. Friend's point. If he will wait for a while, I shall return to the matter later in my speech and say why I believe that it is necessary to have the powers that I ask Parliament to enact.

Mr. David Ennals (Norwich, North)

The right hon. Gentleman accepted that this was democracy. Is there not such a thing as local democracy? Is the right hon. Gentleman aware that in my constituency at the last election the local electorate had put before them by our Labour councillors the intention to do the exact opposite to that which the right hon. Gentleman proposes? Those Labour councillors received a bigger and better vote and won more seats than ever before. For them, that was as much a mandate as the one held by the right hon. Gentleman's Government.

Mr. Heseltine

I am sure that the right hon. Gentleman accepts that, in the end, a national Government have the right to lay down national policies. It was precisely that doctrine which persuaded the right hon. Gentleman, as a member of the previous Cabinet, to steamroller Acts of educational concentration through the House. The House is entitled to consider the proposals, but if Parliament enacts them it will be the duty of responsible local authorities to bring those proposals into effect speedily and effectively.

One aspect of our proposals that has attracted particular interest is the safeguard for rural areas.

Mr. J. D. Concannon(Mansfield) rose

Mr. Heseltine

I try to give way as much as possible but I have a long speech to make, and if I do not get on many hon. Members will not have a chance to speak. With courtesy, I ask the right hon. Gentleman not to press his point.

As our manifesto recognised, the rural areas may contain special problems. However—as we made clear in the election—it would be wrong to deprive those in the countryside of the opportunity to buy their homes. Clause 18 enables local authorities in England to restrict the resale of a dwelling in a national park or area of outstanding natural beauty to people who have lived or worked for the preceding three years in a county within which the national park or area of outstanding natural beauty lies. In Wales, my right hon. Friend the Secretary of State will have power to designate areas within which local authorities may apply a similar restriction.

In recent months—and we have been in office for only eight months—several hon. Members have asked that I publish a financial appraisal of our policies. The argument upon which the demand is based must be sound. The House is entitled know the financial implications of legislation for which it is to vote.

What is perhaps curious is that the loudest and most eloquent demands have been from the Labour Party. It is curious for two reasons. First, to my certain knowledge the Labour Party has steamrollered Bill after Bill through the House with profound financial effects without attempting to cost any of them. In 30 years it has nationalised about 10 per cent. of our economy without explaining to anyone that by now this willful extravagance of the taxpayers' resources would cost £1.5 billion per annum in annual subsidies.

The Labour Government were quite content to propose in their Housing Bill last year amendments to the Leasehold Reform Act, as a consequence of which one group of rather rich tenants in London would have been able to make windfall gains at the expense of rather rich landlords, without any attempt to explain the financial consequences. They were happy to see several thousand pounds of public money go to redundant workers, some of whom were re-employed in the same firm within months of being made redundant. The whole philosophy and purpose of the Labour Party has been to pursue the expenditure of public money in a climate of minimum accountability. Throughout its history, it has clamoured for the wider distribution of wealth.

When we actually introduce a Bill to transfer bricks and mortar to working people, the Opposition behave as though we are giving away the tablets of stone. Why did they not produce their own calculations when they had all the resources of the Civil Service to do the calculations for them? Time and again I made it clear from the Opposition Dispatch Box over a two-year period that we would make the sale of council houses a central election issue. Why did not the Labour Government publish their own figures? I have an answer in the issue of Labour Weekly dated 4 January: It was not ready in time to be published before the election. There is other evidence. A document was leaked to The Guardian. The Labour Party would not publish the document when it was in office. Apparently the document was not ready. After all, it had only had five years in which to do its homework and in which to get the document ready. Perhaps there is another explanation. Perhaps the Labour Party would not publish the document because it did not believe the figures in the document.

The House will want to judge the evidence upon which I put that suggestion. The Labour Party's Green Paper of June 1977 says: In the short term …it appears that for most housing the revenue from sales will exceed the rent and Government subsidy which was previously received, less the cost of management and maintenance. Over the longer term the position changes. But calculations of this sort, stretching over a long period, depend very much on what assumptions are made about inflation, interest rates, costs and rents. That is what the Labour Party said when it was in Government. It reached those conclusions when it was in power. However, it could not bring itself to publish the conclusions in the leaked document that has now assumed such a spurious significance after the election.

Mr. Jack Straw (Blackburn)

If the Secretary of State is castigating the Labour Party for refusing to publish the document, why did he refuse to publish it when the Leader of the Opposition said that the document should be published? Was it because the document made it clear that on the assumptions made about inflation and future rent rises massive losses would result from sales?

Mr. Heseltine

I shall explain why I would not publish the document. The hon. Member for Blackburn (Mr. Straw) served in an official capacity in the Department of the Environment for some time. The reason is simple. I have never seen that document and I know nothing of its status. I do not know whether it is one draft or 10, or whether it is the only draft. I do not know whether Ministers approved it or whether there are any notes from Ministers commenting on it. I do know whether it carried the support of the Secretary of State alone or of any other Minister. I cannot answer any of those questions.

If the conclusions of the document were so valid, why did the Labour Government not publish them when they had the power to do so? They did not publish them because they did not believe the conclusions. If it is suggested that a successor Government should have the right to publish the documents of a preceding Government, will the Opposition give me permission to publish the review of the Rent Acts which they sat on for five years?

There is no conceivable way in which a Minister can have access to the documents of a previous Administration and, therefore, to make judgments as to whether those documents should be published. There is no way in which a Minister can know whether those documents carry the views of the previous Government. Therefore, there is no validity in a successor Government publishing the documents of a previous Government.

Mr. Reginald Freeson (Brent, East)

The documents referred to were not policy documents but information documents. They were full of information and nothing was fed in by Ministers other than one question relating to what the effects would be, in certain circumstances, if this policy were pursued. We did not reject them. We believed the information to be correct. I am sure that the Secretary of State would be prepared to accept information if he asked his civil servants to provide informative documents rather than policy advice.

Mr. Heseltine

If the former Minister for Housing believes that the documents are correct, why did he not give the British electorate an opportunity to judge them during the general election? It is not enough for a Minister for Housing to believe documents to be valid.

Mr. Freeson

Publish them.

Mr. Heseltine

The question is whether the previous Labour Government believed those documents to be valid and whether they thought they should be published. As they did not publish them, I am entitled to believe that they had good reason not to. I am particularly entitled to that belief because they published a Green Paper stating that the validity of such questions was worth no more than the assumptions fed into it. We all know that.

I have published a 50-page assessment in the most minute detail of this whole issue. The House and the Standing Committee can debate it and the Select Committee can investigate it at great length.

I come back to the question: what economic assumptions can be made about the years stretching into the twenty-first century? If onyone seriously believes that we can make a judgment about what will be happening in 2010 or 2020, he should cast his mind back to the time when cauncil house rents were stable at 7s. 6d. a week, when earnings at best were rising slowly and prices were steady. If anyone 50 years ago had tried to produce a calculation on the economics of selling council houses, his conclusion would have been that a council house would be a bargain at £250. That shows the nonsense of trying to peer in minute detail into the future.

Mr. Freeson

The normal span is five years—

Mr. Heseltine

The right hon. Gentleman is expert at losing money after five minutes, let alone five years.

I turn now to the tenants' charter. Many tenants will not want, and many will not be able to afford, to buy their homes. Indeed, one of the most depressing comments I have heard is that a great many council tenants regard their homes as so indifferent that their principal aim is to get away from them and the area in which they exist. The tenants' charter gives a comprehensive framework of statutory rights. For the first time in the history of public sector housing in this country, tenants will have the protection of a statutory code of rights in their dealings with the local housing department.

My aim in framing the charter has been to bring to council tenants the recognition that they have de facto security and the incentives for those who wish to take a greater interest in the condition of their home and its environment. The more that those who can will do for themselves, the more housing authorities will be able to concentrate on the problems of those dependent on society.

I have given proper weight to those responsibilities in framing the charter. The charter builds on the good practice of many authorities and housing associations. But even for them it will have a new significance as a national statutory code of rights.

First, clause 27 conveys security of tenure to tenants and licensees of local authorities, housing associations and new towns who are occupying the dwellings as their only or principal home.

Clauses 29 to 33 give a right to one succession to a secure tenancy and lay down the procedure for possession. The court may not make an order for possession unless one of more of the grounds for possession as set out in schedule 4 is satisfied.

Clauses 34 to 36 govern the new rights of secure tenants to take in lodgers and sublet part of the dwelling. They will also have rights under clauses 72 and 73 to make improvements, including external decorations, to their houses. The landlord's consent is necessary but must not be unreasonably withheld. This will not, however, affect the landlord's duty to repair and maintain.

Clauses 39 to 43 specify how tenancy terms may be varied and lay new duties on landlords to make information available to tenants on a range of matters of concern to them, including the terms of secure tenancies and of the tenants' charter and the rules for allocations, transfers and exchanges. Landlords will also be obliged to consult their secure tenants on specified management issues.

Clause 45 provides that the Secretary of State may contribute to the costs of housing transfers and exchanges.

The charter will make a profound difference to public sector housing in this country, first and foremost to the tenant and his family. It will give them not only statutory security in their own home but the legal rights to make full use of that security, to enjoy their home as they want, to improve it to meet their needs, to paint it in the colour they choose, to put their own ideas, skills and personality into it and, if they decide to do so, to bring another member of their family into the home, or to take a lodger, thus making better use of the accommodation.

Many tenants, having put their own work into the dwelling, will want to own it and thus attract the capital benefit for themselves. If so, the way ahead will be clear. But there will be no pressure. Indeed, local authorities under clause37 will have power to compensate a tenant for any capital improvement he carries out. But whether or not tenants decide to take the further step to ownership, their charter rights will remain.

Some tenants will want to go further in this direction and take full responsibility for their own management by setting up a management co-operative, and I encourage this where possible. It is one way of ensuring that people feel that they have control over the immediate environment they live in. The responsibility is theirs to deal with the way in which their block of flats is looked after and safeguarded from vandalism and other problems which cause distress on some estates. The co-operatives have their own distinctive contribution to make in public housing. I shall take a close personal interest in the progress of co-operatives already in existence and of others which may be set up.

In recent years much has been heard of the problems of inner cities. I believe that the Bill, both by widening the choice of tenure and by the enhanced role it offers to tenants, is a central feature of the Government's policy to bring a new dimension of opportunity and commitment to these areas.

I now come to the part of the Bill dealing with the private rented sector. This sector has been declining for 60 years. There are many causes, of which the single largest is almost certainly the low net return on letting compared with other avenues for investment. The combination of rent control and security of tenure has encouraged landlords to sell up on a massive scale as soon as they had the chance.

Rent control and security of tenure are the consequence of political pressures, and, whilst some have gained from such controls, many others—including many of our poorest citizens—have suffered from the lack of accommodation. I say at once that it would be quite impossible to draw a hard and fast line in the House as to where changes should be made. It is impossible to prove or quantify the trade-off between owners getting possession and more owners being prepared to let. It is equally impossible to balance the possibility of some hardship arising from easier possession on the one hand against the possible social benefits on the other if that reduction in security meant that more couples found more homes available to rent.

Mr. Bruce Douglas-Mann (Mitcham and Morden)

Although I am not saying that I accept the Secretary of State's analysis so far, I believe that there is one major point on which the House would like to be reassured. As the Bill stands, and arising from what the Minister has just said, it is possible that many existing protected tenants could be persuaded into shorthold and thereby lose their security. It would greatly affect the attitude of many hon. Members and members of the public if the Secretary of State would give the House an assurance that in no circumstances will an existing protected tenant be persuaded to enter into a short-hold agreement, thereby losing his security. I hope that the right hon. Gentleman will give that assurance now.

Mr. Heseltine

I give the assurance—the only one I can meaningfully give—that this legislation in no way detracts from the existing security of those who currently enjoy it. I made that clear—as the Conservative Party made clear—during the election campaign.

The House has debated these issues many times and most of us recognise that there are few certainties and little room for rigid attitudes. The previous Government, for example, ended security of tenure for unfurnished tenants of resident landlords in new lettings after the Rent Act 1974. They also proposed to speed up possession proceedings for resident landlords. In other words, they recognised the balance of the argument But, in coming to the House with the proposals in the Bill to stimulate private letting, I have one advantage not avail- able to any of my predecessors. The House has set up under the chairmanship of the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) a Select Committee which has a more comprehensive and permanent remit to consider all these things than had any previous agency of this House.

I therefore say this to the Labour Party. Make no decisions of an irreversible nature about the workings of my proposals. Let them be examined in practice, if it so chooses, by a Select Committee of this House, and then we can make informed judgments in the light of experience. There has been too much that has gone wrong with the private rented sector for far too long for us to refuse to consider new ideas designed to meet the shortages and hardships that exist.

Let us remember the consequences of the Rent Acts. The price has been paid by society at large, not least by the poorest sections of the community. The consequences of holding down rents artificially over long periods are manifest. Thousands of basically sound properties have been demolished. Tenants have lived for years in appalling conditions and owners have given up in despair. In spite of all the housing progress made, it is harder and harder for young people to find a place to rent.

Let me contrast two sets of figures to show the folly of what has happened. Since 1956 the single old-age pension has increased from £2 to £23.30 per week, which is an improvement of over 1,000 per cent.

Mr. Eric S. Heffer(Liverpool, Walton) rose

Mr. Heseltine

A controlled rent fixed on the 1956 rateable value has remained basically unchanged. Since 1970 the average fair rent registered has increased by 106 per cent. while average earnings have moved up two and a half times as fast during the same period, and the cost of repairing the house to which that rent relates must have widened by at least a similar margin. We cannot expect well-maintained homes while keeping the present relationship between costs and rents.

Mr. Heffer

The right hon. Gentleman argues that young people are finding it difficult to rent property, but at the same time he is advocating that council houses should be sold, which will mean that the stock will be depleted. Ordinary working-class people who cannot afford to buy will not be able to get houses, which will be a serious problem.

Mr. Heseltine

Under this legislation ordinary working class people will be able to afford to buy on a scale that they never dreamt possible. The fallacy of the hon. Member's narrow doctrinal argument is that he is denying the opportunity to people who will get it no other way. He must understand that we are selling not to people on the open market but to sitting tenants who, on all the evidence, will either buy and remain owners in situ or remain in the same houses as tenants.

Several Hon. Members rose

Mr. Heseltine

This is a long debate in which many hon. Members will have an opportunity to speak. Every time I give way, regrettably my speech is, of necessity, extended. I must ask the House to allow me to proceed.

I want to indicate the three areas in which I believe that we shall improve the opportunity for rented accommodation. First, clauses 50 to 54 provide for shorthold. A landlord who lets on shorthold will have to offer the tenant a fixed period agreement of between one and five years. If there is no fair rent fixed already, he will need to apply to the rent officer at the outset. To regain possession at or after the end of the agreed period, he will have to give the tenant three months' warning. That will provide tenants with substantial safeguards while corresponding with the needs of the vast majority of new tenants who are looking for short-stay accommodation.

My second new scheme applies to lettings by resident landlords. I want to encourage more people to rent out spare rooms in their homes. The potential appears to be considerable. In 1977 there were some 900,000 people, mostly owner-occupiers, in large houses with two or more rooms apparently surplus to requirements. The present law presents the resident landlord with a formidable assault course of traps and obstacles if he wants to regain possession of his property. Clause 64 simplifies the present procedure.

My third new proposal, in clauses 55 to 57, is concerned with new building for rent. I want to see, on a carefully controlled basis, what scope there is for attracting long-term investment into rented accommodation once more. The Bill gives me, as Secretary of State, power by order to approve bodies seeking to build in the way that I have described. They will then be able to let under what the Bill calls assured tenancies, but only in newly provided building.

Rents will be freely negotiated and will not be subject to the rent officer, but tenants will have effective security under a modified form of the business tenancy regime in part II of the Landlord and Tenant Act 1954. As an experiment, the sort of bodies I have in mind for approval are building societies, pension funds and insurance companies.

These are my three new initiatives in the private rented sector, and all affect new lettings only.

Mr. W. Benyon

It seems surprising to a number of us that my right hon. Friend is prepared to make these concessions to various bodies but is not prepared to trust the individual private landlord.

Mr. Heseltine

I cannot escape from that criticism, but I had to consider the matter carefully in the light of the sensitivity of the whole issue surrounding private rented accommodation. I believe that it is right in the short term to conduct a controlled experiment, which, if it can be shown to reverse the trend of decades, will perhaps recreate a basis of confidence. It is on that basis that I took the decision to try to appeal across the party divide in order to seek a consensus without which it is difficult to believe that there is any lasting prospect of such a reversal.

Mr. Stephen Ross(Isle of Wight) rose

Mr. Heseltine

No; I must get on.

Apart from the three proposals, the Bill will make a number of important changes in the Rent Acts which aim to encourage existing landlords to continue to let and to improve the condition of the rented stock. For example, clause 58 changes the period of review for fair rents from three to two years and clause 62 deals with the totally inequitable system of fixed controlled rents based on 1956 values.

It is crucial that we preserve the immense national asset represented by the country's housing stock if we are to have any hope of achieving our long-term aim of a decent home for every family. With that in mind, we propose extensive modifications in the improvement grant system to make grants easier to obtain and to widen the number of people entitled to them.

Part VI of the Bill sets out the new housing subsidy system for local authorities, new towns and the Development Board for Rural Wales, which is to take effect from 1 April 1981. It is designed to offer a sensible and fair deal as between central Government and the housing authorities and between council tenants, ratepayers and taxpayers.

The starting point each year is the previous year's subsidy entitlement. Then adjustments are made for the changes in expenditure counting for subsidy and in local contributions. The Secretary of State will determine what expenditure counts for subsidy and for each year, after consulting the local authority associations, the change in local contribution.

Part VIII of the Bill introduces a number of changes to strengthen the financial regimes of the housing associations and extends the Housing Corporation borrowing limits.

The Bill includes such a wide variety of provisions that I cannot deal with them all in this speech. My hon. Friend the Minister for Housing and Construction will deal tonight with points raised in this debate, and there will be time in Committee for considerable examination of the detail.

However, I cannot conclude without a further generalisation that follows from the attitude of the Labour Party to the sale of council properties. If the Labour Party in local government pursued practical and flexible policies of council house sales, we should not need legislation and the issues could be left to local discretion, but I know—and I have it from the speeches of Labour Member after Labour Member—that, if I allow any local discretion in any part of this legislation, the Labour Party will seek to use it to frustrate the whole purpose of the policy.

There will be talk today of housing queues, selling off the houses with gardens and the problems of tower block families, but for the underlying reality of the attitudes of the Labour Party I need take the House no further than to a little record of history penned by Mr. Joe Haines, who, from within No. 10 Downing Street, tried to convince the Labour Government of the 1960s to enfranchise the council tenant.

Mr. Heffer

Who is Joe Haines?

Mr. Heseltine

He was the principal press officer to the Prime Minister under whom the hon. Member for Liverpool, Walton (Mr. Heffer) served so conspicuously in the Labour Government of the time.

I quote what Mr. Haines said about the inner workings of the Labour Government over their objections to the sale of council houses: The old objections were renewed again by the political advisers … the 'selling' of council houses was gravely equated with the famous clause 4 of the Labour Party constitution which aims at securing for the workers by hand or by brain the full fruits of their industry upon the basis of the common ownership of the means of production, distribution and exchange. Mr. Haines went on: We were entering the realm of the farcical, the question of whether or not we gave greater freedom to the council tenant was being incorporated into the theology of the movement. Tonight an offer to millions of tenants will be resisted by the Labour Party in defence of the theology of the movement which is more archaic even than the housing standards and practices of Eastern Europe.

I commend this Bill to this House with pride because it is far more than just another housing Bill. It will transform the personal prospects of millions of our citizens, offering to turn them at their wish from tenants to owners. It will establish their rights as individiuals above the bureaucracies of the State. It will come to be seen among the finest traditions and philosophies of the Conservative Party.

Several hon. Members rose

Mr. Deputy Speaker

Mr. Speaker has asked me to announce that he has decided that after 7 o'clock speeches will be limited to 10 minutes.

4.53 pm
Mr. Roy Hattersley (Birmingham, Sparkbrook)

I am sure that my right hon. and hon. Friends will agree that by far the most eloquent and impressive part of the Secretary of State's speech was that in which he told us how important the Bill was. I am sure that he will accept the opinion of this side of the House that profound social revolutions—as he claims he is presenting—by their very nature have long Committee stages. No doubt, being properly aware of his duties to the House of Commons, the Secretary of State will combine with us in insisting that such a Bill, which has the most profound implications for our society, must have very considerable and detailed scrutiny in Committee. We hope that the Secretary of State will support us in that belief.

However, we are not encouraged by the way in which the right hon. Gentleman has treated the House of Commons already on this matter. I refer to the question of the documents on costs. The idea of producing a document describing the financial implications of selling council houses came from the Secretary of State. He offered it himself during Question Time in the autumn when some of my hon. Friends challenged him over the more extravagant claims that he had made during the election campaign. Repeatedly, in Question Time after Question Time, the Secretary of State promised that in time for today's debate there would be a thorough appraisal of the cost to the community. In fact, that thorough appraisal was published last Friday. It was not available in the Vote Office when it opened yesterday, and numerous journalists on Friday and Monday morning were told that there were not enough copies for general circulation.

The Secretary of State had better tell us the position. Is he really saying that, having been committed to this policy for three years in Opposition and for nine months in Government, the Conservative Party did not know its financial consequences until last Friday morning? If that is the case, it is the most extraordinary piece of financial irresponsibility. If the Government knew the financial consequences before then, they had an absolute duty to report them to the House of Commons, as the Secretary of State promised in October.

Looking at the document, I am not surprised that the Secretary of State has been reticent about its contents. I hope to deal with some of the financial consequences when I reach that part of my speech, but I believe that the House should have a taste of the intellectual flavour spread over its 44 pages.

Hon. Members will be aware that our principal complaint about selling council houses is that compulsory sales will mean a denial to prospective tenants of re-lets that otherwise would have been available to them. Clause14 of the annex to this paper seeks to disprove that proposition. It quotes at great length the behaviour of council tenants who have bought their own houses in the past and remained on council estates. Of course, the problem is not that of those who have remained in the past but of those who have left and bought houses elsewhere. Now, when they are offered their houses at a remarkable discount, they will choose to stay on their council estates rather than buy in the private sector.

Paragraph 14 of the document asks the wrong questions of the wrong people. Its authors, having discovered that fact half-way through, conclude with one of the classical logical errors that is described in any elementary textbook. Having quoted a long survey on the behaviour of council house tenants who remain, their final sentence reaches a conclusion about the motives of council house tenants who previously left. If the Secretary of State has any doubts about his error, I can tell him how he can reconcile them.

Mr. Heseltine

I make this offer to the right hon. Gentleman. If he lets me know the assumptions on which he wants the calculations made, I shall have them run through for him.

Mr. Hattersley

I can make a better offer than that. I wish the Secretary of State had given me the opportunity of doing so as it would slightly reduce his embarrassment. Paragraph 14 is based on the evidence of a Mr. Murie of the university of Birmingham, who is quoted throughout the paragraph. If the Secretary of State or any other hon. Member would care to get in touch with Mr. Murie, I am assured that he will explain in detail why that paragraph is wholly wrong. I can give an assurance about that.

If the Secretary of State would like more evidence about the intellectual quality of his paper, perhaps he should look at the first line of the final paragraph, which, I swear, reads as follows: Most sitting tenant purchasers are not old enough for many of them to die. I assume that that line was constructed by the Home Secretary's speech writers.

Notwithstanding a good deal of nonsense which has been produced by the Secretary of State and his civil servants, who, I have no doubt, were embarrassed by the requirement to take part in this operation, there are some parts of the Bill which the Opposition welcome. It is wholly appropriate that I should begin by describing those parts of the Bill with which we agree. Of course, we reserve our right to try to improve even those in Committee.

There are two areas in the Bill with which we agree. First, we very much welcome the extensions proposed in the availability of grants for repairs and improvements. Not only do we welcome that proposal; we invented it. But we in no way begrudge the right hon. Gentleman what we bequeathed to him. Of course, we wish to ensure that the result of those increased powers means an improvement in the amenities for tenants rather than increased profits for landlords. Also, we want to avoid what has become known as "gentrification" of property rather than improved property remaining in the hands of its traditional residents—those who need it. I am sceptical about whether this power will amount to a major improvement programme in the private sector, because most tenants will be unable to afford the balance necessary to put together the package which finances the improvements. Having said that, we welcome that part of the Bill.

Secondly, we welcome the reintroduction of a tenants' charter. Much of what is proposed in that charter—and, of course, I exclude from my welcome the compulsory sale of council properties—is simply a rewrite of Labour proposals. We have never accepted the view, most recently expressed by the Association of District Councils, which I am glad the Secretary of State has rejected, that council tenants, being de facto secure, do not need any legal security. Hard experience shows often that they do need it and that those who do not need it certainly want it. I am sure that the Secretary of State is right to provide it for them.

Naturally, we regret very much that two of the most important proposals in the tenants' charter which would have appeared in a Labour Bill have been omitted. I want to press the Secretary of State on those omissions. The first concerns residence qualification. I have no doubt that the original intention to prohibit residence qualification should have been pursued. For some reason, it seems to have been pursued in the Scottish Bill. Perhaps the Minister of State can tell us why the same policy has not been applied in England.

I still support, as do the Opposition, what has come to be called the Culling-worth principle that no one should be precluded from applying for or being considered for a council tenancy. To preclude certain individuals has a number of economic objections concerning mobility of labour. Much more important, in my experience in the city of Birmingham, it acts in a most discriminatory way against immigrants. I hope that during Committee the Secretary of State will consider reintroducing prohibition of residence qualification.

I hope that we can be told why, within the area of the tenants' charter, tenants are not to be given the right of consultation over the levels of rents and the levels of charges. That would have appeared in a Labour Bill. Indeed, it appeared in the Conservatives' consultative document. But, somehow, between publication of the consultative document and publication of the Bill, the right to be consulted over rent levels has been omitted.

Our fear, and, much more important, the fear of tenants, is that this heralds a period in which the Government will embark on a sustained policy of continual and substantial corporation rent increases as part of their economic policy, behind the doorway of reducing the public sector borrowing requirement, rather like the domestic gas tax announced on Thursday and Friday, and as part of a scheme by which tenants will be encouraged, induced and put under pressure to purchase their houses as they make the calculation between mortgage repayments and rents that increase week by week. That is our fear about paragraphs 85 to 89.

We support the Secretary of State—once more the scheme was ours—for introducing a more flexible subsidy structure. But the structure that a Labour Government would have introduced, the more flexible scheme that I agree is necessary, contained two significant differences from that presented to us today. I wish to press the Secretary of State on both matters, acknowledging and repeating that the general outline of his subsidy scheme seems to us to be basically right but basically different from what we would have done in two particular ways.

The Labour Bill would have obliged the Secretary of State to have regard to the latest information available to him as to changes in the levels of earnings. We pledged ourselves—and we kept our pledge—to keep rent increases and levels of earnings increases in line. Clause 89 of the Bill does not impose any such obligation on the Secretary of State. It requires him to have regard, among other things, to past and expected changes in incomes, costs and prices. Anyone who has drafted a Bill and who has been advised on drafting a Bill knows that this obligation is not an obligation at all. It does not in any way constrain the Secretary of State, who, under the terms of the Bill as it now stands, is able to decide on rent levels without any real regard to any of the other indices. This part of the Bill amounts to an enabling power which, if passed by the House, will allow the Secretary of State to do what he wants. That is a fundamental constitutional difficulty. But it also leads many people to believe that the right hon. Gentleman wants to mount massive rent increases.

There was not a word from the Secretary of State today about prospective rent levels. I hope that we shall hear a little on that and on other matters, to which I propose to turn, from the Minister of State.

Another ominous straw in the wind for rent levels is demonstrated by the differences between what Labour would have done and what the Secretary of State now proposes. Clause 116 seeks to repeal what has come to be called the no-profit rule which at present prohibits local authorities from charging rents at such a level that the housing revenue account runs into substantial surplus and remains in surplus over a long period. The Secretary of State said in his consultation document that when he removed the no-profit rule and therefore allowed some housing authorities to build up substantial balances at the expense of their tenants he would say how he proposed to deal with those profits. Previous Conservative Governments have clawed back those profits to the central Exchequer. But the Secretary of State said that he would make clear how he proposed to distribute those profits. Unless my attention wandered during his 50-minute speech, he has not told us that today.

It seems extraordinary that the right hon. Gentleman should ask the House of Commons to vote for local housing authorities making and sustaining large balances in their housing revenue accounts without beginning to fulfil his promise to describe how those balances are to be used and what is to happen to them. If the Minister of State does not reply to that question tonight, it will be the most appalling dereliction of ministerial duty.

Adding all these matters together—the failure of the Secretary of State to describe his rent intentions, the failure to explain what is to happen to the surplus, the changes he is making in subsidy and rent regulations and the power he is to possess to make arbitrary decisions about rent levels—tenants can only conclude that they are in for a period of continued, sustained and substantial rent increases.

All the hints, nods and winks from the Government over the last three months suggest that that is the case. The Daily Telegraph on Saturday called for exactly that policy. The Sunday Times, a week last Sunday, in a front page article which bore all the marks of careful ministerial guidance, said that the Government were proposing high rent increases as an inducement for greater purchase. The Prime Minister herself, in the broadcast which The Times described as deeply unmemorable, talked in terms of corporation tenants making a larger contribution to the overall economic welfare of the country.

I hope very much that the Minister of State will make clear how he sees the pattern of rents developing in the future and perhaps also say how he sees the pattern of council house building developing over the next year or two. It is extraordinary that we are debating a Bill concerning council house building, council house ownership and council rents but the Government have not thought it right to inform the House on two basic matters, namely, what council house building they anticipate and what rent levels they propose.

The Minister of State had a little fun with me, which I do not begrudge him, when I said that he was very late in producing his housing investment programme plans. He said that we had been much later in our time and had gone as late as 4 January. Even by our tardy standards, he is now 11 days overdue. I hope that before the day is out he will give some indication of when the housing investment programme is to be announced.

Having explained what we hope to hear, I should now like to turn to two other matters. The Bill, I fear, contains hopeless intellectual confusion about the rented sector in particular. It reflects conflict within the overall Government housing policy. Those conflicts come about as a direct result of Conservative dogma.

The provisions of the Bill, taken together with the ominous news that I expect, if we get any news at all, about council house building, must mean a containment and possible contraction of the public rented sector. Yet, at the same time, the Government are trying to stabilise, perhaps even expand, the private rented sector. It seems to me extraordinary that anyone should be prepared to advance a thesis that the tenants of this country, as a body, have anything to gain from the contraction of public rented housing and the extension of private rented housing.

Only the blindest prejudice could advance that proposition. The Secretary of State clearly wants to promote private rented housing. That is obvious from the way that he swings the balance of advantage throughout the Bill away from the private tenant and towards the private landlord.

There are many examples of that, but I shall give only three. Clause 58 reduces from three years to two years the period between registration and re-registration of fair rents. The inevitable result of that will be more frequent rent increases and, over the years, higher rent increases.

Clause 59 changes the date on which fair rents will take effect from the date on which the application was made to the date on which the rent officer made his decision. That change will have two inevitable results—procrastination by the landlord, and the tenant having to pay an unreasonably high rent during the period of procrastination that precedes the rent officer's determination.

Clause 62 abolishes controlled tenancies. The inevitable result will be large rent increases for many of our poorest tenants and many of those in the worst accommodation. There are many more examples, and we oppose all attempts to swing the balance of advantage, in what is, in any case, an unequal relationship, away from the man who wants to rent a house for his family in the direction of the man or institution who wants to let a house for profit.

Mr. Stephen Ross

One of the disappointing aspects of the debate is that neither Front Bench spokesman has got to the kernel of the housing problem. What is the attitude of the Labour Party to the large number of empty properties in this country? If we are facing economic difficulties, would it not make sense to try to bring some of that property into occupation?

I agree with what the right hon. Gentleman said about the lack of information about the future house building programme and I agree that, certainly in my constituency, where 13 per cent. of property is local authority owned, the sale of council houses would be a total disaster, but what proposals does the right hon. Gentleman have for dealing with the problem of empty properties?

Mr. Hattersley

I am glad that I have enabled the hon. Gentleman to make the point which he was unable to make to the Secretary of State. It is impossible to deny the advantages of the course that he has proposed, but I do not believe that one should pursue those advantages if, by doing so, one would involve existing tenants in intolerable penalties.

I believe that the Secretary of State genuinely thinks that the course that I have described is likely to bring more private property on to the market, but I am convinced that it will penalise existing tenants and will not produce the results that the, right hon. Gentleman seeks. After all, the Rent Act 1957 moved the balance of advantage far further away from tenants towards landlords, but its net result was to reduce the supply of private rented property.

I do not believe that the Secretary of State can achieve the object he seeks in the way that he proposes, not least because I believe that the private landlord is an anachronism in 1980. I do not believe that it is possible to run a substantial private rented system in a way that simultaneously supports the interests of tenants and offers private landlords sufficient rewards and inducements for them to put their houses on the market. I make no allegations about wickedness in the Victorian sense. I allege that private landlords are an anachronism and I believe that the outcome of the Bill will demonstrate that fact more than adequately.

Mr. Heseltine

The right hon. Member must be aware that every new publicly built house costs a subsidy of £1,500 in the first year. Does he not understand the need to try to produce some incentives to get existing property owned by the private sector on to the rented market? How would he do that, other than along the lines of the shorthold provisions in the Bill?

Mr. Hattersley

I can give the Secretary of State an example from my constituency about which I have written to him. If he would allow the Conservative council in Birmingham to buy some of the large number of private houses on the fringes of development areas in the city, those properties would be rented immediately to Birmingham citizens. That is a much more practical and less ideological approach than that adopted by the right hon. Gentleman.

Mr. Heseltine

Will the right hon. Gentleman give way?

Mr. Hattersley

The right hon. Gentleman will not be able during my speech to make up for all his omissions.

Mr. Heseltine

The course proposed by the right hon. Gentleman would lead to the level of first-year losses that I have outlined.

Mr. Hattersley

The right hon. Gentleman is rather disarming in the way that he assumes that we all accept his inaccuracies. I am not prepared to accept the figures that he has conjured up. I do not want to pursue the more arcane realms of the right hon. Gentleman's document, but there is no doubt that most of what he has said about investment and transfer payments is wrong.

I have no doubt that the tenant is best protected by an extension of municipal owernship, and that will surely and certainly come. I have said that I want to see an extension of municipal ownership, and the House knows that one of our traditional and long-standing objections to the sale of council houses is that it will diminish the supply of public rented property.

That property will be diminished in two ways. I assure the Secretary of State that the authority that he quotes in his document will confirm my view that public rented property will be diminished in terms of numbers. One in seven of new houses that are purchased is bought by those who move from council accommodation. They leave a substantial number of relets for new tenants in desperate need. About 75 per cent. of families moving into council houses move into properties that are not new but re-let. Our wish and determination is to preserve those council houses for the rented sector.

When I talk about the Bill diminishing the rented sector, I am not speaking only in a numerical sense. The Secretary of State has made gross overstatements about the dissatisfaction of many council tenants for which he has no justification, because the surveys of the attitudes of council tenants are clear. Much of his policy is designed to turn Britain into two housing nations—the prosperous who can afford to buy, and the rest who have to survive in rented accommodation. Even if the policy is not so designed, it will certainly have that result. We do not believe in two housing nations. We believe in two housing sectors, treated with equal esteem and embracing all income groups and having their own individual and distinct advantages.

I have no doubt that a policy of enforced sales will reduce the desirability of, and the esteem in which the nation holds, corporation and public housing, and it will move us disastrously along the road towards corporation housing being simply the welfare provision that we find in the United States and elsewhere.

Mr. John Heddle (Lichfield and Tamworth)

May I tax the right hon. Gentleman on that point? Is he saying that a tenant of a property owned by a local housing authority holds his tenancy in greater esteem than he would if he owned that property?

Mr. Hattersley

I am not saying anything remotely like that and I cannot imagine how the hon. Gentleman came to imagine that I was. I stated that all that the Secretary of State has said, and much of what he said during the general election campaign, which was the same, only with even more overstatement, suggests that there is something inferior about not owning one's own house. That is a division in society which this side of the House does not want to see, and it is a division which will be reinforced by the way in which council house sales will develop.

The Secretary of State warned his colleagues that they would hear a lot about the compulsory sale of new, well-equipped and traditionally designed houses. He is right. He is going to hear at least something about that.

At the press conference to launch the consultative document, the Minister of State said that a fair spread of properties would be sold and that he had a lot of evidence to support that view but that, unfortunately, it had not been published. The published evidence also, unfortunately for him, demonstrates quite the opposite.

In the Greater London Council area, only 3 per cent. of flats have been sold since 1977 and only 16 per cent. of the houses which have been sold are in inner London, where the majority of houses are to be found. In Birmingham, 10,000 properties were sold between 1965 and 1978. Only four of those properties were flats. Nationally, during the last nine months for which figures are available, over 37,000 properties were sold, only 484 of which were flats.

There is no doubt that the houses which will be sold will be the new, traditional suburban houses. The public sector, the sector for rent, will retain the old houses bought as part of road widening schemes and city redevelopment plans, houses built before the war and not improved, and multi-storey flats. Families who need rented accommodation will be denied the opportunity of moving into them. Families already in council accommodation will find the accommodation in which they live unsuitable or inadequate and will be denied the opportunity to transfer into a house of their choice.

When I say that families will be denied the opportunity, it is enormously important for us to understand and remember that the enforced sale of council houses does not, as the Secretary of State suggests from time to time, offer the opportunity of house purchase to every corporation tenant. At least half of the corporation tenants will not be able to afford to buy their houses. No matter how generous the discounts or how substantial the loan, more than half will not be able to buy their houses. They will not be able to afford the early repayments, and they will not be within the scale of any conceivable mortgage scheme.

Moreover, 44 per cent. of council tenants are in receipt of either a Department of Health and Social Security income support or rent rebates. They will not buy their houses. The pattern that will emerge in consequence is that the richer tenants will buy the better houses and the poorer tenants will be left with those that remain. I do not know how to describe that in terms of social justice. [Interruption.] The Secretary of State spoke for 50 minutes and I made no complaints. If I speak for anything like that length of time, the House will be denied many other speeches. I hope that the hon. Gentleman will allow me to conclude my speech. No doubt he will seek to make his own speech later.

That is our principal complaint—wholly undoctrinal—against council house sales. We have many supplementary complaints and objections of great force. Despite the publication of Friday's meaningless document, no one really believes that the sale of council houses, over the life of a normal council house, will not result in substantial losses to the community as a whole.

A second example of the supplementary but important objections is that this is a direct attack on local autonomy, on the rights of democratically elected councillors to fulfil the mandates on which they were elected.

Thirdly, the scheme, if it is promoted in the way suggested by the Secretary of State, will have a direct and adverse effect on mortgage rates for prospective private tenants. A substantial number of corporation tenants attempt to obtain mortgages on the open market. The Secretary of State hopes that that will be so. That is what the Conservative Central Office urged on councils when letters were sent to Labour groups some months ago. The net result of that extra demand for mortgages can only be either a continuation of the mortgage famine or an increase in mortgage rates to attract new buyers to meet the new demands.

Those are supplementary objections to the scheme. Our principal objection relates to the number of houses that will be lost to the pool of publicly rented housing. I refer to remarks made by the Minister for Housing and Construction. He is remarkably reckless in his use of figures. I attribute that in general to the company that he now keeps. I hope that in reply he will try to clarify some of the points he has made at previous press conferences when he was not open to the scrutiny of the House.

The Minister said that it was the Government's view that only a minimum of council tenants will want to buy or take advantage of the right to buy. Will he tell us on what statistics he bases that estimate? Will he tell us what is "a minimum"? Will he tell us how many houses the Government want to sell, hope to sell and plan to sell? We believe that with the admittedly extremely generous discounts there will be a large demand, at least in the early months and years. The Labour Party does not believe necessarily that people who want to do things at the expense of others should have an unrestricted fiat to do so.

The Minister also said that nationally more houses had been built in the past than had been sold. That is a remarkably bent statistic. He was comparing nationwide building with selling in a number of authorities, as a majority of authorities were not prepared to sell at that time.

However, if one looks at the enthusiastic sellers, one discovers that in 1978 the GLC sold 3,706 houses and started 3,136. Birmingham sold 2,179 houses and started 1,469. Nottingham—champion in this league table—sold 2,157 and started 329. Will the Minister tell us whether the Government contemplate a situation in which more houses are being sold, at a loss to the pool of rented accommodation, than are being built? Will the Government contemplate a situation in which there is a net loss in that sector?

When the Minister has answered those questions, perhaps he will turn to questions on other subjects connected not only with the vital role of the public sector but with other parts of the Bill. We are particularly concerned with the part of the Bill dealing with public sector tenants, to which we take great exception.

At the annual conference of Shelter, the Minister for Housing and Construction spoke with remarkable eloquence about the need to prohibit restraint in the public sector. He said that for him it was a matter of principle—something which must be changed and which would be changed. Will he tell us why it has not been changed in the Bill and how that principle was eroded?

Will the Minister also confirm some of our worst fears about the final point with which I wish to deal—that of shorthold? There are several arguments to be advanced in favour of shorthold which I do not begin to dismiss or discount. A shorthold provision is included in the Bill, but virtually all the safeguards have been omitted. Why? The safeguards appeared in Private Members' Bills this year, last year and the year before, but they have now been omitted. No doubt the Under-Secretary of State, if he is a member of the Committee, will be able to explain that in detail. He was a sponsor of at least three Bills which provided for shorthold tenancies protection and safeguards which go far in excess of this Bill.

There is one danger about which we are particularly concerned. Clause 51(3) gives power to the Secretary of State to deregister shorthold properties and unilaterally to decide that tenants in shortholds are not only not protected in terms of their tenure but are no longer protected in terms of their rents. If that provision reaches the statute book, a future Labour Government would be committed to repealing the shorthold proposition.

If the Minister wants the co-operation of both sides of the House, and if he wants shortholds to be given a fair wind, as he describes it, the safeguards which have previously been included in shorthold Bills must be included in this Bill, and certainly his power to deregister shorthold tenancies must be removed. If he feels unable to do that, shorthold landlords should not enter into agreements in the belief that a future Labour Government would continue with this policy.

In dealing with clause 51(3), I should like to make a general complaint about the way in which the Bill has been framed. Powers similar to those contained in clause 51(3), enabling the Secretary of State to do what he chooses, appear in paragraph after paragraph. He has enabling powers. The Secretary of State chooses the rents. The Secretary of State chooses the subsidies. The Secretary of State decides how he will sell council houses if councils will not. The Secretary of State has power to re-register properties.

I regard it as constitutionally deeply unhealthy that the House of Commons should pass a Bill which then enables one Minister to behave in that way. If we thought about the Bill in terms of democracy alone, we would think it necessary to vote against it this evening. But, of course, we think about it in much wider and very different terms. Much of what the Bill proposes is deeply damaging to the interests of millions of people in this country.

The principle on which the Bill is based is, in my belief and in the belief of my right hon and hon. Friends, deeply divisive. Tenants of corporation properties who are prosperous enough and self-confident enough to buy their houses will certainly enjoy sustained benefits—I do not deny that for a moment—but they will enjoy them at the cost of the rest of the community, who will pay for council housing subsidies and who will be required to compete for the council houses which remain. Meanwhile, the tenants in private property will see their security diminished, their rents increased and their landlords' powers extended. The public authority tenant can look forward to a reduced chance of transferring to the sort of house that he wants and to the certainty of continual rent increases during the next decade.

This is exactly the sort of superficial, meritricious, class-conscious, uncaring Bill that we would expect from the right hon. Gentleman, and we shall vote against it tonight.

5.31 pm
Mr. Tony Durant (Reading, North)

I am pleased to enter the debate at this early stage because I believe that the Bill has two features of fundamental importance. First, it raises the status of council tenants. I have always believed that council tenants have been badly treated by this nation and have always been thought of as second-class citizens. Some of the measures in the Bill try to bring about the feeling on the part of council tenants that they are no longer second-class tenants.

The Bill improves the opportunities for single persons and young married people to rent accommodation. At the moment, in the public sector in most authorities it is practically impossible for the single person to get a council house. Very often it is practically impossible even for the newly married young couple to do so. The shorthold tenancy will help in this regard.

Why should there be a right to buy? The Opposition spokesman tended to deprecate those who wish to buy as though they were moving into a different social class. He rather fostered the idea that it was an anachronism to rent property in the private sector. He seemed to suggest that everybody should be either a council tenant or a private owner. I disagree fundamentally with that approach. It was a bad statement to make in this Chamber against many people who rent out very well run properties. It was very unfortunate that he attacked them.

My fundamental belief is that the sale of council houses is necessary in order to provide a mixed society. I do not like the idea of having council tenants in one area, private tenants in another and private householders in yet another place. I am in favour of a mixed community. With a mixed community there is variety and interest.

Mr. Don Dixon (Jarrow)

If the hon. Gentleman believes in mixed estates, would he advocate that local authorities should buy houses on private estates and rent them to council house tenants?

Mr. Durant

The truth is that that has been going on. It is nothing new.

People should have the opportunity, as a fundamental right, to own their home if they wish to do so. The Bill opens up the possibility of home ownership to a far greater number of people than has ever been given the opportunity before.

The exercise of this right will also bring about greater mobility. One of the fundamental troubles of our economy in this country is that people find it very difficult to move. I come, fortunately, from a prosperous and successful area. In the jobcentre in my area there are 2,000 vacancies, but people cannot move from other parts of the country because there is no opportunity for them to get the housing they need. They cannot come with their families and take up new jobs in my area.

Mr. Straw

Is the hon. Gentleman aware that in saying that the sale of council houses will encourage greater mobility he is directly contradicting what the Government say in their document? What the Government say, in order to justify some of their calculations, is that few households that buy as sitting tenants would be likely to otherwise move away; nearly all would have remained local authority tenants for the rest of their lives". That was in a Department of the Environment document issued during this month. Is the hon. Gentleman saying that he disagrees with the Secretary of State?

Mr. Durant

I do not accept that. I am not a member of the Government. I do not have to accept everything in every Government document that has ever been produced. If I did that, I would have a heart attack. I do not have to accept what is in any particular document, be it from Shelter or from the Government. Let us get that clear.

I believe in the opportunity for people to buy their council houses. They should be able to share in the nation's wealth. An enormous investment has been put into local council housing. People have a right to share in that wealth. Council tenants should have that opportunity. If people buy their council houses, they have the opportunity to participate far more in the management of their estate. That is fundamental. There is a far greater interest, on the part of those who own their own houses on a council estate, in the management of that estate. This has been made clear in the proposals for a tenants' charter.

What are the objections to the right to buy? Some of them have already been put by the Opposition. Much of what has been said about waiting lists is exaggerated nonsense. Most waiting lists are suspect. My local authority has had a waiting list of 3,000 ever since I have been involved in the town, yet people are always being housed and people are always leaving or arriving. The figure cannot consistently be 3,000. Something must be wrong with the operation of the system of waiting lists for council property. That is why there needs to be a far greater examination of waiting lists. The waiting list is one of the weaknesses of the housing system.

A further nonsense is that the waiting list is now very much a regional matter. There is a waiting list in the South and there is pressure for housing in the South, but in some parts of the country that pressure no longer exists because there is freedom of opportunity in housing. In my part of the country that sort of pressure still exists, as I have already indicated.

It has been said that housing is a national asset and that we should not get rid of it. Whose national asset is it? It is the people's national asset. What vague body owns this asset other than the people themselves? They should therefore be involved in the disposal of that asset.

Mr. David Stoddart (Swindon)

I am very interested in what the hon. Gentleman is saying. The answer, of course, is that the whole of the people own the asset. Is not one of the objections to the sale of council houses for a song, at very large discounts, that we are getting rid of national assets—which belong to all the ratepayers and taxpayers—to individuals, who themselves, rather than the whole community, will gain the appreciated value from them in time?

Mr. Durant

That is another nonsense. Those people are not getting houses at a bargain price. They have already paid for that property for very many years; indeed, they have well overpaid for it. Those on the 50 per cent. basis, who are supposed to be getting such a good bargain, have obviously been in the property for a long time. Many of them have more than paid for the cost of their houses. They are not getting so much of a bargain in that sense.

Mr. Stoddart rose

Mr. Durant

I have already given way to the hon. Member. I must proceed. Many other hon. Members wish to take part in the debate.

Another argument commonly used is that only the best council houses will be sold. This is not necessarily so. Many people wish to buy property that is not in particularly good condition because they prefer to have the chance to do it up themselves. That particularly applies to the younger element, who prefer to take a cheaper property in perhaps not such a good area and to have the opportunity to improve it. This should be encouraged.

There has been talk about local government freedom. What about the citizens? The question of local government freedom is another nonsense. After all, the Labour Party said that local government should have no freedom over education. Now Labour Members are very conscious of the freedom of local authorities. This issue concerns the freedom of the individual as was argued when we discussed education and it is why the Government and Parliament have the right to pass this Bill.

Mr. W. Benyon

If there is such a vociferous demand, why is that demand not reflected in the polls?

Mr. Durant

It was shown in all national polls that people would like to own their own homes, and particularly their council houses. Obviously, the number who can is much smaller than those who believe that it is a good thing. I accept that most people believe that it is good to own their home. The polls have shown that.

We have seen from Shelter's magazine that 30 per cent. of Tory-controlled councils do not think that the Bill is right, and Guildford has been mentioned as being adamant in this respect. I have carefully examined Shelter's returns. Most of them—signed by officials—came in in August. I do not believe that that is a good basis on which to make a judgment. I treat the Shelter returns with some suspicion. Taken overall, the figure of 30 per cent. used by Shelter is suspect and should be treated as such.

The argument about costs is nonsense and a red herring. We are talking about the year 2040 and I am not interested in the year 2040. Some Opposition Members may be concerned about that time but I am not. I am concerned about the immediate position and with the cash gain. All documents show that. There may not be a long-term cash gain but there is such again in the short term, and that is what matters.

There has been talk of a lack of mortgages. I hope that by the year 2040 the demand for council housing will have gone away. By then, all council houses may have been sold off into the private market and we shall not need them. There is no council housing in Denmark and the Danes do not appear to suffer as we do from an enormous housing shortage. Let us not look so far ahead. Looking to the future, to the imponderables which can be fed into our permutations, cannot stand examination.

I urge those in the financial world to come into the housing market. A failure in the past has been that the banks and the insurance companies have not been more involved in housing. Britain is one of the few countries where those institutions are not involved in lending money for housing, but I hope that once the house sales momentum gets under way those institutions will become more involved.

I am particularly keen on the tenants' charter. Local government is good at providing and allocating housing but its management of housing estates is weak. Local government's management skills in housing leave a lot to be desired. We all have the experience of people complaining to us that their loo has been leaking for six months and that no repairs have been done. The administration of local government housing estates is not good. We all accept that. The tenants'charter—about which both sides of the House generally agree—will improve opportunities for tenants to look after and to get involved in the estates on which they live. Such involvement will improve estates.

I am in favour of security of tenure. The do-it-yourself industry and the desire of council tenants to improve their homes has enhanced our council estates, and much can be done under the tenants' charter to achieve a mixed society on such estates. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) spoke of consultation and I agree with him. Since the consultative document there has been a weakening of the consultative process with council tenants. I hope that we shall strengthen the consultative provisions when we examine them in Committee.

Under the shorthold provisions there are tremendous opportunities. My experience in my constituency demonstrates that there is a crying need for shorthold tenure. Many single people, and young marrieds, have little opportunity of finding shorthold accommodation. During the general election I was shown around flats by landladies who did not let their properties because of a psychological fear of the Rent Acts. Much of that fear was unjustified because under the Rent Act 1974 owners had protection if they lived on the premises. None the less, those landladies feared that they would not be able to get a tenant out. They were, therefore, reluctant to let their property. That was a pity. The shorthold provisions will have the psychological effect of releasing more property.

All this is a beginning. My right hon. Friend the Secretary of State made it clear that the Bill was a beginning and that we would see how it went. I accept it on that basis because I feel sure that it will bring more housing on to the market. I criticise the Bill because of the way that it deals with mobility. The sale of council houses will assist mobility, but there is still a great deal to be done by central Government to get more mobility in the housing sector so that people may move more easily around the country.

An industry can suddenly die in a town where there is no other major industry. Workers are therefore stuck in that locality and there is little opportunity for them to move elsewhere. We have had to take work to them because of the lack of mobility in the housing market. More should be done in that direction.

I welcome the repair provisions in the Bill though I believe that they should be streamlined. There is too much local authority interference once grants for improvement have been made. Officials are constantly coming and going, and I have come across tenants who have lost heart half-way through an improvement scheme. They have quit because of official interference.

Mr. Allen McKay (Penistone)

When the hon. Member for Reading, North (Mr. Durant) talks about local authority interference, does he not realise that that interference is a protection for the tenant in ensuring that alterations are correctly carried out? Many people in my constituency have complained to me of faulty workmanship. As a result of so-called "interference", those faults have been put right.

Mr. Durant

If the correct arrangements are made and the professional standing of the builder is checked at the start, such interference should not be necessary. I am not saying that there should be no control, but my experience is that constant visiting by officials at weekly or 10-day intervals tends to make tenants lose heart. It is a local problem.

The last Government greatly damaged tenants' successful repair and maintenance operations by cutting improvement grants by one-third. It was one of the most damaging things that they did. That decision affected much property that could by now have been done up and put to use. We must re-examine that issue.

Some aspects of housing are not dealt with in the Bill. I wish that they were. I have referred to mobility and I believe that the Rent Acts review is urgently needed. There is not much about it in the Bill. There should have been more. Housing subsidies required further investigation.

The Bill does not deal adequately with empty properties. This has been mentioned by Opposition Members. We should foster tenants' associations because they have a vital role to play. The Bill does not deal with them.

I make a special plea for security of tenure for those who live on houseboats. I do not live on one myself but I speak on behalf of houseboat owners. I shall try to move an amendment to the Bill dealing with this matter in Committee. The Bill is a correct first step towards the creation of modern housing conditions. It not only recognises that council tenants have rights; it tries to secure greater use of our housing stock. That is a fundamental issue which society has not tackled, and I believe that the Bill moves in that direction.

5.50 pm
Mr. Frederick Mulley (Sheffield, Park)

I agree with the hon. Member for Reading, North(Mr. Durant) about the importance of the Bill. Decent housing affects a family almost as much as income in terms of a decent standard of living. It is of particular importance in the inner areas of our industrial towns, where housing remains a grievous problem. Sheffield is one such area.

Much has been done in the 30 years since I made my maiden speech on this subject, but much remains to be done. The hon. Member for Reading, North and my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) have welcomed some of these provisions. However, on balance, I believe that the Bill will make matters much worse for the people whom I represent, and I therefore oppose the measure.

Time is short and my right hon. Friend the Member for Sparkbrook eloquently expressed many of my views, so I shall try to deal briefly with those aspects of the Bill which affect my constituents. I have no objection in principle to the sale of council houses or to home ownership. Indeed, I believe that the biggest deterrent to home ownership today is the 15 per cent. mortgage rate brought about by the Conservative Government. Already in Sheffield there are signs that people who might have tried to buy a house are seeking council tenancies.

The Sheffield city council is totally opposed to the mandatory right to purchase council dwellings, but it has no objection to home ownership. For a number of years the council has used its resources to build houses for sale. It has been successful in providing houses for direct sale. However, that is different from selling rented accommodation which belongs to the city.

In Sheffield there are 211,000 dwellings. About 93,000, or 45 per cent., of them are council dwellings, 42.5 per cent. are owner-occupied and only 12.5 per cent. are privately rented. What happens to the stock of council tenancies is extremely important to housing development in the city. Our record compares well with that of any city, and is better than that of many, but we still have a waiting list of 25,000 people.

Many of my constituents are council tenants, but there has been no demand from them to buy their council homes. Indeed, when we had a Conservative council 12 years ago it sought to sell council houses and was remarkably unsuccessful. There is no great demand. When tenants examine the costs of rates, repairs, mortgage payments and management and service charges, they discover that it will cost them more to be the owner-occupier of a council house than to continue to be a tenant.

The haphazard sale of flats or separate houses will increase management costs and make nonsense of the tenants' charter, which we welcome. If all the tenants in a block of flats or a small estate agree to a proposal, they can be prevented from proceeding because one or two dwellings are privately owned by people who are unwilling to agree with the majority view.

The Secretary of State is optimistic when he says that only a small addition to local government manpower is necessary to administer the scheme. The Government are putting enormous pressure on local authorities in financial and manpower terms. It is outrageous to introduce a proposal that is bound to add substantially to manpower requirements.

Even if the sales proceeded, the proposal in the Bill can only be described as an enormous and disgraceful dissipation of public assets. The Secretary of State described the Bill as a social revolution. I prefer to describe it as a counter-revolution. I recall the 1955 general election campaign, when Mr. Macmillan boasted that the Conservatives would build more council houses than the Labour Government had done. The Conservative Party's philosophy then—and I did not dissent from it—was that the only way to tackle the grievous housing problem was to extend municipal ownership.

The Bill will damage the functions, powers and responsibilities of local authorities. The hon. Member for Reading, North said that housing, more than anything else, depends upon the circumstances of a particular area. I agree with him. The difficulties and problems are different in each of our cities. It is unprecedented for the Secretary of State to take power to override all manner of local discretion, not merely in relation to the sale of council houses but in the granting of mortgages. Local authorities will be directed to give mortgages to people who, from their records, they know to be uncreditworthy.

Under the Bill it will be possible for a person to buy a second council house at a bargain rate after three or four years. A city such as Sheffield has a large elderly population, but discretion to provide homes for the elderly is to be taken away. Local authorities have a statutory obligation to house the homeless, but the means by which they can do that are to be removed.

The provision for housing subsidies is likely to be disadvantageous for a city such as Sheffield. The proposals are vague and the Minister must clarify the position. It would be unacceptable if Sheffield had to operate a system of subsidies based on a national average. The overriding worry is that fewer council houses will be available for local authority programmes. The housing investment programme for the financial year 1980–81 has not yet been announced, and there is anxiety not only about the dissipation of existing assets but about the inability of councils to provide for elderly and disabled people and for the homeless. The mandate given to local authorities by their local electors is to be taken away by the Bill. The Bill will not assist those who need homes and improved circumstances, and it must be strenuously opposed by all possible parliamentary means.

6 pm

Mr. Nicholas Scott (Chelsea)

Like the right hon. Member for Sheffield, Park (Mr. Mulley), I made my maiden speech on housing and I have taken a close interest in the subject ever since. I suppose that I share some of his sadness at the lack of progress in meeting many of the housing aspirations of our people.

As someone who has, perhaps to excess, sought for a consensus on this subject, I was moved almost to despair by the speech which the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) made from the Opposition Front Bench this afternoon. It was a blinkered, doctrinaire response to the measure before the House, and it was immensely disappointing.

In many ways, the right hon. Gentleman's response was not merely blinkered and doctrinaire but self-contradictory. I thought that the high spot of his remarks was when, at one moment, he proclaimed the need for improvements in property and then denounced what he called "gentrification". Within a sentence he went on to laud the importance of mobility and then urged the importance of retaining certain housing for its traditional residents, whoever they may be. I thought that his whole speech added up to a sterile defence of the nanny-State approach to housing that has caused us to fall short of our housing dreams. Indeed, I thought that his thinking had moved on little from the 1885 Royal Commission on housing for the working classes. The Bill is a movement forward from the attitude reflected by the right hon. Gentleman in his speech.

The Bill seeks to meet the needs of all citizens of this country and, as such, I welcome it. It is reported that Harold Macmillan once said during a discussion that he wanted not constructive criticism but praise. I hope that my hon. Friend the Minister for Housing and Construction will not feel that my welcome for the Bill is any the less if, rather than waste any of the time that I have by heaping paeons of praise on him and his right hon. Friend, I mention one or two of the reservations that I have, or some of the improvements that I believe might be made in the Bill.

I welcome the sale of council houses. I would have preferred a measure which gave some discretion to local authorities, especially those in areas in the centre of our large cities, where the importance of preserving a good stock of publicly owned housing cannot be overestimated. The Opposition have a heavy responsibility, because of their doctrinaire response to the proposals for the sale of council houses, for having forced my right hon. Friend to meet the situation with a rather blunt and inflexible instrument of the statutory right for all council tenants to be able to buy the house or flat in which they happen to be living.

If we give council tenants the right to buy the house or flat in which they live, I must echo the sentiments put forward by the Member of Parliament for the constituency in which I live, the right hon. Member for Battersea, North (Mr. Jay), by asking what logical reason there is why such a measure should not extend to tenants of privately rented blocks of flats.

Anyone who lives in central London—I suppose the same is true, though to a lesser extent, in all large cities—will know of large blocks of flats that are traded around over the heads of the tenants who live in them. Many of these blocks end up in the hands of companies registered in Liechtenstein or some other area overseas. The tenants find it extremely difficult to enforce the terms of their tenancy agreements or any covenants that are the responsibility of the landlord. Service charges are increased, and the agents hide behind the overseas addresses of the companies that own the blocks of flats.

As a minimum requirement, I should have thought that the housing corporation should produce a model scheme, under which tenants' associations of blocks of flats could have first refusal for the purchase of their block when it came on to the market. I know that there are problems with valuations, but if the Housing Corporation could have a model scheme and a duty was placed on a vendor to give first refusal to a tenants' association to purchase such a block of flats, an important step would be taken to preserve a balanced community in the centre of London.

We have only to look a few hundred yards down the river from the Palace of Westminster to see what I think is the largest block of flats in Europe, Dolphin Square, which at one time was traded round over the heads of its tenants between property companies. An imaginative gesture was made. A trust was formed, and that block is now run on a non-profit-making basis in the interests of those who live there. There are many other blocks in my constituency and elsewhere in London that would benefit from such a move. I hope that it will be possible during the progress of the Bill to extend to private tenants the rights given to tenants in the public sector.

Another group of tenants has been left out of the provisions of the Bill. I want to refer briefly to that group. Ironically, these people are actually public sector tenants; they are the so-called tenants of the Crown estates. "Crown estates" is a mere term. The tenants of these properties are tenants of a Government Department. These estates are not the "Queen's Private Estates" but are estates administered as a Government Department. Yet these tenants are almost unique in that they enjoy no protection under the Rent Acts and have no right to enfranchise under the Leasehold Reform Act. I should have thought that it was essential, through this legislation, to see that these people were brought within the ambit of one or other of the provisions in the Bill and enabled to enfranchise the leases that they have.

I do not say that the Crown Estates Commission is a bad landlord. Having been one of its tenants, I can vouch for the fact that it is an admirable landlord, but if we are to extend the principle of the right to buy to council tenants there is no logic whatever in denying it to Crown estates tenants.

I want to mention a problem that is skated over in the terms of the Bill. I am puzzled about the intention of the Bill regarding the proposals for leasehold reform. At the leasehold tribunals, as opposed to the Lands Tribunal, we shall determine the price at which people will be able to enfranchise their leases. But there are two problems which I believe need to be cleared up. Perhaps my hon. Friend the Minister will make clear, when he winds up the debate, whether it is intended, at a later stage, to include some provision in the Bill to cover these.

First, there are the two different systems at present for determining the value of a lease that is to be enfranchised. The lower values that were covered under the 1967 Act follow a well-known formula. That was changed by the so-called Cambridge Lands Tribunal decision. A large number of higher value leaseholders wanting to enfranchise are waiting to hear whether the Government will introduce one form of valuation of leases for enfranchisement. I believe that the previous Administration made clear that they intended to have a common system. I should like to hear from the Minister whether he intends to move in that direction. If he does, it will certainly benefit a large number of leaseholders in my constituency.

On the other hand, there is a need to reform the way in which a lease is enfranchised and the timing within which it has to be enfranchised. At present, when a tenant's notice to acquire a freehold under the Leasehold Reform Act is given, the price is determined at which he can enfranchise, and that lasts for ever. A tenant can, in theory, wait four or five years, during which time the value of money—under the previous Administration at least—may halve. That is unfair to the landlord. If a tenant serves notice that he wishes to enfranchise, there should be a time limit, but a generous one of perhaps six months. However, there should be a time after the notice has been served and a price has been agreed within which the tenant should have to go ahead and complete the transaction if he still wishes to do so.

I welcome the provisions that have been included regarding the privately rented sector. I see little chance of any substantial revival of the privately rented sector. Economics are against it in areas where rented property is most needed, and I think that the political attitude of the Opposition will preclude any great investment in this sector. However, I want to see the preservation of the existing privately rented sector.

I thought that when the right hon. Member for Sparkbrook described the private landlord as an anachronism in this day and age he showed a most profound ignorance of the nature of a city. Coming from a man who represents the second or third city in this country, that was, I thought, deplorable.

The lifeblood of a city is young people coming in to make their fame and fortune, to seek new jobs and to bring up new families. Such people cannot qualify for council housing on their arrival because of the points system, and they are unlikely to come into the owner-occupied sector. Their natural home, when they first come to a city, is the privately rented sector.

If we destroy the privately rented sector, we shall atrophy the city and literally turn it into two camps—owner-occupiers on the one side and municipal tenants on the other—and put it back even more into a class-ridden straitjacket than it is now. I doubt whether we shall see any revival in the privately rented sector, but we should do our best to preserve the part that remains.

My right hon. Friend talked of the need for residential landlords to make rooms available in their houses in many of the stress areas in our cities. The single best step that he could take would be to talk to his right hon. Friends at the Treasury to see whether, in their next Budget, they could produce provisions which would mean that anybody who let off part of his home was not charged capital gains tax on that section of his house when he disposed of it. They should exempt from income tax the first tranche of rental income up to, say, £1,000 a year. My spies tell me that in certain parts of London there is wide-scale evasion by people taking in lodgers and not declaring that fact to the Revenue. I suspect that the loss to the Revenue would be minimal, but many respectable, right-minded people might be encouraged to make available rooms in their houses for the benefit of the young who come to live in the city for the first time if such a proposal were accepted.

My right hon. Friend mentioned the evils of rent control and how it had diminished the market in rented houses over the past 25 to 30 years. I am sure that that is true. However, I must put down a marker that any attempt to try to restore the free flow of market forces in central London in privately rented housing would be a social disaster of the first magnitude. Indeed, my right hon. Friend made it clear that he did not intend to take away security from anyone who now enjoys it.

I warmly welcome the tenants' charter provision for those who will remain public sector tenants. I welcome it particularly warmly since, if I am right, the first time that it was advocated was in a speech that I made in the constituency of my hon. Friend the Member for Tonbridge and Mailing (Mr. Stanley), when I held responsibility for housing matters on behalf of the Conservative Party. The fact that he is introducing this provision is one of the nicer circles of the wheel of politics.

One aspect of the tenants' charter that I should like to bring out affects particu- larly the city of Westminster and the Royal borough of Kensington and Chelsea. At the end of the war those authorities took on some expensive property—which they still own—which they are anxious to dispose of in a sensible way over the coming years. They would like the right to regain those properties and to sell them properly in the market. Really they are anomalies. Under the terms of the tenants' charter, I do not think that those authorities would be able to gain possession. Perhaps my right hon. Friend will consider that matter in detail and see whether anything can be done to help those authorities.

I have long thought that one of the main objects of housing policy ought to be to try to break out of the class-based and divisive straitjacket into which housing has gone in recent years. The first step in that direction is to expand the frontiers of ownership. The Bill does that in a dramatic way. It may have its faults, but as a major step in that direction I welcome it.

6.15 pm
Mr. Bruce Douglas-Mann (Mitcham and Morden)

It ill-becomes the hon. Member for Chelsea (Mr. Scott), representing as he does that area, to deplore the remark made by my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) that the opportunities for improvement grants without adequate control could result not only in the gentrification of an area but in the total exclusion from that area of the indigenous inhabitants.

How many working-class residents are still living in Chelsea, except in council houses? They have gone. Twenty-three years ago Chelsea had a large number of working-class residents in privately rented accommodation. As a consequence of the 1957 Act and the opportunities for landlords to make substantial fortunes out of buying up properties, eviction, improvement and gentrification, Chelsea is now a totally different area from that which the hon. Gentleman and I knew 25 years ago. Chelsea is now characterised by the King's Road rather than by the qualities that were known in the Chelsea of the past. The hon. Gentleman has witnessed in his area—as in Paddington, which he represented before going to Chelsea—the exclusion of the working-class resident.

That change in the character of a locality was facilitated by the 1957 Act, supplemented, I accept, by the well-intentioned improvement measures in the Labour Government's Housing Act 1969. However, it has resulted in many working-class residents on average incomes being removed from large areas in the centres of our cities. If the Bill becomes law, those who remain will be even more rapidly removed from the centres of our cities.

Mr. Scott

What is the alternative? Should we sterilise an area according to some demographic pattern that existed at some time? Surely not. We accept that there will be a certain amount of gentrification, but we can take counter-measures, such as encouraging housing associations, housing trusts and others, to provide rented accommodation for those who would otherwise be squeezed out of those areas.

Mr. Douglas-Mann

I accept that. We need to bring the privately rented sector into social ownership through housing associations, local authority acquisitions, and so on, to ensure that our towns and cities provide accommodation for those who need to live in those places.

But how many postmen or milkmen continue to live in Chelsea? How many of those who provide the essential ingredients of the labour force that a city needs can continue to reside there? Very few. We shall be excluding such people from the centres of our major cities and towns by continuing in this Bill the policies started in the 1957 Act.

The hon. Gentleman and I agree on many issues. I agree with many of the points that he made in his speech. For example, I welcome his proposal about a model scheme for tenants to buy their flats. I welcome his suggestion that the residents of Crown estates should have similar opportunities to those provided in the Bill. I also welcome his suggestion for changes in the provisions relating to leasehold enfranchisement. Indeed, I share his view—we have argued together both privately and publicly—that the Revenue laws are more responsible for the decline of the privately rented sector than any provissions of the Rent Acts. I shall return to that point.

First, I wish to refer to part I, which contains major provisions and many of the most disturbing aspects of the Bill. The social and financial implications of selling council houses are the subject matter of the inquiry of the Select Committee, of which I am Chairman, that is concerned with the policies of the Department of the Environment. It would be naive of me to pretend to the House that I approach that inquiry without suspicion of what the outcome might be or without having thought about the possible implications. Obviously, however, it would be inappropriate for me to prejudge them.

I have read with the greatest interest the Government's appraisal of the financial effect of council house sales. It is contended that the Government have found the philosopher's stone and that they are thus enabled to carry out the policy with a gain for everybody and a loss to nobody. If the Select Committee is convinced of that, so be it. That will be the subject matter of the Committee's report. The assumptions upon which the Government's appraisal have been based will be challenged and considered very carefully by the Select Committee, of which the hon. Member for Chelsea and I are both members.

I shall concentrate my remarks on other provisions in the Bill. I refer especially to shorthold tenancies. In reply to my intervention, the Secretary of State gave little reassurance to those who are worried about the effect of the Bill as it stands—namely, that it will enable landlords to persuade their tenants to transfer from being protected tenants to being insecure shorthold tenants—without any real advantage to themselves except, possibly, a short period of reduced rent or some other spurious benefit. Such tenants will be forfeiting security of tenure, despite the Government's contention that no one will lose security of tenure as a consequence of the Bill. As the Bill stands, many tenants could be persuaded to lose their security of tenure. That would be a damaging consequence.

My right hon. Friend the Member for Sparkbrook argued strongly that clause 51(3) enables the Secretary of State wholly to dispense with the requirement that rent should be registered. My right hon. Friend said that if that provision is not removed the Labour Party will make it clear that it intends to repeal the Bill. I hope that the Labour Party will consider repealing the whole shorthold provision unless we are offered considerably greater safeguards.

The hon. Member for Kensington (Sir B. Rhys Williams) introduced a Private Member's Bill to achieve shorthold tenure. It contained a number of safeguards that have not reappeared in the Government's Bill. The hon. Gentleman's Bill included a provision that if the landlord proposed to re-let to another tenant on shorthold he must offer the tenancy to the existing tenant. That provision has not appeared in the Bill. The alternative in the hon. Gentleman's Bill was that if the landlord did not offer to re-let to the existing tenant the tenancy would have to be withdrawn from the market completely for six months. That provision has not appeared in the Bill. Measures which the hon. Gentleman introduced, and which Conservative Members accepted in their support of his Bill, have not appeared in this measure.

It is not necessary to be an expert on the Rent Acts to appreciate the scope for driving a coach and horses through a large number of loopholes. For example, there are the subletting provisions. It would be easy for a landlord to grant his son, or some conveniently amenable friend, a tenancy of a dwelling under clause 53. That person could proceed to sublet without any registration of rent, without giving any of the notices that are purportedly required by the Bill and without even telling the tenants that he was only an intermediate landlord, occupying as a shorthold tenant. In those circumstances, the tenants could suddenly be evicted as soon as the landlord found it convenient to take that action—and they would have had neither security nor the protection of a registered rent.

I agree with many Conservative Members that there are many provisions within the Rent Acts that need to be improved. The Bill removes one silly trap, namely, the second fixed-term letting by the resident landlord. However, there are many other far more serious traps for tenants. Those traps include holiday lettings and the allegedly "shared" accommodation, under the terms of which a landlord may say to a man or woman, when they do not even know each other, "I shall let you in to share that single room, or flat, on the basis that you do not have possession of any one part of it." Consequently, that is not treated as a letting of an individual part of a property: it is a shared letting and is outside the protection of the Rent Acts.

If the Government were presenting a Bill that blocked the indefensible loopholes that now exist, and at the same time were creating the opportunity for landlords to let on a shorthold basis and with a registered rent, so that we could test the extent of the disincentive effect in the private rented sector of security of tenure and the extent to which that disincentive has been caused by the Rent Acts, it might be right to give it a try. If they were blocking the loopholes for abuse and at the same time creating a new opportunity, it might be right to support them.

The effect of the Bill is to widen the loopholes. Indeed, the loopholes are being advertised. They are being made easier to identify and to use. At the same time, the Government are creating a totally new category of tenancy. The consequence of that creation is a gap in the law that should not exist unless one is doing something different at the same time.

The private rented sector in Britain is declining at a rate that is far greater than the rates of decline in other countries. That is not because of the Rent Acts. The reason is that we have a financial structure that allows tax relief on mortgage interest but not on rent, so that someone who can pay £1,000 or £2,000 a year for his home has a great competitive advantage, if he buys rather than rents, as mortgage repayments obtain tax relief. It is a structure that enables that person, in effect, to pay 50 per cent. more if he is buying his home, whereas he will receive no tax relief if he pays rent. The result is that anyone with property to dispose of will obtain 50 per cent. more if he sells than if he lets. No change in security of tenure will make any difference to that.

The changes that are being introduced in the Bill will lead to greater abuse and the more rapid eviction of those who now live in our city centres. Perhaps the changes will mean that there will be a few more rooms to rent at £40 a week, but that will not help those who really need that accommodation or those who will have been evicted to provide it.

I hope that when the Minister replies to the debate he will tell us why it was necessary to include clauses 71 to 74. They appear to provide yet another trap for the tenant who agrees to carry out improvements, subject to conditions, and subsequently finds that he is not able to carry through all the conditions. He thereby becomes liable to yet another ground for possession under the Rent Acts. Why are the clauses necessary? I find their inclusion difficult to understand. Why have the Government included no provisions for compensation for a tenant who has to lose possession, similar to those contained in the Landlord and Tenant Act 1954 for business tenants who are evicted from premises in which they have carried out improvements?

I view the Bill with grave suspicion. The major issues that it raises will be the subject matter of the inquiry that will be carried out by the Select Committee. That inquiry will be pursued vigorously.

6.29 pm
Mr. Michael Mates (Petersfield)

First, I add my voice to those who have enthusiastically welcomed the Bill. The principles in it appear to be admirable. They have the benefit of having been often enough repeated by the Conservative Party in Opposition, and now in Government, to be well known to those who agree with the policy of the Conservative Party and to those who do not. Although many will say that they do not agree with the principles contained in the Bill, they will not be able to say that they are surprised that the Government are carrying out another of their policies. It follows that any reservations that I shall express about the details of the Bill do not in any way diminish my enthusiasm for its principles but represent, I hope, a constructive contribution to our thinking, which may result in some improvements in the legislation as it proceeds from today.

Our promise that we shall put the prospect of owning his own home within the reach of every householder in the land is an exciting challenge, but I fear that in our enthusiasm to carry the pledge we might cause some unfortunate and unforeseen consequences. In particular, I shall say a few words on the subject of council housing in rural areas and housing set aside but without special facilities for the elderly.

My constituency lies in the part of Hampshire that is almost totally prevented, by the county and regional structure plans, from carrying out substantial further development. The future growth of both market towns in my constituency, Petersfield and Alton, is to be held to the minimum. The expansion potential for small villages in this part of Hampshire, and up and down the Meon valley, is—in my view quite rightly—almost nil in order to preserve their character. The question therefore arises of how to perpetuate two principles which seem to be in contradiction—the intrinsic right of an existing tenant to buy his own home wherever he may live and the need to preserve our rural and agricultural heritage from extensive development. I am clear in my mind that the right of a council tenant to buy his home, which is envisaged in the Bill, cannot be taken away just because he happens to live in a small or beautiful village. Nevertheless, we should look to the consequences within small communities of the exercise of that right, and we should provide some safeguards.

I believe that here there is scope for improvement in some of the Government's proposals. Let me quote two examples. The village of Lasham in my constituency has a population of about 400, in a rural area of great beauty. It is close to an airstrip, and it is nationally and internationally known as one of the major gliding centres in the country. It has just six council houses and there is no possibility at the moment of the council building any more. They stand close to the village, the church and the pub, and they would be a highly desirable and prized second home for those who live in London and elsewhere and who spend their weekends gliding.

Three of the six tenants have already applied to purchase their houses. They have not been permitted to do so because the local council restricts the purchase scheme to villages where there are more than 30 council-owned dwellings. When the Bill becomes law, these tenants will be able to exercise their right to purchase. The consequence will be that when they become owners and they or their successors wish to sell, they will be free to do so. The council will have no control over the hands into which the housing may fall. As a result, in a few years' time there will be no housing available in the village for low-income families and village life will significantly change.

There must be many such villages, particularly along the South Coast of England—Hampshire, Dorset and Sussex—in which council houses will be snapped up as second homes for those whose recreation, for example, sailing, makes them want such a house. Indeed, it is not beyond the bounds of possibility that speculators will give financial inducements to council tenants to exercise their right to buy so that properties become available to those who are prepared to pay a high premium for a house in an area where building is restricted and where people need weekend accommodation to pursue their leisure, sport or pastime. Surely that is not what we intend by the Bill.

My second example is the village of Farringdon, which is another beautiful example of a rural community. The village has a close of 16 council houses and four bungalows which have been set aside as accommodation for the elderly. Again, there is no prospect of further building. The bungalows are not warden-controlled, nor, under the Bill as it stands, do they have any of the requirements that would exempt them from the compulsory right to purchase. Many such bungalows have been built over the years by councils in pursuit of what I regard as the admirable policy of maintaining the integrity of a rural community. Thus, parents who have raised their families in three or four-bed roomed council houses can, when the children have grown up and left, be rehoused within their community, surrounded by their friends and all that is familiar to them, in accommodation that is far better suited to their needs as they grow older. At the same time they are releasing the larger houses for other growing families, thus repeating the cycle. If such bungalows are sold and go beyond the control of the council, there will be a significant and unfortunate change in the social structure of the community.

Another important factor is the rehousing of agricultural workers who have lived in tied accommodation until their retirement. At the moment, most local authorities in rural areas are sympathetic to the workers' needs and give priority placement to agricultural workers who are retiring. In that way, farmers can continue to house workers with an essential need for accommodation. The reduction in the housing stock and accommodation set aside for the elderly will make this in every case more difficult, and in many cases impossible.

Some people would argue that such accommodation should not be available for sale. I do not agree with that proposition. I believe that it would be invidious and arbitrary to deny certain council tenants the right to become home owners purely because they live in a small and attractive community. But there must be safeguards to prevent the disintegration and destruction of these communities. Although the Bill makes an attempt to exercise control within national parks and areas of outstanding natural beauty, that is only a tiny part of the rural problem, and I am not sure that it approaches the matter in the best way. However, I shall not pursue that matter now.

I suggest that we should consider that where there is limited accommodation and replacement is virtualy impossible, or where accommodation has been set aside as a matter of policy for the elderly, tenants should be able to exercise their right to purchase, thus maintaining the principle that every secure tenant at the date of the passing of the Bill should have that advantage. However, where the conditions that I have mentioned have been shown to be fulfilled, the local authority should be able to insert as a condition of sale that it will have the first option to buy back the house at its market value when it is next offered for sale. That gives the local authority the opportunity, if it takes the view that it needs the house, to buy it back again and to have it available for council tenants. Clearly, it is not economically possible for the purchase to be repeated again and again. Councils should be able to apply to the Secretary of State to have a particular house exempted from future sales. That should be made clear to any new tenant before the outset of his tenancy.

As I see it, that meets the need to give every current tenant the right to buy his house, and it also provides that if the local authority considers it important enough it can get the house back at a later date. It will also prevent local authority housing from falling into the hands of those who are eager to have it in certain areas for second or third homes.

I hope that the Government will consider my suggestions and will help to achieve the balance that I have described. Indeed, it would be a tragedy if, in embracing the principle of home ownership for council house tenants too enthusiastically, we damaged or destroyed the character of rural communities. We would make it much more difficult for councils to provide accommodation for the elderly. It is a difficult balance to strike, and I am not yet convinced that housing need and sensitive planning for small communities in the future have been given sufficient weight in the Bill.

6.37 pm
Mr. David Alton (Liverpool, Edge Hill)

Today's debate has been symptomatic of the debates that have taken place over the last 10 or 15 years. Governments have come and gone and altered the emphasis as to whether council houses should or should not be sold. Local authorities, too, have been plagued by the incessant debates on whether or not their local council housing should be sold off. Many of us feel that such matters have blurred the more fundamental issues in housing today.

Whether or not houses are sold makes little difference to the millions who still live in homes without inside toilets or bathrooms. It will have no impact on Britain's lodging-houses and hostels where many fester in the most appalling conditions. Further, the Bill ignores the crazy system of housing finance that is operated in the country. I hope to reurn to these points later in my remarks.

Parts of the Bill command themselves to me. In some respects it is a curate's egg of a Bill—it is fair in parts. We welcome the provisions that would strengthen housing action areas and general improvement areas by recognising that increases in environmental grants are needed. Many of our general improvement areas and housing action areas have suffered because the environment around the houses has not been improved hand in hand with the homes. That has created a patchwork quilt of decay and renovation.

Liberals also welcome the enabling powers that are being given to housing associations to acquire and improve property with a view to sale. The experimental scheme to test that principle was piloted by the Liberal administration in Liverpool. We are pleased that the Government have seen fit to extend the principle throughout the country. We also welcome the tenants' charter. However, we shall totally oppose the compulsory sale of council houses. Like Conservatve hon. Members, we want to see the creation of a property-owning democracy. It is nonsense to suggest that the housing situation is the same in every local authority in Britain and that each area should be treated identically.

The Bill implicitly accepts that there are differences from area to area by deliberately excluding areas of natural beauty. Not only is it a case of one man's meat being another man's poison; it undermines the whole system of British local government and further erodes the right of locally elected representatives to make decisions on issues affecting their locality. We shall seek to amend the Bill so that local authorities are given the right to sell council houses where they think fit.

The Secretary of State argues that his policy is based on a mandate from the people. Some might argue that that is a strange mandate, as it is based on 30 per cent. of the popular vote. We also argue that every local councillor in the United Kingdom was elected on a mandate and that those councillors are also answerable to the electors who put them there. They, too, fought on policies and principles and they can be expected to rebel against what they will see as an imposition upon them. Unnecessary confrontation will be caused. The Secretary of State and the Minister would do well to listen to the exhortations of the Association of County Councils—which is controlled by the Conservatives—and of the Association of Metropolitan Authorities, which have both condemned the Bill because it seeks to control local authorities.

In rural areas particularly, this broad brush approach could have disastrous consequences. Many rural areas have unique circumstances that will be ignored if the Bill is pushed through in its present form. The National Farmers Union pointed out: Given the fragility of the structure of many rural communities the union considers it extremely important that changes in law affecting housing provision, however well intentioned, should recognise the need to maintain a diversity of housing available in rural settlements, where the numbers are such that very small shifts in the balance can fundamentally affect the future of a community". Therefore, Liberal Members will press the Government to recognise the special circumstances of rural areas. The Government should recognise particularly those areas where there are strict planning controls relating to green belt or infrastructure problems that limit the construction of new homes. They should also recognise those areas where there are strong pressures for holiday and retirement homes as well as those where there is strong pressure for commuter homes. We also believe that the provisions in the Bill concerning Wales, where areas subject to resale conditions will be designated by order of the Secretary of State, should apply to England. If such provisions are not incorporated in the Bill, I cannot see how the Government will be able to implement the terms of the Rent (Agriculture) Act 1976, which places responsibility on local authorities to rehouse outgoing agricultural workers leaving tied accommodation.

However, special circumstances do not apply solely to agricultural areas. For example, in seaside towns it may become a regular occurrence for council houses to be resold as retirement or holiday homes. That will be of no use to local people who are unable to afford a house in the private sector and who rely upon limited council accommodation.

I have personal experience of city housing problems because I was chairman of a housing committee in Liverpool until last May. Circumstances in Liverpool are very different. We have 80,000 council dwellings. I spoke to officers in the city's housing department today and they told me that 3,899 of those properties stand empty. They are owned by the city council. Many are derelict and ugly eyesores. In the road adjacent to my home in Edge Hill a house owned by the city council has been empty since 1964. One reason for that is that there has been too much municipalisation. The housing empire has got so out of hand that it has been impossible for the local housing department to run council accommodation in a sensitive way. In Liverpool, 36 per cent. of homes are council owned, compared with a figure of 31 per cent. nationally. There are a further 32 per cent. rented homes in the private rented sector. That demonstrates the need to strengthen the owner-occupied sector. We have tried to achieve that.

The Liberals in Liverpool, supported by the Conservative Party, commenced a sales policy in 1977. Of 80,000 council dwellings about 1,200 have been sold. In the peak year for council sales of 1972, under the last Conservative Administration, about 60,000 of the country's 6 million council properties were sold. The sale of council properties is not a cure-all for housing problems.

The document published today shows that selling council houses will provide a profit of up to £7,600. The officials who wrote that document said a few months ago, in a report that was kept secret, that selling council houses could result in losses of up to £5,000. I believe that the books have been cooked and that the figures have been rigged to suit the circumstances. As the Secretary of State said, any long-term financial analysis will show exactly what one wants it to show, depending on what assumptions are built into it. These assumptions, by masterly sleight of hand, have turned Britain's 18 per cent. inflation rate into a 4 per cent. inflation rate for the next 20 years.

The Government's calculations seem to take no account of the massive increase in construction costs. I shall give the figures for five dwellings that are currently being built in Duncan Street, Liverpool. A three-bedroom, five-person house costs Liverpool city council £24,279to build.

Mr. W. R. Rees-Davies (Thanet, West)

Did it use direct labour?

Mr. Alton

It did not use direct labour. A three-bedroom, four-person house costs £25,164 and a four-bedroom house will cost £29,429 to build. That is not the end of the story. Because of the crazy system of housing finance, that money will be borrowed over a 60-year period. In total the first house will cost £219,000, the second house will cost £243,000 and the third a jackpot of £265,000—for a four-bedroom council house.

If economic rents were charged on those properties, they would range from £80 to £93.28 weekly. That is truly the economics of the madhouse. The Bill dodges the need to reform such a crazy system. The best way to solve the problems of creating a property-owning democracy and achieving greater home ownership, as well as overcoming the problems of housing finance, is to construct more low-cost homes for sale. I am proud to say that in Liverpool we have pioneered such a scheme. Over 3,000 such properties are now either built or in the pipeline. They have been built on inner city sites which people said could not be built upon. They were denounced by the local Labour Party, which voted consistently against them. Those houses are not only built; they are occupied by those who wanted their stake in the community.

Priority was given to existing council tenants and it was therefore possible to achieve two objectives. First, greater home ownership was achieved, and, secondly, more council accommodation was freed as tenants moved into properties that stand cheek by jowl with council estates. That created vacancies in council accommodation for those in need who could not afford to buy their homes. The Bill fundamentally ignores that problem. What does one tell 90,000 people who are in the dole queue on Merseyside about buying a council house? They will say that they have no chance of buying a council house. What does one tell those in low-income categories, because they do not have any chance either?

By encouraging those who can afford to buy to move out of council accommodation into a house that is built for sale, two objectives can be achieved. First, by working in partnership with private enterprise, homes that people can afford are built at low cost on land that is owned by the local authority, and at the same time council accommodation is freed for those in need. If the Government wanted to do something radical, they would not introduce such a Bill but would offer to pay people's deposits to enable them to move out of council accommodation into houses built for sale. In that way, more homes would be created for people in need.

It is all very well to talk about home ownership, but it is a mark of a person's sincerity that when he advocates a certain course of action he does something about it. In 1974 the then Shadow Secretary of State for the Environment, now the Prime Minister, said that she would give an unbreakable and unshakable pledge—it was printed in every national newspaper—that the election of a Conservative Government would mean that mortgages would be pegged at 9½ per cent. We would all agree that that looks pretty sick now, with a minimum lending rate of 17 per cent. and with mortgage rates increased to 15 per cent.

This month, home buyers will start paying a record 15 per cent. on mortgage repayments. They will not even get tax relief on the additional payments until the end of the financial year. This latest increase means that the cost of a mortgage has doubled from January 1978, during the relatively politically stable period of the Lib-Lab pact, until today. Assuming mortgage repayments over a 25-year period, the cost of borrowing £1,000 two years ago was about £8.15 per month, excluding tax relief. The cost of borrowing £1,000 now would be £12.90 per month. Those figures should be measured against the background of rapidly increasing house prices.

During the same two-year period, house prices have risen by 47 per cent. A house costing £10,000 in January 1978 now costs about £15,000. The mortgage repayments on such a house will have risen from £81.50 to £193.50 per month. Over two years, the average house buyer has been faced with the phenomenal increase of 130 per cent. In human terms, the effects of such spiraling costs are unbounded. Many home owners and potential home owners were encouraged to over-extend themselves and borrow as much as they could afford at that time, but wages have not kept up with mortgage increases and many mortgagors must now have sleepless nights wondering how to pay the increased costs for which they have not budgeted.

If the Government are sincere in trying to create more home ownership, that is the problem they must tackle first and foremost. Many people who are currently trying to buy their own homes will be forced back on to council waiting lists, as the recent report by Shelter clearly demonstrated, because they will soon be in default on their mortgage repayments. It is all very well to talk about home ownership, but if we are not prepared to put our money where our mouth is we shall never achieve our objectives. Selling off council houses at knock-down prices, desirable as it may be in some areas, will not cut waiting lists and will not make bad housing go away.

6.53 pm
Mr. W. Benyon (Buckingham)

I declare an interest as the owner of rented property.

In the enormous Bill we are considering, there are several very good measures, including the clause relating to shorthold tenancies. What a tribute that is to my hon. Friend the Member for Kensington (Sir B. Rhys Williams), who has espoused that cause for so long. Therefore, it is with some regret that I shall be unable to support the measure in the Lobby tonight, because it removes from a democratically elected body the right to take a decision on policy—in this case housing policy. That is a vital principle; it is the heart and kernel of the Bill. It cannot be amended in Committee.

I am a Buckinghamshire Member. My local education authority in Buckinghamshire over the past two periods of Labour Government has fought and fought and fought again to preserve the independence of its education system. Its efforts were warmly applauded by those who now occupy this side of the House. I did not then and do not now agree fully with the education policy of that authority, but I support to the hilt the right of the authority to take this decision in Buckinghamshire and not in Whitehall. I cannot see the difference between a Socialist Government forcing a Conservative council to change its education policy against the wishes of its electors and a Conservative Government forcing a Labour council to change its housing policy, again against the wishes of its electors. Some of my hon. Friends can square that particular circle but I cannot.

I warmly support the encouragement to tenants to buy and to councils to sell. In my constituency all my authorities—new town and local authorities—have sold council houses for several years, but I cannot be a party to forcing a council to do this against its will and against the policy on which it was elected.

As I understand it, my right hon. Friend's case falls under three headings: first, that it establishes an essential right to be conferred on the individual; secondly, that large sums of public money are involved in the building and the maintenance of public housing and, therefore, the Govenment have the right to override local authorities; thirdly, that this policy is contained in the election manifesto on which the Conservative Party fought and won the last general election. I shall deal with those three headings one by one.

Yes, indeed, it confers a right on an individual in an area in which the council does not wish to sell. But if by doing that we interfere with local democracy, one man's gain can be another man's loss. What right, for instance, had the parents in Buckinghamshire who wanted non-selective education? They had only one right, which was to vote, and to persuade their fellow citizens to do the same, in a particular way. When I visit Labour heartlands—and I live in one in London—I cannot understand why these councils are elected over and over again when they are so obviously making a complete mess of what they are doing. But, disagreeable as it may be to my hon. Friends, they are so elected, and if the demand for purchase is so vociferous, why has it not shown itself in the local elections? The answer must be that it is a minority, whatever its size, who wants to purchase, just as it was a minority in Buckinghamshire who wanted non-selective education.

Mr. Durant

The former Member for Basildon, Mr. Moonman, admitted in a recent television programme that it was because the local council resisted the sale of council houses that he lost his seat.

Mr. Benyon

Those who attended the Conservative Party conference heard the candidate for Dagenham make this point. The amount of property owned by the council in Dagenham is a relatively small proportion of the total. If the demand for purchase is so great, why is there not a much greater move out of council houses in those areas? As occurred in Buckinghamshire with education, and as is occurring in Labour-controlled local government areas, the danger is that when the minority is thwarted by the majority it appeals over the head of the majority to central Government. That is the real danger of the Bill.

Mr. Michael Shersby (Uxbridge)

I understand my hon. Friend's point. Does he not agree that in the municipal elections of May 1978 a substantial number of local authorities changed from Labour to Conservative? Witness my local authority, the London borough of Hillingdon, where the main plank was whether or not council houses would be sold.

Mr. Benyon

That answers my question. If they take action at the polls, fair enough, but why is it not shown in the polls in other areas which will be affected by the Bill where the right to buy will be forced on council tenants by the Secretary of State? If my hon. Friend is saying that in the area to which he referred it changed the result of the election, he must accept the alternative as well.

The Secretary of State's second point concerned large sums of public money. Let us be clear about this public money. A large part of the public housing estate is completely free of debt because it was built a long time ago. Should that part of the public housing estate therefore be subject to these provisions? As for the debt itself, that was borrowed on clear contractual terms. I do not suggest that they should do so, but it would be open to the Government to vary the terms of repayment if they are worried on that score. However, it is the housing subsidies that are really at issue.

After 10 years in this House I have gone full circle. The first thing that I had to do when I came here was to serve on the Committee on the Housing Finance Bill. That taught me the danger of using a sledgehammer to crack a nut. It is dangerous and one often hits one's toe in the process. What we were doing there, as we are here, was trying to attack in a cumbersome way the true burden of housing subsidies.

However, housing subsidies are totally within the control of Parliament. If previous Labour Governments had told Buckinghamshire that they thought that its education policy was detrimental to the nation and were therefore not prepared to support it with taxpayers' money, Buckinghamshire would have to decide whether to go ahead on its own with its own resources or conform to Government policy. Likewise, if the Secretary of State comes to Parliament and says that he wants to vary housing subsidies, that is a perfectly proper action and the policy decisions can be left to local authorities.

It is said that such proposals were in the manifesto. Let us leave to one side how manifestos of all political parties are produced. Suffice it to say that they appear and form the policy on which a party fights a general election. However, it is the most dangerous parrot cry of all to say that everything in the election manifesto must be good and must be carried into legislation.

There are many examples that could be cited, but I shall take the devolution proposals under the previous Government. Hon. Members who were present will remember that on the Second Reading of the first devolution Bill members of the Labour Party, with few notable exceptions, trooped into the Aye Lobby saying happily that it was in their manifesto. After that, we saw greater and greater disillusionment slowly appear until at the end we realised that no one's heart was in the measure, yet only a small group disagreed. Because the proposals were in the manifesto, Labour Members voted for them on Second Reading and rushed like Gadarene swine to their doom. It is no exaggeration to say that the small group that stood out against the proposals saved the nation from disaster. It would be stupid and presumptuous to say that the Bill is in that class, but I submit to my right hon. and hon. Friends that vital principles are at stake and that those principles will become more obvious as time goes on.

In the House at this time are many councillors and people connected with local government and they know that local government did not start in the 1880s as so many people think. It goes back into the mists of time and forms the basis of our evolution and the strength and stability of our society. Nowhere should that be more appreciated than in the Conservative Party, whose history spans three centuries. We are not upstarts like the Labour Party.

Mr. Straw

We did not have the vote.

Mr. Benyon

Unless this party is a party of tradition, in my view it is nothing. Anything that takes decision-making away from the town or shire hall and places it in the power and patronage of Whitehall is, in my book, bad. That is not Toryism to me.

How can we forget what we said in those devolution debates in the previous Parliament? We were against the Labour Government's proposals. We said that devolution without a federal system would not work. We all accepted—all of us—that there was disillusionment with and isolation from central Government, and we all accepted—all of us—that, as far as possible, government should be brought closer to the people over whom it is exercised. If we were sincere in what we said then, I say to my right hon. and hon. Friends that we must accept local government in whatever form it takes, with all its faults with all its infuriating conservatism, warts and all. We simply cannot pick and choose without laying ourselves open to the charges that we made against the previous Labour Government.

There are many anomalies that will arise by taking the freedom to make decisions away from local authorities. My hon. Friend the Member for Petersfield (Mr. Mates) mentioned rural housing and my hon. Friend the Member for Chelsea (Mr. Scott) raised the problem of inner cities.

Many of my hon. Friends believe that the importance of the property-owning democracy overrides everything else. It is important and should be encouraged in as many ways as possible, but it cannot be the only objective.

I did not join the Conservative Party to be centralist and autocratic, and I am in good company. In November last year the Chief Secretary to the Treasury had a great success in this House, and that prompted the Daily Express to interview him under the title of the Ghengis Khan of public spending". The article quotes him as follows: You see, I have this deep instinctive belief that the more decision-making is dispersed throughout society, the less likely you are to get decisions with baleful consequences. Once you centralise power, a bad decision is disastrous. I could not agree more with that. It is all very well making the Secretary of State the gauleiter of housing, but on these Benches we should remember that the next gauleiter could be a commissar.

One of the essential truths about housing is that it is a long-term business. It does not happen in five years. My hon. Friend the Member for Reading, North (Mr. Durant) said that he cannot look into the next century, but he will have to on housing, otherwise he will never have any success. Crashing swings of the political pendulum are not conducive to a sound housing policy that will produce the result that we all want—a modern home for every family in the land.

Office engenders responsibility, and over the past four years of Labour government even the political knuckleheads in the Labour Party began to realise that we could not rely on one form of solution to the problem. Every resource and form of tenure are necessary to achieve the aim.

As a result of what we are doing this evening, attention and effort will be diverted once again to a totally barren controversy that will not produce one extra home. In addition, it will weaken and anger local government in the country. It will dog our footsteps in government, and if, God forbid, we ever find ourselves in opposition, it will be a precedent that will be used mercilessly against us.

Mr. Deputy Speaker (Mr. Richard Crawshaw)

From now until 9 o'clock we shall be operating the 10-minute limit. I hope that hon. Members will curtail their speeches to save the Chair having to intervene.

7.8 pm

Mr. Julius Silverman (Birmingham, Erdington)

I am delighted to speak after the hon. Member for Buckingham (Mr. Benyon). I say that not only because I have sympathy with his views but also because I believe that we would all agree that his is the sort of speech that enhances the prestige of this Chamber.

I approach the problem of the sale of council houses largely from a constituency point of view. In my constituency we have a huge council estate consisting almost entirely of flats, and throughout my constituency there are between 5,000 and 6,000 council flats and maisonettes. It now seems that the people who live in them will never have the opportunity of living in a house.

A major problem raised in my surgeries concerns people who have lived in these high-rise flats, in many cases for as long as 12 years. Many of them have children, which makes a flat entirely unsuitable. Having done their servitude for that period, they want the privacy of their own house and garden. I have to tell them nowadays that to get a house in almost any area in Birmingham is like getting a lump of gold. I have to tell them candidly and frankly that it is practically impossible, and the Bill will make it totally impossible.

By its very nature, this provision for the sale of council houses is selective. First, it includes only those who can afford to buy their houses and to pay a mortgage. Even with the discount, this imposes a burden which only working people on higher incomes can afford. Of course, the discount is substantial. It ranges from 33 per cent. to 50 per cent. As a result of inflation, the 50 per cent. may possibly amount to 70 per cent. when a person gets an option which he can operate in the next two years. He buys the property at a price that will operate two years hence, and this means that he may be getting a 70 per cent. discount—a great attraction for people who are interested in buying houses.

I do not know their motives. No doubt many people wish to be owner-occupiers. That is very good. The Labour Members on the Birmingham council have never been dogmatic about this issue. In fact, we have built hundreds of houses for sale, and we have never dogmatically opposed owner-occupation.

Many other people—I do not say this cynically—see the possibility of acquiring an asset well below its market price, and in many cases these houses are undervalued before the discount is deducted. They see the opportunity of obtaining an asset which perhaps one day they may be able to sell, and which, in any event, they can leave to their children. For example, an old lady of 90 was granted a 25-year mortgage by the Birmingham city council to buy her house at a discount. No doubt she has people waiting in the background. I am not condemning such people. In fact, if they came to me for advice about whether they should buy, I should tell them to go ahead because they would be getting something for nothing out of the Tory Government. It might be the last thing that they will get from that Government. Certainly they should buy—there is no doubt about the advantages of doing so.

The point is not whether they should buy but whether the council should sell. I have said that this measure is selective. In the first place, it provides solely for those who have the income that will enable them to buy.

Mr. John Sever (Birmingham, Ladywood)

Does my hon. Friend agree that one of the difficulties that seems to have been overlooked in the Bill is the ability to buy? There seems to be little checking on the proposed purchaser's ability to maintain his mortgage. Does my hon. Friend agree that if people attempt to buy property without the necessary financial backing to maintain it, they will be in as great a difficulty—if not greater—as many of them already are in meeting their rent payments?

Mr. Silverman

I agree entirely. We may find a number of people in great difficulty trying to bear this burden. We should bear in mind that at present they get a mortgage from the council at the Consolidated Fund rate, which is almost 2 per cent. lower than the prevailing mortgage rate. When the Consolidated Fund discharges its older loans at the lower rates of interest, its rate will be in line with the prevailing mortgage rate. There is no doubt that many who have undertaken this responsibility will then find themselves in some difficulty.

I am also concerned about those who are excluded by the Bill—those who do not have a chance to obtain a house. I speak not only of council tenants. There are those who live in the private sector—in slums—who are also entitled to the chance of a house. There are homeless people who live with relatives—and there are still many in Birmingham. These people believe that they should have a chance to get a house, but at present the Bill excludes them practically entirely from obtaining the thing that they cherish most in the world. Such people come to me and say that they want a very small thing—their own home with a little garden. I have to tell them that I am sorry—it may be a small thing, but it is inaccessible. This is a humane problem, and I do not think that it can be overriden by this or that dogma.

The point about local democracy that was made by the hon. Member for Buckingham is particularly important in my view.

Another proposal in the Bill is the provision of local tribunals to deal with the question of leasehold. On the whole, I welcome this. I do not know exactly how the tribunals will work, but one of the great barriers to tenants exercising their rights under the Leasehold Reform Act at present is that in the long run they are obliged, if the landlord so desires, to go to the Lands Tribunal, and they are not prepared to pay the cost of that tribunal. If this provision diminishes that to any extent, it will be a desirable reform. However, it may be necessary also to have some legislative alteration to make the formula for the purchase price clearer.

Another objection that I have to the Bill has been dealt with already by my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley). It concerns the question of subsidies. The original formula was provided in our own Green Paper, but there is one vital difference here. At every point the Minister is brought in to make the final decision. We have the formula—it is almost like a chemical formula—of BA?LCD. BA is the base amount, and in the final analysis the Minister decides that. The Minister also decides the differential. Even the local contribution can be determined by the Minister, who decides what is acceptable—

Mr. Deputy Speaker

Order. The hon. Member for Birmingham, Erdington (Mr. Silverman) has had more than his 10 minutes. I must call the next speaker.

7.18 pm
Mr. Anthony Grant (Harrow, Central)

Like the hon. Member for Birmingham, Erdington(Mr. Silverman), I was impressed by the sturdy and courageous speech of my hon. Friend the Member for Buckingham (Mr. Benyon). I have no doubt that what he said struck a sensitive chord among many of us on this side of the House. We do not like over-centralisation or central dictatorship of any sort. On the other hand, I do not like small local dictatorships which can defy the wishes of the people just as much as central Government in many ways. Therefore, I believe that the good parts of the Bill justify its Second Reading and override the points that my hon. Friend made. I am sure that as a result of his speech the Secretary of State will consider very carefully in Committee whether he has perhaps usurped too many powers unto himself, but I do not think that this should override the need to give the Bill a Second Reading, because it is an extremely good measure.

In view of the time I shall confine my remarks to part II, which relates to the private rented sector. I listened with great interest to the hon. Member for Mitcham and Morden (Mr. Douglas-Mann). I am sorry that he is not present. I believe that he practises law. I do not deny that high taxation has been a deterrent to the development of the private rented sector. High taxation is a deterrent to everything. I should have thought, however, that the hon. Gentleman, with his knowledge of the law, would have realised that the great panoply of legislation, set up over many years, has been a fundamental, basic deterrent to anyone—particularly small landlords—who would otherwise be prepared to let his property. We have created a great spider's web of legislation over rent control and so-called security of tenure ever since the First World War.

I looked this matter up in the Library. If my arithmetic is right, there are about 40 statutes and well over 50 statutory instruments and orders covering the whole question of rent control. This great tangled mass has done nothing to help. There has continued to exist a chronic housing situation. The distortions in the market still exist and, despite all the legislation, people still suffer. I do not deny that all this activity stemmed from well-meaning intentions. It was no doubt prompted by greedy landlords in the Victorian era. It was certainly promoted by well-meaning, but foolish, Governments, particularly Labour Governments, who were still living in the nineteenth century. It led to the foolish policy of subsidising the property instead of the person in our society. This is where we have gone wrong.

The consequences of this policy have been as absurd as they have been grossly unfair. They have been unfair socially.

As the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said, we have created two classes of society. It has happened in this respect. There are those who are rent-controlled tenants in the private sector, and the rest who cannot sit on that pot of gold. An example is the small landlord. None of this relates to need or poverty. I have lost count of the number of cases, brought to my notice at my surgery, of private landlords, many of them widows, who have had the albatross of far better heeled tenants around their neck. A classic case was the widow who had been left one property by her husband as her sole means of income. In that property there lived a protected tenant who was himself a substantial property owner—he owned six other properties—yet the state of rigor mortis that prevails meant that nothing could be done.

The policy has been disastrous economically. It has created immobility in the employment and labour sphere, which has been damaging to our economy. We shall have a lot more unemployment. There will be structural unemployment and unemployment caused by technological change. Many people who worked in declining industries in the North, the North-West and Scotland are unemployed. If, however, in the South one opens a newspaper, one sees page after page of advertisements for jobs. The reason is the straitjacket of crazy housing legislation over many years that has created almost rigor mortis. Although I agree with my hon. Friend the Member for Chelsea (Mr. Scott) that this situation cannot be unscrambled overnight because to do so would create great social suffering, I would go so far as to say that if there had been no Rent Act legislation since 1915 we would have no housing problems today.

I welcome part II, which creates short-hold and assured tenancies. I put only one question to my hon. Friend the Minister. Is he satisfied that more nervous landlords will not be deterred by the unlikely event, the almost inconceivable event in my view, of another Government taking office who would implement the policies set out by the right hon. Member for Sparkbrook and the warning that he gave to landlords? If the property market becomes scared, I fear that we shall not get out of the stranglehold that exists and that private rented property will not be available.

I should like my hon. Friend to say what has happened to the option scheme. If options could be given to tenants to buy, woe betide any party that sought, at an election, to take that right away. Is my hon. Friend satisfied that the Bill is sufficient to enable the market to expand in the way that he wishes?

I welcome the Bill. I believe that it will get us out of the straitjacket and enable greater mobility of labour, which will reduce unemployment and help our economy. It will be a move against the creation of council house ghettos, which I detect as the only policy advocated by the right hon. Member for Sparkbrook.

I believe that the Bill will encourage greater home ownership. I know the difficulties, but if one more person is able to own his own home that will be one more bulwark against the encroaching powers of the tyranny of the State.

7.26 pm
Mr. David Winnick (Walsall, North)

I welcome the measures in the Bill to give security of tenure to council tenants. Like a number of my colleagues and the Labour Party itself, I have long campaigned for council tenants to be given further protection in law. This is a welcome step. It should be stated that this is what the Labour Party had inten- ded to do. It was part of the Labour programme that was not implemented but which would have been implemented had we been returned to office.

It is ironic that the Bill seeks to introduce a form of private tenancy without giving proper security to the tenant. I do not accept the arguments of the Secretary of State or of Conservative Members that it is possible for the private rented sector to be revived. I do not believe that it is desirable. I disagree with the hon. Member for Chelsea (Mr. Scott). Every time more freedom has been given to the private landlord, it has been abused. We know of Rachmanism.

When it is claimed that the Rent Acts have produced the scarcity of property, it should be borne in mind that when the Conservative Government introduced the 1957 Rent Act the same arguments as those put forward today were advanced. It was suggested that if one did away with all restrictions and gave landlords more opportunity there would be an incentive for the landlord to provide privately rented accommodation. What occurred in practice, apart from all the abuse and intimidation, was that private landlords and property companies were only too keen to sell the property that had become vacant. Instead of an increase in private rented accommodation, there was considerably less of it as a result of the 1957 Act.

Although it has been said that existing private tenants will be given protection, I have no doubt that abuse will occur and that some existing private tenants will be intimidated into becoming part of a shorthold tenancy. I shall watch for that development carefully.

Like my party, I am opposed to the sale of council houses. There will continue to be an argument about whether a loss is involved. As my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann), who is Chairman of the Select Committee on the Environment, of which I am a member, has said, we are considering the financial and social implications of council house sales. From all the evidence we have so far gathered, a loss seems undoubtedly to be involved. I think that this will be shown also in the evidence to come.

But the greatest concern must exist over the social arguments relating to the sale of council houses. Many families, certainly a large number of my constituents who are council tenants living in multi-storey flats, visit my surgery and write to me, as they write to other public representatives, to say that they wish to be rehoused. They are sick and tired of living in multi-storey flats. Very few of these flats will be sold off. The Minister for Housing and Construction gave me information about the sale of council flats in a recent parliamentary reply. I asked how many council houses and flats had been sold in each of the past four quarters for which figures were available. The national figures for flats over those quarters were 90, 145, 135 and 150.

The Secretary of State says that greater encouragement will be given and that it will be law that council flats will have to be sold if people wish to buy them, but I do not believe that there will be any great wish to buy flats. We know only too well that the better type of council housing will be bought. Few Conservative Members would deny that.

Of course, if the better type of council housing is sold, those in multi-storey blocks of flats will have less opportunity of getting a transfer. Both parties that have controlled the council at Walsall have a policy of not selling flats. I do not believe that that position will change.

It is unfortunate, to say the least, that a community asset of considerable value is to be sold, regardless of local needs, solely to satisfy party dogma. Local authorities are the best judges of whether it is advisable to sell council dwellings. When the Labour Party was in Government, we were lectured by the Conservatives that it should not be up to Whitehall to make decisions over local matters. The Conservatives have changed their tune. They now tell us that local authorities must obey, that Whitehall must lay down the line and that regardless of local circumstances the Secretary of State knows best.

It would be far better to assist council tenants who want to buy to move into the private market, with mortgages and so on. Apart from satisfying those tenants, the result would be to release their accommodation for those such as my constituents who live in multi-storey blocks of flats. It would give them a greater opportunity to move into the houses with gardens that they are so keen to have.

The Tories' policy towards council housing is that they believe that it should be available for the poorly paid, the disabled and a number of pensioners but that, generally, council housing is not required any more. Last year saw the lowest number of council housing starts since before the war, and the present Government have decreed that there is no great need for more council housing.

I believe that there is, in fact, a greater need for council accommodation for many families who find it virtually impossible to buy a house, not only because of the 15 per cent. mortgage interest rate but because of the level of house prices, certainly in London and the West Midlands. A number of what I describe as semiprofessional families who might previously have been able to buy a house are now unable to do so. They will not have their needs satisfied by private rented accommodation, and they need council accommodation.

It is unfortunate that the Conservatives consider that there is little need for council accommodation. That is an aspect of housing policy that we shall have to present to the country at local elections and other times.

I consider this to be a shoddy Bill which springs from the Conservatives' hostility to the very concept of a publicly rented housing sector. It will do nothing to provide accommodation for people in need and will do a tremendous amount of damage. The 1 million people still on housing waiting lists will find that their needs and wants will remain unsatisfied as a result of the Bill.

7.35 pm
Mr. Michael Shersby (Uxbridge)

I had the pleasure of listening on the radio this afternoon to the right hon. Member for Birmingham, Sparkbrook (Mr. Hatters-ley). He made one of the usual mistakes of Labour spokesmen who oppose the sale of council houses. He implied that only those on the waiting lists for rented accommodation have real housing need. I do not believe that that is so.

Those on the waiting lists to buy properties, either because they are tenants or have never applied for local authority rented accommodation, are also in housing need. Many people have never applied for local authority rented accommodation. Many are young couples who are about to be married and are looking for a home to buy. They need a home of their own in which they have security of tenure, just as much as do those on housing waiting lists, who have no monopoly of housing need. We need a variety of types of accommodation to suit people with different needs.

I welcome the Bill and congratulate my right hon. Friend the Secretary of State on bringing in such an important measure so soon after the general election. I particularly welcome the Bill because, as my hon. Friend the Member for Reading, North (Mr. Durant) has said, it raises the status of council tenants, and that is a matter of great interest to me.

Housing is of considerable interest to my constituents. Few issues—perhaps only the overcoming of inflation—are more important. Housing is the key issue, particularly for young engaged or married couples seeking their first homes and for those who have been tenants for some years and desire more than anything the boon of home ownership.

I was pleased that the Secretary of State visited my constituency recently to hand over the keys of the 500th house to be sold to tenants since the Conservatives took control of Hillingdon council in May 1978. That house was an example of what can be done by a tenant to improve a property and it is an example of the sort of home ownership that I wish to see encouraged.

For other secure tenants, the provision of a charter giving them rights under the law is something that they have desired for many years. I am glad that the Government are introducing it.

I wish to make three points in the brief time available to me. First, I am pleased that Parliament is at last legislating to introduce a new system of shorthold tenancies in the private sector. In the previous Parliament I was a sponsor of the Bill to provide shorthold tenure which was introduced on several occasions by my hon. Friend the Member for Kensington (Sir B. Rhys Williams). On each occasion we had to witness that Bill being voted down by the then Labour majority in the House, who thus deprived many young people of desperately needed accommodation.

The provisions of clauses 50 to 54, which introduce shorthold tenancies, are an important contribution to solving the housing problems facing young people in particular. They will be able to take a lease at a fair rent for fixed terms of between one and five years, at the end of which the landlord will have the right to regain possession.

Shorthold will release a considerable amount of accommodation in the privately rented sector which has been unused or, in many cases. under occupied. It will be a particular benefit to couples who are working and saving for a deposit to buy a home of their own. I hope that it will encourage the subletting of parts of dwelling-houses where the owner is still terrified to let because of the fear that he or she will not be able to regain possession, due to the provisions relating to security of tenure. That is a fear which may not be justified, but people believe that, and no assurance by Members of Parliament will put people's minds at rest. Only an Act of Parliament which creates a new type of tenure—shorthold tenure—will put their minds at rest and make this sort of accommodation available.

I say to the Labour Party that I hope very much that it will be possible in Committee to consider the points which have been raised on security of tenure and that we shall be able to reach a bipartisan agreement on the desirability of shorthold. Only if we do that can we really make it work.

I should like to give an illustration of the benefit which shorthold could bring to university students, both single and married, who have experienced tremendous difficulty in obtaining suitable accommodation in recent years. I mention the problems of students at Brunel university, in my constituency. For many months, young freshers at that university have been forced to sleep in makeshift beds in the university building. They cannot obtain suitable rented accommodation locally because people will not sublet.

Uxbridge is predominantly an area of semis. If the people who own those semis have the upstairs part empty, they will not let for fear that they will not be able to regain possession, either for their own use or perhaps for use by their children, at a subsequent date. I hope that when the Bill becomes law home owners locally who have spare accommodation will consider letting it to students and to others who desire nothing more than a couple of rooms of their own for a fixed period of between one and five years.

In today's debate we have heard little about the problems facing our university students—the young men and women on whom we depend so much for the success of our country in the future. I believe that shorthold will be a wonderful boon for them. The owner will know that he can regain control of his home, and the short holder will have the benefit of security of tenure for a limited period. We can discuss in Committee the extent to which that security of tenure should be improved.

I turn now to those people who need not a short lease with security of tenure but the opportunity to purchase a home of their own. For those people, the benefits of buying a house by means of shared purchase are of enormous value, particularly in areas such as Greater London, where house prices have risen substantially during the last two years. Shared purchase is a much better solution to the housing problem than an extension of municipal ownership—even in the East Midlands, even in Birmingham.

A list of the Nationwide Building Society's house prices shows that a terraced house can be bought in the West Midlands for £11,930 and a semi-detached house for £17,750. The Nationwide says in its summary on first homes that terraced houses are now purchased by 42 per cent. of Nationwide's first-time buyers compared with 30 per cent. five years ago. Semidetached houses are the second most popular choice of first-time home buyers, followed by flats and maisonettes, the figure for which is 16 per cent., and detached houses, where it is 10 per cent.

Mr. Winnick

Average house prices vary from area to area.

Mr. Shersby

Prices vary over the country. Hon. Members who have had the opportunity to read the Nationwide survey will be aware of the prices within their areas. I give the figure in my constituency, in which London airport is situated. In the fourth quarter of 1979, house prices increased by an average of 29 per cent. There is little difference between new and secondhand properties. Those prices are now stabilising. In Greater London, the price of an older semi-detached house is £32,320. That is the price in my constituency for those types of houses, of which there are a large number.

How, then, are young couples with average industrial earnings to be able to buy a house at that price? The only answer is by means of shared purchase, where as little as 30 per cent. of the equity can be purchased and the remainder rented with an option to buy at a later date. A mortgage of about £10,000 is a feasible proposition for many young couples, and even the not so young, whom I see at my weekly constituency advice bureau. It is not a figure which is by any means out of court when both partners are working, and sometimes when they are not. I pay tribute to my local authority for the vigour with which it has forged ahead with this scheme and to other councils which have done likewise.

As with all good things, there are one or two snags. First, there is not enough property available to local authorities to meet the demand. I hope that in his reply my hon. Friend the Minister will say something about encouraging local authorities to provide more houses for sale.

I welcome the Bill as an important measure which will do much to spread home ownership, which is the greatest boon to men and women in the country.

7.48 pm
Mr. D. E. Thomas (Merioneth)

In all housing debates it is almost a tradition that I get up to restate the housing profile in Wales.

In Wales, 25 per cent. of our housing stock was built in the last century. The resources made available per capita in Wales are below the level made available in any English region. The Bill attempts to make local authority housing stock available to tenants for purchase, but the measure is overshadowed by the far more substantial threat of further cuts in local authority housing expenditure.

In 10 minutes I shall not go over the abysmal record of the Labour Government on housing. I shall not go over the effect of housing cuts imposed by the Labour Government on the profile of the housing stock. If this proposal is implemented—unless perhaps the imaginative revolt that has already started on the Conservative Back Benches develops—we shall be back to where we were in 1972 in Wales and in the whole of Britain. In that year, when a Conservative Government were in power, the number of houses built in the public sector in Wales plummeted to 3,377. In the same year, 3,171 council houses were sold to their tenants, leaving a net increase in the housing stock of 200.

Ten years ago Plaid Cymru—which has a consistent record on housing policy, if nothing else—said that to start to tackle the real housing needs of Wales 25,000 new houses a year were needed. In that period the Labour Party—which always follows behind Plaid Cymru's initiatives in this field—adopted a target of 22,500, later dropping it to 20,000. That figure of 20,000 public and private new starts in Wales was reached in only one year, 1967, when 11,000 local authority starts were undertaken. My fear is that we shall have a repeat of the position in 1972, when there was a wholesale disposal of stock. We need an increase in resources available so that the amount of housing stock can be increased and its proper distribution ensured.

Ostensibly, the Bill will redistribute the ownership of housing stock, but that does not mean that we are utilising our stock properly. The basic issue is the proper utilisation of the housing stock. This cannot happen through market forces. The hon. Member for Petersfield (Mr. Mates) made a strong plea, with which I wholeheartedly agree, that market forces cannot be relied upon to protect rural communities. I argue equally strongly that they cannot be relied upon to support or to maintain the integrity of urban communities. But in the rural communities—the point with which the hon. Gentleman was dealing—78 per cent. of the councils in the Shelter survey indicated that they had some reservations about the indiscriminate right to buy.

I do not take the view that the so-called rural safeguards in the Bill are adequate. Indeed, the National Farmers Union—I do not agree with it on everything—has very sensitively argued that in rural areas the sale of public sector rented accommodation to existing tenants will do little to help housing conditions; indeed, it will exacerbate them. Local authorities have no power at the moment to control the occupancy of private sector housing, except in the case of new building.

The danger that we shall face—it was put forward clearly by the hon. Member for Petersfield—is that housing stock in rural areas will become second homes, or will become commuter homes where those rural areas are near to major urban centres. We can foresee, as a result of the Bill, rural houses being sold off in quantity, or possibly in total, in certain localities. This will only exacerbate the depopulation of rural areas, lengthen the waiting lists and erode community life. That will be the social effect of the Bill. The Association of District Councils has made this very point, arguing that the special condition should be capable of extension by a local authority to the whole of its area. It has also argued for discretion as to the 10-year pre-emption right, which is far stronger than we see now in the Bill.

I press on the housing Minister in the Welsh Office—I hope that he and I will both appear on the Committee—that we should look again at this question and see whether the special provision for Wales is adequate to ensure that we can control the proper use of our housing stock. We do not want a position in which more and more housing units are becoming no longer housing units but units for tourist, recreation or leisure purposes.

I turn now to an issue that is covered in two clauses. I refer to leasehold reform, or to what I prefer to call leasehold abolition, for which many of us in Wales have been campaigning over the years. I have two examples of the kind of thing now happening, particularly in urban Wales.

I should like to mention the case of Mr. Embry of 13 Hirwaun Street, Cathays, Cardiff. Mr. Embry is a longstanding member of the National Union of Railwaymen and a shop steward. He is the owner-occupier of a leasehold property. The ground landlord is the BP Pension Trust, a well-known philanthropic organisation. The lease came to an end in September 1979. The market value of the house is probably about £7,500. The BP Pension Trust is asking £2,500 for the freehold. Many people living in terraced cottages in the valleys in South Wales are in a similar position. About 30 per cent. of the market value of their property, were it to be sold, is demanded for the purchase of the freehold.

There is an attempt in the Bill to deal with the question of the valuation panel, or the rent assessment panel, becoming the panel for the valuation of the cost of purchase of freehold. We regard this as a minimal reform. We take the view that there ought to be a serious attempt to place a strong and firm ceiling on the total price of the freehold, so that we do not have problems with institutional investors, many of whom have come in and purchased leaseholds in areas such as urban Cardiff, Newport and Swansea. These institutional landlords should not be permitted to profit the third time round from leasehold property.

We want to see a strengthening of the Bill to deal with the insecurity which many leaseholders now face. Many of them approach a state of panic when the lease runs out. They are faced with the need to obtain capital for purchase and have no prospect of getting it. I press the Government to take action on this issue also.

7.55 pm
Mr. Tim Renton (Mid-Sussex)

I am sure that the hon. Member for Merioneth (Mr. Thomas) will forgive me if, in the precious minutes available to me, I do not seek to pursue and rebut his arguments.

Like my hon. Friend the Member for Kensington (Sir B. Rhys Williams), I feel this evening a little like the hero of the parable of the sower in the New Testament, because I introduced, during the years of the Labour Government, two Bills under the Ten Minutes Rule, by which I sought to amend the Rent Acts in order to bring forward more private rented accommodation from both the resident and the non-resident landlord. In those days, the seed that I tried to sow fell very much among thorns and upon rocky ground. It is therefore delightful tonight to know that one is sowing in a much more fertile atmosphere, and to welcome—albeit with some reservations, one or two of which I shall go into—my right hon. Friend's major Bill.

I welcome the concept of shorthold tenancies in the private rented sector. Both Shelter—an organisation for which I have considerable respect when it discards some of its political bias—and the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) have said that they did not think that the shorthold tenancies in the private sector would help. They did not think that this concept would help to bring forward more accommodation. They thought, in contrast, that it might increase homelessness—something that none of us on either side of the House would wish to do. All I can say is that the measures introduced by the Labour Government—notably the Rent Act 1974—certainly have not succeeded either.

In my constituency, estate agents estimate that about 40 per cent. of private rented accommodation has been withdrawn from the market in recent years. We have as much homelessness, even in Sussex, as we ever did before. We have as many dossers on the beaches beyond Brighton and Hove waiting for the evening soup run. Every housing association in Sussex, I am told, has a closed waiting list. We must therefore surely try to see whether the shorthold tenancy can now bring forward some of the private accommodation that has been withdrawn from the market in recent years.

In this context, there are two questions of some detail with which I should like my hon. Friend the Minister to deal when he replies. The first is whether, when a landlord enters into an agreement with anew tenant and he creates a shorthold tenancy for one year, it will be possible to enter into an agreement that that one year is renewable for further periods of, say, one year, at the option of either landlord or tenant. It is very important that this extension of the term by renewal should be possible within the shorthold concept. Obviously, when a landlord finds an acceptable tenant, and, vice versa, when a tenant finds an acceptable landlord, both tenant and landlord wish to continue the arrangement. But it is not clear to me at present—under, for example, clause 54—whether it would be renewable.

My second question is this: will the shorthold arrangements envisaged in the Bill be additional to the existing provisions for the temporarily absent owner-occupier created in the Rent Act 1977? I hope that they will be, because I am sure that the aim of the Minister for Housing and Construction in the Bill is to increase the supply of accommodation. It is important, therefore, that no possibilities that already exist should be withdrawn.

I want to see "To let" signs appearing in every street in my constituency. I believe that the Bill is taking some necessary steps to ensure that that happens.

I want also to mention housing finance and housing subsidies. I am concerned that paragraph 26 of the explanatory memorandum gives no figures for savings on housing subsidies under the new proposals.

It seems to me that the Secretary of State is proposing a complex formula which is, above all, at his discretion. It gives him a varying discretion for different local authorities. I do not know that this is the best way to tackle this difficult area of housing finance. It is clear that current subsidies for housing finance are a broad brush approach. It is estimated by my council that only 60 to 70 per cent. of its council tenants are in need, yet they all receive a subsidy by virtue of living in council property.

I recommend strongly to my right hon. and hon. Friends that they look at the proposals put forward by the Mid-Sussex district council, which is represented in this House by my hon. Friend the Member for East Grinstead (Mr. Johnson Smith) and myself. Under that scheme the council suggests that it should waive all that part of housing subsidy which covers capital expenditure—particularly that which covers loan repayments and interest. The council proposes that it should then be allowed to raise its rents to an economic level.

It estimates that this would mean an increase of £3.64 a week in average rental. At the same time it asks, as a quid pro quo, that it should be allowed total reimbursement from the Government for rent rebates. It reckons that as a result of putting up rents to a full economic level the number of tenants receiving rent rebate would increase by about 500.

As my hon. Friend the Minister will realise, such a scheme would mean that all the subsidy received by the council would be for rent rebate only and would be concentrated not on bricks and mortar just because those bricks and mortar were in public ownership but exclusively on council tenants in need. In addition, the council says that its suggestion would save the Government £600,000 in the initial year.

I believe that this is a very important proposal from the Mid-Sussex district council. After all, the Government still spend approximately £5 billion a year on housing finance. That is the major area left in which we could create large savings in public expenditure. If Mid-Sussex district council is allowed to do what I have suggested by way of an experimental scheme, and it worked, such a scheme could be extended and adopted by other councils.

I fully appreciate that many councils are not in a position to make this kind of offer. It is because we do not have high unemployment and because we are an area of relatively high incomes and continuing growth in Mid-Sussex that we can make such a suggestion.

Surely the Government do not get an offer such as this from a council every day of the week which would save them £600,000 in a year. If this specific suggestion were adopted of allocating all the housing subsidy by way of rent rebates to people in need rather than to property, that would be very much in keeping with Tory philosophy. If it worked, it would be as fundamental a reform of housing finance as the encouragement to private ownership of housing that is the most important part of the Bill.

8.4 pm

Mr. John Tilley (Lambeth, Central)

I begin by answering one of the questions posed by the hon. Member for Mid-Sussex (Mr. Renton) and say that there is no right for a tenant to renew a short-hold tenancy at its expiry if he so wishes. That is a serious derogation from the Bills that he and the hon. Member for Kensington (Sir B. Rhys Williams) introduced in the last Parliament. I hope that they will press the Minister for the renewal of shorthold tenancy to be included in the provisions of this Bill.

In some ways, the Bill distorts the English language to the point of deception in trying to give the impression that rights are being given to tenants and potential owner-occupiers. The fact is that the rights and abilities are being taken away from them.

The first phrase that sticks in my craw is "the right to buy". As has already been pointed out, only 50 per cent. of council tenants have incomes which enable them to be considered as purchasers. That is the national percentage. I am sure that in areas of low incomes—such as my own inner city constituency—something like three-quarters of the people will enjoy the right to buy just as they enjoy the right to dine at the Savoy because it is open to everyone. Such a right is meaningless because such people do not have the ability to pay.

There is also the strange label which describes council tenants as "secure". What does that mean? It means that they will be secure in the knowledge that the Government will be blackmailing their council to put up rents to very high levels. It has been made clear that that is the Government's intention. They will be secure in the knowledge that their council will not be receiving the subsidies that are essential for decent standards of maintenance and repair. They will be secure in the knowledge that their chances of transferring, in London, to a house in the outer area, with a garden, are now nil. Those chances have been destroyed because of the sales policy of the Tory GLC and the Tory-controlled outer London boroughs. That is the strange definition of security, on which the other provisions of the tenants' charter will have no impact at all.

We see another distortion of language where another category of tenants is described as "assured tenants". That category, though it is important, has hardly been mentioned in the debate. What is the tenant assured of? He is assured that he will have no protection at all under the Rent Acts. He is assured that his landlord will have the single objective, plus the power, to push up his rent to the highest level the market will stand. That is a strange definition of assurance.

Perhaps there is one description that is almost too good. That it is the description "shorthold". We have heard in speeches from both sides of the House that many of the tenants who become shorthold tenants will quickly realise just how short that shorthold tenancy will be. While the Minister and some of his supporters—though only some of them—believe that this provision will unleash a flood of properties for letting that are now being hoarded by landlords that is merely a matter of faithon the part of the Tories. Some of them have been honest enough to doubt whether that reserve of properties exists. I am not able to convince hon. Members otherwise.

In his speech the hon. Member for Chelsea (Mr. Scott) said, having forgone constructive criticism and having moved on to destructive praise, that he welcomed the Bill even though he outlined many of its inadequacies in relation to inner London. As the hon. Member did, let us look at existing tenancies. The Bill has three tendencies which are undeniable. It will have three effects which cannot simply be discerned by a Select Committee looking into a crystal ball. There is no need to look into a crystal ball. We can read the record of what landlords have been, and still are, doing.

The first tendency is to increase homelessness. If the Bill is intended to give landlords the power to evict people when they wish, it is likely—indeed necessary if the Bill is to be effective in the way desired by the Government—that landlords will have to evict people. The figures are very clear. Following the Rent Act 1974, the protection extended to furnished tenancies reduced the number of families made homeless because of eviction in London. That process is certain to be reversed by this Bill and local authorities, already struggling with large numbers of homeless families, will need to help more of them.

The Bill will secondly cause a feeling of greater insecurity for tenants because they will know that they have only between one and five years' security of tenure. Why should a landlord grant a five-year security of tenure when he can apply a one-year shorthold tenure with more options? Tenants will not dare to press for repairs, even though they have a statutory right to such repairs. They will not dare to challenge the abuses of the Rent Acts, which already occur and will continue to occur. The Bill merely adds to the loopholes.

The Bill will also have an effect upon landlords. It provides them with an incentive to change existing tenancies to shorthold tenancies. The good ones will do that when tenants leave voluntarily. However, we must all accept that there are bad landlords. The hon. Member for Harrow, Central (Mr. Grant) seemed to think that bad landlords went out with Queen Victoria, but bad landlords exist even in the reign of Queen Elizabeth II. The bad landlords will be tempted to find ways of winkling or harassing out protected tenants in order to replace them with shorthold tenants.

My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) said that this was a dangerous enabling Bill. I believe that it is a disabling Bill in that it reduces in a variety of ways the power of local authorities to help with housing. It also reduces the legal protection of private tenants. The Secretary of State will be able to decide how far that protection is reduced, but we have not yet been told how far he will go. We must be told precisely which areas will be excluded from the registered rent provision. We have a right to know whether the Secretary of State expects local councils to have a surplus in their housing revenue accounts.

The Bill provides private landlords with an incentive to harass existing tenants and an opportunity to exploit new tenants. The Bill will have little, if any, effect on the decrease in the number of private rented dwellings. The Rent Acts have had little effect upon that trend because there are deeper economic and fiscal reasons for it than responses to rent control.

Hon. Members representing the London constituencies concentrated on the effect of the Bill upon private tenancies. The Bill reintroduces the fear of eviction, the fear that some families will have no roof over their heads within a few months and that the next rent increase will be more than they can afford. That applies particularly to the 200,000 people who have controlled tenancies and who tend to be the older and poorer people in our community.

I do not say that the Labour Government abolished all the bad aspects of private landlordism. But without exaggeration I say that part II of the Bill rehabilitates the memory of Peter Rachman because it is based on the theory that the power of profit is the only way to solve the housing problem in our cities. We have proved time and again that the private sector will not,—and I accept that perhaps it cannot—provide decent housing at rents which working people can afford. I believe that it is undesirable for one person's home to be owned by another for personal gain.

Private landlordism on a commercial scale in our big cities is dying. The role of the Government must be to put it out of its misery and give the public sector, the co-operative sector and the housing associations the resources to provide a better alternative. All that the Bill does is to prolong the agony of the death throes of private landlordism and to provide the means for deprivation and exploitation for yet another generation of private tenants.

8.13 pm
Mr. Mark Lennox-Boyd (Morecambe and Lonsdale)

I support the Bill. I do not wish to dwell on the eulogy and praise for legislation which has been promised for many years by the Conservative Party. The Lake District national park is part of my constituency. Another part is an area of outstanding natural beauty. I am pleased that there are special provisions in the Bill to deal with those areas.

Such rural areas are special. They are different from urban areas and in a different category from other rural areas. The National Parks Authority is responsible for planning decisions in a national park. The district council is responsible for housing. In a national park there can be conflict between the National Parks Authority and the housing authority. For that reason, national parks are in a special category. I am pleased that that has been taken into account. However, the special provisions in the Bill do not deal with the problem correctly. Clause 18 could give the planning authority the right of pre-emption at market value to buy back any house which was put on the market. I can see no reason against that. One reason that has been used against pre-emption is that under existing procedure rights of pre-emption are proving to be a deterrent to the availability of building society finance. That has caused difficulties.

There should be no difficulty if the right of pre-emption is exercised at the market value rather than at the value of the sale price in the first instance. That is preferable to the provisions in clause 18. Clause 18 embodies the simple suggestion that in certain circumstances there should be a limitation upon the type of person who may buy a dwelling house in a subsequent sale. The tenant who has purchased the dwelling and his successors in title are prevented from selling that house except to a person in a certain category. That person must be a local—a person who has lived or worked in the area for at least three years.

That will lead to difficulties. The national parks have experienced difficulties with the section 52 agreements under the Town and Country Planning Act. The National Parks Authority has limited the right to resell a property, after an improvement has been made under planning permission, to certain categories of people similar to those envisaged in clause 18.

That results in a difficult and uncertain valuation of the property. If the number of people eligible to purchase a property is limited by residence or place of work, the catchment area involved is small and the property value is undermined. The value of the property is uncertain and probably lower than the market value would be if there were no limitation.

Unfortunately, this has meant that on the resale of that property people have found it difficult to obtain mortgage finance because the mortgage authority has considered the property uncertain. There have been instances of people finding it a deterrent to improving their property as there is no certainty that the value of the improvements will be reflected in its resale price.

Another matter to which I should like to draw the Government's attention is that within the definition in clause 18 we have—

Mr. D. N. Campbell-Savours (Workington) rose

Mr. Lennox-Boyd

I am afraid that I cannot give way. We are limited to 10 minutes. I have no doubt that the hon. Member for Workington (Mr. Campbell-Savours) will be called. I have several points to make and I do not wish to waste the time of the House.

There is a problem with the interpretation of what constitutes the place of work, and I ask the Government to consider this. Is a Member of Parliament said to have his place of work within his constituency? Does "place of work" mean wholly the place of work or partly the place of work? If it means partly, it would include someone who passed through the area, such as a travelling salesman, which would not be the Government's intention. If it means wholly, it would exclude Members of Parliament and business men whose offices were outside the constituency but who did some work within it. There will be problems of interpretation. I say no more than that.

Furthermore, because of the matters to which I have alluded, there will be problems of valuation. The restriction on the right to sell the property to certain individuals will lead to a diminution of its value. Inevitably the catchment of people who will be able to purchase the property will be that much smaller. That aspect of devaluation is not excluded by clause 6 of the Bill and, therefore, will be germane to the consideration of the district or local authority valuer.

Where do these uncertainties lead us? I suggest that they lead us to a two-tier housing market where some properties just outside the areas of a national park will have one value and those just inside it will have another. They lead to a certain amount of prejudice against the local authority which was the original housing authority, because that authority will receive a lower sale price before discounts than it would have received for a similar property just outside the area of a national park.

The difficulties of interpretation and the definition of who will constitute a proper purchaser to obtain title will lead to difficulties for council tenants. We need only consider the difficulties that solicitors will have when advising a client whether a prospective purchaser is suitable, whether he will be able to obtain title and whether he has the right residence or work qualifications.

I believe that I have drawn attention to some of the difficulties with which I believe we are faced because of the way in which the Government have sought to deal with this problem. I suggest that they should look at the matter again and consider the possibility of giving district councils in the national parks and areas of outstanding beauty the right of preemption to repurchase the property at the market value at the time they wish to exercise that option.

8.22 pm
Mr. Frank Allaun (Salford, East)

I ask the hon. Member for Morecambe and Lonsdale (Mr. Lennox-Boyd) to forgive me if I do not follow the points that he raised, for reasons of time.

The Government are deliberately attempting to undermine and end the provision of council houses in Britain, first, by selling off council properties and, secondly, by reducing the number of new council houses built to under 45,000 this year, and probably a much lower figure next year. As the writer of the editorial in The Daily Telegraph says: All this makes sense so long as there is no new building. Thirdly, the Government, by reducing subsidy and thereby increasing rents, are undermining the provision of council houses.

Council housing has provided good homes for millions of families, and we shall struggle to retain it. The policy of the Labour Party is clear: we are against the sale of council houses except in areas where there is no shortage of accommodation for rent—and such places are few.

The Bill will not produce one additional house. There are almost a million people on the waiting lists, plus all those—I know plenty in my constituency—who do not put their name down because they know that there is no chance of getting a house even if their names are on the list. If we restrict the number of houses available, we restrict the number of re-lets. Three out of four people are allocated a council house because of a re-let.

Which houses will be sold? Obviously it will be the better houses, the houses in the suburbs, the semi-detached houses with a little bit of garden in which the children can play. It will not be the flats at the top of 20-storey blocks, where mothers live in terrible conditions because their young children cannot be allowed out to play. Only 1.3 per cent. of all council house sales have been flats. We leave behind for the disadvantaged the unsold houses—the dregs, the dross. That happened in America. American council housing has become welfare housing for the disadvantaged. That is the danger. That is what will happen to our good housing stock.

The Bill is undemocratic. It takes away powers from local authorities. Labour councils do not like it—and there will be more Labour councils by 1 May next. Many Conservative councils do not like it, and have said so, because it takes away their rights. Why should a council be compelled to sell its houses if it does not wish to do so? Many councils, such as Guildford, North Norfolk and even Chelmsford, have opposed the idea, and others have their doubts.

Let us consider the financial loss to the community. Councils will have to go on paying interest on the original loans on these houses for the next 60 years or for the balance of the 60 years since they were built. Discounts of between 33 per cent. and 50 per cent. will be given. Therefore, an average council house, valued at £14,000, will secure for the buyer a £7,000 tax-free gain. But, on top of that, a buyer is to be enabled to pay £100 and secure an option to buy two years later at the price when he took out a mortgage. In two years, prices might increase by over 40 per cent. The Secretary of State knows that that has happened. Therefore, that would add tremendously to the bonus. If buyers are to gain to that extent, somebody else loses. Who is it? It is other council tenants, ratepayers and taxpayers.

The figures that we have been given to show that this will be a painless business are phoney. They exclude all tax relief on mortgage interest, which is already £1.2 billion a year to owner-occupiers. The Secretary of State smiles, but he knows that that is true. For every new mortgage, tax relief at 30 per cent. will be lost to the Exchequer.

Conservative leaders hope for a quarter of a million sales a year. At an average price and a mortgage of £10,000, that will cost the Exchequer £750 million extra in tax relief. If a similar number of houses is sold in the subsequent year, the loss will rise to £1.5 billion a year, and so on. That loss will have to be made up by additional income tax, VAT, taxes on tobacco, petrol, and other taxes.

Nottingham city council claims to have made a profit on its sales, but subsequent close investigation by two experts shows that during the life of the houses there will be a loss of £22,000 on a two-bedroomed house and £29,000 on a three-bedroomed house.

What about the families who cannot afford to buy, even with a mortgage? Is it any wonder that these sales are opposed by organisations such as One-Parent Families, the Campaign for the Homeless and Rootless, Shelter and others, not to mention the TUC and the Labour Party?

Another factor is that the huge new discounts will lead to corruption on a massive scale. If a house valued at £14,000 can be sold for £7,000, moneylenders will offer loans to buyers of low means. Such loans will be on the understanding that, after five years, the buyers will resell to the moneylenders and share the tax-free profit between them.

Council tenants should be warned about what they are taking on. With building society interest at 15 per cent., plus rates, repairs and insurance, they will pay a great deal more than their present rents. Then, if they fall behind with their instalments, there is the danger of eviction. In some areas the eviction rate is already increasing, even without this added risk. Even so, discounts are so enormous that it will prove a good deal for many tenants but a disastrous deal for everyone else.

A horde of additional local government servants will be needed. I do not know whether the Secretary of State has taken that into account. Each house will require to be surveyed, so there will have to be surveyors. Each house will have to be valued, so there will have to be valuers. The three-year stay of tenants in council houses will, in many instances, require extensive checking. If they have moved about, their three-year status will have to be recorded. The details of the sale will have to be checked. Finally, mortgages will have to be fixed, following inquiries into the buyers' means. If the right hon. Gentleman thinks that he can do all that without local government officials, he is making a great mistake. How many thousands of extra local government officials will be required? This is the Government who are supposed to be reducing the number of such officials.

I refer to the Minister's intention to increase rents. The new system means that he will set a figure by which each council's contributions in rents and rates will be compelled to rise. If councils do not do so, they will lose Government subsidy. They will have to make up the shortfall by cutting services. That is an unfair way of putting pressure on tenants to buy.

The Labour Party is in favour of council housing and owner-occupation. It can prove that by its introduction of the option mortgage scheme, the £500 million loan to the building societies and the loans and grants to first-time buyers. There is no proposal in the Bill to make private landlords sell to their tenants. No, this is municipal asset-stripping, and Labour Members, without exception, will vote against the Bill.

8.33 pm
Mr. Tim Eggar (Enfield, North)

The Bill should be seen as not only the fulfilment of a manifesto pledge that received a good deal of support throughout the country during the election but the first step, although perhaps a hesitant one, towards the reorientation of the housing market.

The strengths and the weaknesses of the Bill must be viewed in the perspective of United Kingdom housing. We are lucky in having the highest percentage of owner-occupation in Europe. However, we have an unacceptably high degree of fluctuation in house prices. That can be traced almost directly to the reliance on one major source of finance for house purchase—namely, from the building societies and on floating rate funds.

Outside the owner-occupied sector we are burdened with one of the least flexible housing markets in the Community. Legislation introduced by successive Governments has reduced the private rented sector to the provision of scandalously substandard housing for totally uneconomic rents for mainly the poorest in the community. The remaining one-third of households are caught in the spider's web of State housing, whether that is in the form of letting from councils or from housing associations. Tenants benefit from highly subsidised rents, but they pay the price of being the tenants of largely bureaucratic and inflexible landlords.

The inflexible landlord system means that the tenant, once in a local authority area, effectively remains chained to an area for the rest of his life as a tenant. It is against that background that we should judge the Bill.

I turn briefly to the detailed provisions. Broadly, I think that much of the Bill can be welcomed. The granting of substantial discounts to council tenants, together with the legal right not only to purchase but to finance, will undoubtedly increase the mobility of the housing market. In time, as we look forward, it will ensure that there is an added diversity in the property market, a diversity that is to be welcomed.

I am particularly grateful to my right hon. Friend for including provisions that permit widows to benefit from any discounts that their husbands would have otherwise accrued. Also, I offer thanks on behalf of single people who may be living at home looking after one or both parents. They will give a broad welcome to the fact that they can join together with their parents in getting a mortgage for a property.

On the other hand, I feel that the provisions in the Bill are too restrictive in relation to the five-year resale proposal. I hope that in Committee the Government will give local authorities and other landlords the right to exercise their discretion about whether that discount has to be re- paid in proportion if a sale is made within five years. Every council has certain undesirable properties—I know that from my own constituency. Often, those properties are tower blocks from which tenants, as soon as they are allocated there, seek to be transferred. Yet the same flats at the top of tower blocks would be attractive to young married couples without children who would wish to purchase them as a way into the housing market—even though they could benefit only from the minimum three-year discount. Councils could well be given a flexibility and discretion about reclaiming the discount given if a sale was made within five years.

I turn briefly to the tenants' charter aspects of the Bill. Of course, the requirements put legal force behind only the requirement on all councils to stick by the provisions that are already enforced by the best council landlords. However, there is a real danger that clauses 42 to 45 will lead, in the hands of some councils, to empires of consultation officers, tenants' advisory departments and housing conciliation appeals procedures. We should be aware of the danger that the tenants' charter will become a bureaucratic orgy.

I turn to the creation of the shorthold tenure—an act which we all welcome. However, I do not feel that there is any justification for the requirement that the rent under shorthold tenancies should be protected by the force of law. Surely, the negotiation of a rent for a shorthold tenancy should be decided between the tenant and the landlord. There should be no interference by a third party. It is an extraordinary double standard that introduces that requirement but makes no express statement as to whether rents are to be regulated if council tenants let off rooms in their council property.

We should also examine matters that are not covered by the Bill. We should recognise the substantial need for additional public expenditure restrictions. The only area in which that can be made is in housing subsidy. At present, the subsidy runs at over £1.7 billion per annum. That amount goes not to those in greatest need but to those who have the luck to live in State housing. Everybody knows of examples of households with four or five wage-earners. Such households receive exactly the same subsidy and pay the same rent as the widow next door who is struggling to rear three or four children on her own. That simply cannot be right. Surely it is far better for all tenants to pay economic rents so that any help available can be given to those in real need. Even allowing for a generous increase in the estimate of what will have to be given for rent and rate rebates, the basic rate of income tax could be cut by up to 3p in the pound over a period of time in order to cut out the housing rental subsidy.

In equity, if we are to tackle the subsidy for State housing, we should look at the subsidy that is presently available for owner-occupiers in the form of tax deduction for interest payments. We must openly declare that we shall not increase the amount of borrowing that qualifies for interest deduction and that any variations we make in the present system will be merely to take account of regional house price variations.

I know that the Secretary of State is considering looking at the tax advantages given to building societies. Those tax advantages, combined with historical belief and antagonism from the clearing banks against funding short and lending long, mean that there is no real competition within the finance markets that provide housing funds. I hope that consideration for the overall economic policy of the Government together with the specific consideration given at the moment will mean that we shall move towards a situation where building societies are able to fund themselves in a long-term sterling bond market and therefore reduce reliance on floating rate finance. That would go some way towards damping down the up and down movement in the price of private housing.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. I think that the hon. Member has had his 10 minutes.

8.42 pm
Mr. Jeffrey Thomas (Abertillery)

I venture to think that no hon. Member will quarrel with the bald statement of fact that housing and the problems stemming from it represent the greatest social problem of our time. In our view, the Bill comes nowhere near meeting the challenge of those problems. In many respects it aggravates and exacerbates the very problems that it purports to amend. The Bill has been described in various ways, including that of a "tenants' charter". A far more appropriate name would be a "dossers' charter", because in its present form it is in many ways a recipe for further homelessness.

I shall deploy the time at my disposal by dealing with one aspect of housing, but an aspect that is crucial to Wales and many other parts of the United Kingdom. I refer to the problem of leasehold property and leasehold reform. From the information available, it seems that even today there are about 400,000 leasehold properties in Wales. That is the biggest concentration in the United Kingdom and amounts to almost one-third of the total housing stock. We are therefore entitled to ask what the Bill does to cure the various problems confronting leaseholders. It needs only the most cursory scrutiny of the Bill to discover that it is almost silent on those measures needed to alleviate the difficulties facing leaseholders in Wales and the rest of the United Kingdom.

The 1967 Act was fought for very hard over many years. Because it was a novel measure, it ran into problems. One problem was that the machinery set up under the Act was not used as it should have been used, and most of the leaseholders affected by the 1967 Act have not taken professional advice and have therefore not known of their rights under the Act. This is not only a major factor in the disparity in freehold prices but it has led to a great deal of misunderstanding and resentment. I understand that only 15 per cent. of all the leaseholders in South Wales have made use of their right to purchase under the 1967 Act.

Because of the limited time at my disposal, I do not want to canvass all the problems and difficulties, but it has been suggested, for instance, that a qualifying lessee should be able to proceed under the 1967 Act by his solicitor serving a notice of enfranchisement together with a certificate of title to the effect that the applicant is qualified to purchase the reversion. Whilst this no doubt would help in ensuring that leaseholders obtained a fair deal in the sense that they would have to use the machinery of the Act, in many cases—for instance, where the freehold of an estate of houses was being sold—this requirement would put up the cost of purchase. A more practical solution would be to make it mandatory for the freeholder to inform the leaseholder of the statutory procedures under the Act at the time of the lease-holder's initial inquiry about purchase.

I underline the urgency of the need for reform. If essential amendments and additions to the 1967 Act are to be made under the Bill, it is imperative that they be made quickly, as relief is most needed by leaseholders whose leases are near expiry. These include a multitude of 99-year leases created towards the end of the last century. The lapse of even 12 months in introducing relief could mean a difference of hundreds of pounds in the cost of a freehold.

May I seek in the time at my disposal to make several short points? First, the proposal to grant council tenants the right to purchase their houses freehold after three years gives a justifiable sense of grievance to the leaseholder who under the present rules has to wait for five years before enfranchisement. In these new circumstances, leaseholders should at least be put on a par with council tenants.

Secondly, the present procedures under the 1967 Act give the landlord technical advantages which operate to the disadvantage of the tenant, and in some circumstances prospective purchasers are frightened off. One such advantage is that the landlord can quote a high price, often forcing the leaseholder to concede that price rather than go to the expense of appealing. Other instances include the requirement that the tenant must pay the landlord a deposit of £25 at the outset. This means in practice that the landlord need not quote a price until the £25 has been paid, and if the tenant withdraws because the price is too high he has to ask for his deposit back and may well not receive it because the landlord will counterclaim for compensation.

More importantly perhaps, the landlord can employ delaying tactics. Even though time limits are specified in the regulations, in practice there is no effective sanction against delay, and unscrupulous landlords use delay to persuade a tenant to pay a high price or dissuade a prospective tenant altogether.

The £25 deposit should be abolished, but the problem of the delay is rather more difficult but equally important. Some landlords do not respond to inquiries or applications and many take much longer than the two-month period in which, under the Lord Chancellor's rules that accompany the 1967 Act, they are obliged to reply to a leaseholder's notice of claim. Although there will have to be safeguards for ground landlords who are prevented from replying for good or valid reasons, to impress a sense of urgency on them dilatory landlords should be fined or damages awarded against them for failure to act within the two-month period. Above all, there should be a massive publicity campaign to ensure that leaseholders know their rights under the 1967 Act, even if they are not to be given fuller rights under this Bill.

Finally, the Bill is the most obvious vehicle for reforming the leasehold system. It is at hand and can easily be amended and added to in Committee. It would be criminal folly for the Government to ignore the desperate needs of leaseholders not only in Wales but throughout the United Kingdom. Reforms are urgently needed, and I hope that the Government will find time to include them in the Bill.

8.51 pm
Mr. John Heddle (Lichfield and Tamworth)

I am grateful for the opportunity to speak at this late hour, and I shall abide by the strictures from the Chair.

I ought to declare two interests. Before I entered the House I was by profession a consultant surveyor and for some time was connected with the housing market, and I am a member of the board of management of a housing society. It is therefore with pleasure that I note that part VIII, which is concerned with housing associations and the Housing Corporation, seeks to protect public funds by imposing more stringent controls on the accountability and audit procedures of registered housing societies, which I have previously discussed with the Minister.

The Bill is the most comprehensive and courageous piece of housing legislation that has ever been framed, and it is a matter of great joy on these Benches that it met with overwhelming endorsement by the electorate in May of last year, particularly in the new towns. It endeavours to create not two nations but one—a nation of home owners. It endeavours to bring about a larger distribution of wealth from the public till—that impersonal thing—to the private purse, which strikes a chord close to most people's hearts.

It is a matter of historic importance that there is this endeavour to take housing out of the political arena once and for all. The Bill will provide an open door nationwide for everyone to become a secure tenant or a secure owner. It will endeavour to lift the veil of "them and us" from towns and cities.

The Bill enables tenants who cannot buy outright at least to take one or two steps on the ladder. It gives them the opportunity to buy a proportion of their house, directly related to their income and status for the time being. That proportion can be increased as their career prospects and status improve, and ultimately they can realise 100 per cent. home ownership.

There are three indisputable reasons why the Bill must make sense. The first is economic. Subsidies for council housing currently cost the Exchequer and the ratepayers a horrendous deficit. A figure of £5 billion was given by my hon. Friend the Member for Mid-Sussex (Mr. Renton). I do not know whether the deficit is £5 billion or £2 billion, but it is a horrendous sum. Rent increases of the size necessary to cope with that deficit would not be practical. At the same time, we, as a nation, cannot afford to continue to borrow abroad to meet this deficit. Realisation of assets is the only permanent solution that will lead to the reduction of the capital debt—loan charges, management, maintenance and repairing obligations imposed upon every housing authority in this country.

Secondly, home ownership will give the individual a personal stake in the capital wealth of the country and a substantial measure of political freedom and independence from the State machine and political patronage.

Thirdly, home ownership will give personal mobility, as we have already heard from my hon. Friend the Member for Harrow, Central (Mr. Grant). Personal pride in ownership is the stimulation for and the natural instinct of someone who cares for what he owns. This will help to create a nation of families who are more responsible and who will thus live in a more stable society.

At the same time, it will unlock the capital that is tied up in the bricks and mortar of our so-called greatest national asset—a national asset that is enjoyed by few but contributed to by many. The capital released by the sale of bricks and mortar will be recycled and reinvested to rebuild homes for people genuinely in need—sheltered housing for the elderly and infirm, and starter homes and half-and-half homes for first-time buyers to enable them to realise the opportunity of home ownership.

There is no doubt that successive Rent Acts, particularly the 1977 Act, have dried up the availability of private rented accommodation in both the furnished and unfurnished sectors. The Bill is a bold attempt, through its shorthold provisions, to bring forward accommodation that is locked up and vacant to enable people to move about the country and take up jobs elsewhere, which is so necessary to revitalise our economy. The Bill also introduces a new form of tenure—assured tenancies. These will enable landlords to let new houses at realistic rents and will thus encourage the larger residential developers and builders to incorporate a supply of houses and flats to be let unfurnished in their larger developments, as they did before the war.

It may also encourage pension funds and other institutions to invest directly in the residential sector. I welcome this. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) referred to those houses which are still caught in the trap of the Rent Act 1957 and the fact that the Bill will lift them out of control. At the same time, he said that such decontrol would affect poorer tenants in substandard accommodation. I venture to suggest that substandard accommodation will remain substandard while landlords are unable to recover realistic rents to meet the cost of repairs.

At once, the Bill will provide the broad brush of home ownership that so many people voted for at the last election—the opportunity to buy their own homes and be liberated from subservience to the local authority and at the same time have the opportunity of being masters in their own homes and masters of their own destiny. The Bill seeks to purge the vendetta against the private landlord and to ease council tenants from inhuman and petty bureaucratic restrictions. It seeks to encourage private developers and builders to resume their historic role of providing homes to rent and thus assist the mobility of labour that is so essential to a society that has become wooden and static, and so necessary in an economy that is undergoing radical change. The Bill presents the public with the opportunity to share in a major shift of economic power into the hands of the individual, with all that that means in terms of self-help, self-health, self-respect and freedom.

9 pm

Mr. Gerald Kaufman (Manchester, Ardwick)

This Second Reading debate has inevitably centred on the provision in the Bill for compulsory sales of council houses. But the House should pay attention to the many other pernicious provisions in the Bill. The most fundamental change is in clause 80—the removal of the Housing Act 1957 duty on local authorities regularly to prepare plans for the provision of new homes in their areas. This is a statutory duty that local authorities have had imposed on them for many years under Governments of both parties. Its removal strikes at the heart of publicly provided housing in this country.

This is accompanied by other proposals that illustrate the Government's detestation of local authority housing and their vendetta against council tenants. Clause 116 means the return to the provision in the Housing Finance Act 1972, repealed by the Labour Government in 1975, that councils should be allowed to make a profit out of the rents they charge their tenants. In clause 41, there is the specific and deliberate removal from the Labour Government's tenants' charter of the right of tenants to be consulted about the rents that they pay.

In its way, the most vindictive innovation in the Bill—astonishing coming from a Government who claim to champion home ownership—is the provision in clause 98 that in future local authority mortgagors shall have to pay whichever is the higher—the local authority average interest rate or the building society rate. This change will make it even more diffi- cult for local authority tenants to buy their council houses.

In all the euphoria that the Secretary of State has generated about the alleged desirability of the compulsory sale of council houses, the right hon. Gentleman has never really discussed how practicable this might be. The Opposition make clear that we regard it as unacceptable that councils should be compelled to sell off their best houses regardless of local housing need. As my hon. Friend the Member for Lambeth, Central (Mr. Tilley) pointed out, it is even more culpable in a way to offer tenants the bait where many who are attracted by it may never be able to bite on it.

The right to buy, of which we have heard so much, does not exist for most tenants of housing associations. Of these 340,000 tenants, no fewer than 215,000, or 63 per cent., are excluded by clause 2 from the right to buy. Again, 15 per cent. of council tenants are excluded outright from the right to buy by the rule that there must be a minimum tenancy of three years. That means that 1 million families are excluded from the Secretary of State's social revolution for a start.

The Secretary of State has not yet announced what minimum income level for mortgages he intends to lay down under clause 9. What is known is that council tenants have much lower incomes on average than the population as a whole. The latest figures show that the average income of council tenant households is 24 per cent. below the average for all households. It is also known that the sums that purchasers pay, even with the discounts proposed in the Bill, will be very high. At a 33 per cent. discount, weekly mortgage payments on an average council house will be £23. Even after tax relief, the payments will still amount to £16.33.

If we are generous to the Secretary of State, we can consider the tenants who will qualify for maximum discount of 50 per cent., although they will number only 30 per cent. of the total. Their weekly mortgage payment before tax relief will be £17.17. After tax relief it will be £12.19. Those payments, with rates, water rates, heating charges, insurance and repairs and maintenance added, should be contrasted with the present average council rent of £6.56 a week. As my hon. Friend the Member for Salford, East (Mr. Allaun) indicated, the cost becomes very high for households with only three-quarters of average income. For them, all chance of rent rebate is lost for good. This high cost may be one reason why council house sales so far under this Government have not exactly been a roaring success.

We already have experience of the response to the Tory policy of substantial discounts. In May the Secretary of State announced that he was immediately allowing councils to sell houses at a discount of up to 50 per cent. He was optimistic about that initiative and declared: I believe that the new consents will give impetus to the Government's policy to encourage the growth of home ownership in which the sale of council houses has an important part to play. That was his confident hope, but what has been the result? In the third quarter of 1979, the first complete quarter since the Government took office, council house sales totalled 7,060, but in the third quarter of 1978—under the restrictive, killjoy Labour Government—council house sales totalled 8,484. The net result of the Secretary of State's breathless new impetus has been a reduction in council house sales of 17 per cent.

We have other evidence of the response to the Government's new policies. In May the Secretary of State gave a new consent for the sale of houses in new towns. The Government announced in July that after only a couple of months of the new consent no fewer than 11,130 tenants in 11 new towns had already made inquiries about buying their homes. That was pretty impressive, but what is the position six months later? The grand total of sales from those 11,130 initial inquiries is 516–4½ per cent. And that is the percentage of those who made inquiries. The number of tenants in those new towns is 85,600, so the percentage of purchasers of those eligible to buy is ½per cent.

Mr. Michael Colvin (Bristol, North-West)

Can the right hon. Gentleman tell us how many councils which were selling houses before the general election are not now doing so? Bristol city council has reversed its 18-year-old policy of selling council houses and is now not doing so. Could not that account for the fall in sales?

Mr. Kaufman

That does not account for the figures that I have given because Bristol reversed its policy fairly recently, following Government interference in its successful approach to council house sales.

What a disappointment the poor figures must be to the Secretary of State. We all remember his rousing rhetoric at the Conservative Party conference in the autumn. He told the cheering throngs at Blackpool that the sale of council houses would be seen as "a great social revolution" He proclaimed: I can think of no act of social policy more likely to change the attitude of countless thousands of our people than the enfranchisement of council tenants. He promised a "great crusade" against Labour-controlled councils that opposed his policy. He described them as the feudal barons denying the peasants their land. The right hon. Gentleman issued this stern warning: If it is a fight they want we shall lead our party across their heartlands, carrying our message door to door. The right hon. Gentleman had his chance, because in one of the greatest Socialist heartlands of all, the constituency of Manchester, Central, we had a by-election in the autumn. The overwhelming majority of electors in that constituency live in council property and they waited behind their doors in suspense and anticipation, ready for the Secretary of State's promised knock.

We all know that it usually takes brute force to keep the right hon. Gentleman away from the political stump, but the doors of Manchester, Central remained unthumped. In fact, Manchester did not even see the Secretary of State during the by-election campaign. As for the Tory candidate, he did not even mention the sale of council houses in his election address, and when the votes were counted it turned out that the peasants had voted for the feudal barons. The Tory candidate got 1,275 votes, and Magna Carta lost its deposit.

The problem is that the Secretary of State is a great fighter when words are his weapon. But, sadly, in his crusade he seems to be leading an army of conscientious objectors. Let us be fair to the Secretary of State. He is fighting so many crusades at once that he cannot win them all immediately. As we know, another of his battles is against bureaucracy. He spelt out his views vividly in a speech that he made in Cheltenham in July. It was a major oration and at times his language reached Demosthenic heights. Take this extract, which I quote in its entirety: Sale of council houses. Get on with it. But it was on the subject of bureaucracy that the Secretary of State was at his most eloquent. He said: We are now at a point where the web of bureaucracy is too dense, too pervasive, and entangles far more than it ought … Local councils … do not need, they do not want, the fussy supervision of detail which now exists. Let us look at the Housing Bill and see how in it the Secretary of State gets rid of the web of bureaucracy and the fussy supervision of detail. Let us consider, in particular, how a council tenant goes about exercising his right to buy a house. It is a simple straightforward procedure. First, the tenant serves a written notice on the council under clause 5(1). The council responds by serving a notice on the tenant under clause 5(1). For good measure, the council then serves a further notice on the tenant under clause 10(1). Then, not resting on its laurels, the council sends the tenant a form under clause 10(3). The tenant has been left out of things a bit, so he counters smartly by serving another written notice on the council under clause 11(1).

A new participant now makes his appearance—the district valuer. He makes a determination or are-determination under clause 11(2). The council cannot let that go by, so it makes a representation to the district valuer under clause 11(3). The tenant is not going to let that pass, so he makes a representation to the district valuer under clause 11 (3). In response, the council serves a notice on the tenant under clause 11(4). The council then follows this up by sending the tenant a form under clause 11(5).

It is now the tenant's turn again. He serves a notice in writing on the council under clause 12(1). Back to the council, which serves a notice in writing on the tenant under clause 12(3). Various moves now become possible. The council can serve a notice on the tenant under clause 15(2). The tenant can serve an injunction on the council under clause15(8). The council, getting desperate, may make a covenant under clause 18(1). The council may serve a notice on the tenant under clause 18(2), or it may give a consent to the tenant under clause 18(2).

Yet another character now appears—the chief land registrar. He can enter a restriction under clause 18(5). Back to the council, which must give the tenant a certificate under clause 19(2). Enter now the Secretary of State. He may give the council notice in writing under clause 22(1), and he may repeat the process under clause 22(2). Then, in a masterstroke, the Secretary of State may withdraw his notice in writing to the council under clause 22(1) by giving the council further notice in writing under clause 22 (5). The pace then quickens. The Secretary of State may execute a document under clause 23(1). The chief land registrar can register the tenants under clause 23(3). He shall then supply the Secretary of State with a document under clause 23 (4).

Along the way, the House will be relieved to hear, the Secretary of State has all sorts of little jobs to do. He may make an order under clause 7(3), or regulations under clause 9(4), or orders under clause 17(1) and clause 20(2), or regulations under clause 21(1), or a determination under clause 22(7), or an order under clause 25(1). That is how the Bill makes it easy for the council tenant to buy his house and how the Secretary of State fulfils his promise to get rid of fussy supervision of detail and to destroy the web of bureaucracy.

What a crusade the Secretary of State is leading, to be sure. His straggling troops are groping their way down a murky labyrinth, accompanied by a qualified solicitor and a filing clerk. Instead of a glorious war-cry such as "God for Michael, England and St. Margaret", the slogan on his pennant reads "Please complete this form in triplicate". His council house sales army does not only consist of the tenants—the PBI. It includes the non-commissioned officers as well, and additional staff for the local authorities. There are about 50 to 60 additional staff for the Department of the Environment and the Welsh Office. There are extra employees for the law courts and extra employees for the Land Registry.

But we must remember that the Secretary of State is used to creating work for idle hands. It was he who, only the other day, appointed as his adviser on the Palace of Westminster a former Tory Member of this House, Sir Robert Cooke, the man best remembered for helping to make this Victorian Palace look like Victoria Palace. Sir Robert is being paid £3,000 a year for one day's work a week. He is living disproof of the belief that it takes two to quango.

One quango that has been working full-time is the team at the Department of the Environment that has been patching together a document on the costs of council house sales. Here is the impressive products of its labours—"Appraisal of the financial effects of council house sales". It sets out to prove that, on a variety of assumptions, the sale of council houses would bring a profit to the taxpayer and ratepayer. The Secretary of State last Friday proudly described it as most rigorous, sophisticated and comprehensive". The Secretary of State has strange standards. This publication, Crown copyright, price £1.20, should find a steady sale in bookshops, if placed on the shelves devoted to sensational fiction. Here is some of the phraseology of this "rigorous, sophisticated and comprehensive" document: Recourse must be had to inference, deduction and assumption. … All that can be done is to make assumptions. … Estimating the effect is difficult. … The figure shown is no more than tentative. … With so many variables, what would happen is hard to assess. All the same, the document arrives at its conclusions—conclusions uniformly favourable to the Government's case. But can we believe what it claims to prove?

Let us look at three of the crucial elements in its calculations—first, the cost to the Exchequer of tax relief on mortgage interest payments. Every assessment made in this document includes a calculation of this tax relief. Yet the Chancellor of the Exchequer has told me that in such a calculation too many assumptions would have to be made for an estimate to be meaningful. So, on the authority of the Chancellor himself, that part of the calculation is worthless. But there is worse to come.

Another essential element in the calculation is the rise in the level of rents. Rents forgone by the council on houses sold are, of course, a loss to the taxpayer.

In an answer that I received yesterday, the Minister of State flatly refused my request for his estimate of increases in council rents for the next five years. He fobbed me off and said that future council rent levels depended on the decisions of local authorities. Yet this document includes future rent increases in its calculations. It claims to do what the Minister says he is unable to do. It bases its claim that council house sales will yield a profit to the taxpayer on assumptions that rents will rise by between 3 and 11 per cent.

These assumptions are completely bogus. The present average council house rent is £6.56 a week. In his rate support grant settlement published two months ago, the Secretary of State assumed that rents would rise this coming year by an average of £1.50 a week. That assumption is faithfully repeated in this document as part of the basis of the calculations.

An increase of £1.50 on £6.56 is, however, not 3 per cent. or even 11 per cent. It is 23 per cent. That scale of rent increase makes a vast difference to the outcome of the document's calculations. Let us remember that the Bill repeals Labour's no-profit limit on rent increases. In future, rents are liable to go up even faster, so that the fraudulent assumptions on rent increases invalidate this document even further.

There is another element in these calculations that conclusively reveals the document's dishonesty. Every calculation in this document allows for the cost to the council of renovating the house—if it had kept it instead of selling it—and cost assumptions range between nil and £3,208 over a 20-year period. There is absolutely no justification for these assumptions. The document itself admits that no separate figures are available for the cost of improving all purpose-built dwellings.

It guesses that in the decade 1969–78 9 per cent. of purpose-built council houses were modernised. That means less than 1 per cent. per year, or about 18 per cent. over 20 years. That is probably an overestimate because the figure is likely to be much less than this since the houses sold will be the best houses. They will be the newest houses, those least likely to be in need of modernisation. So the most that should be allowed for savings on modernisation is 18 per cent. of that £3,208.

That reduces the potential saving to £577 and by itself plunges many of the Secretary of State's allegedly profitable results into deficit. The Secretary of State was being much more honest with the House when he admitted last month, speaking on this very subject: As one looks ahead for many years, one can make more or less whatever judgment one likes. That is purely a matter of personal opinion."—[Official Report, 12 December 1979; Vol. 975, c. 1284.] As for this document, it really is a shoddy piece of work. Far from being rigorous, sophisticated and comprehensive as claimed by the Secretary of State, it is as contemptible as the policies it seeks to justify. If the claimed profit to the taxpayer of council house sales is so much fool's gold, the quantifiable cost to the taxpayer of the Bill is only too real. First, the Secretary of State will be spending something like £750,000 to publicise his council house sales policy. The requirement for the local authorities, the Department of the Environment, the Welsh Office, the courts and the Land Registry to take on extra staff will cost about £9.5 million a year.

Then we come to rents. Last June the Secretary of State spelt out his housing policy. In his statement he promised: Some will prefer or will only be able to rent. We are not going to forget them. The right hon. Gentleman has certainly not forgotten them. We have seen how he is forcing council rents up by 23 per cent. In clauses 58 and 62 of the Bill, he forces up the rents of private tenants as well.

Clause 62 ends rent control for 200,000 private tenants. Clause 58 allows landlords to put up rents of more than 1,400,000 regulated tenants every two years instead of every three years as at present, and the 200,000 controlled tenants will also face rent increases every two years in future. Another 133 rent officers at a cost of £1 million a year will be needed to administer this scheme. The cost of the rent officers alone wipes out almost all the money that the Secretary of State saved last year in his famous quango hunt.

The cost to private tenants of the increased rents will be severe but the cost to the taxpayer will be enormous. Higher rents mean higher rent allowances—a taxpayers' subsidy to private landlords paid out of the public purse. The increased rent allowances brought about directly by the Bill will cost the taxpayer £60 million a year by 1982–83.

It is not clear whether aid with rents by the Supplementary Benefits Commission is included in that figure or additional to it. If it is additional, the cost to the taxpayer of "Heseltine's high rents policy" could be an extra £140 million a year within two years, rising each year after that. No wonder the Bill is so widely condemned.

The Association of District Councils, making a point which is important to my hon. Friend the Member for Workington (Mr. Campbell-Savours), states: the safeguard for rural areas … is not of itself adequate to preserve an adequate supply of accommodation at a reasonable price for local people. The National Farmers Union says it considers that the unconstrained nature of the provisions in the Bill will add to existing severe problems in many rural areas. The National Housing and Town Planning Council has denounced the £100 option as being reminiscent of the seedier aspects of hire purchase. The Sunday Telegraph states: In some areas, the result of this Bill may be to reduce public housing provision quite unacceptably. Perhaps the most searing condemnation is that which states: What does such a policy really achieve? What it results in is the better houses being sold to the wealthier tenants. It will be of no advantage to the old and will not be available to the poor. It reduces the overall quality of the public housing stock and this has financial consequences when average repair and maintenance costs rise. That stringent condemnation comes from the Tory Reform Group, a well-connected body. A list which the group supplied to me shows that its patron is The right hon. Peter Walker, MBE, MP and that its vice-presidents include: The right hon. Lord Carrington, PC, KCMG, MC, the right hon. Sir Ian Gilmour, Bt, MP, and the right hon. William Whitelaw, CHMC, MP. The Tory Reform Group speaks for many besides its patron and vice-presidents when it condemns the Bill.

The Bill is cumbersome and bureaucratic. It deliberately makes housing dearer than ever before for all tenants—council tenants and the tenants of private landlords. It is an expensive Bill. It comes from a Minister who claims that he wants to cut public expenditure, but it will add hundreds of millions of pounds to public expenditure. Worst of all, it is an irrelevant Bill. It juggles with rents and ownership. As my hon. Friend the Member for Salford, East and the hon. Member for Buckingham (Mr. Benyon), in a courageous speech, said, if it becomes law the Bill will not produce a single additional home for those who are in desperate need.

Last June the Secretary of State said that his objective was to provide enough new house building to meet the demand for home ownership and meet essential needs in the public sector. The Secretary of State has already failed irretrievably.

The Director General of the National Council of Building Material Producers has warned that because of council house sales the level of private house building could be significantly affected by the creation of new demand on scarce building society funds. The council expects a decline in new housing this year of 11½ per cent.—8 per cent. in the private sector and 16 per cent. in the public sector.

The National Economic Development Council in its recently published construction forecasts expects a devastating total of only 185,000 housing starts this year in the whole of Great Britain. It expects only 70,000 starts in the public sector. The latest figures for England and Wales, published last week, show that between September and November total housing starts were down by 13 per cent. on the previous year and public sector starts were down by 24 per cent.

The Secretary of State, who has the effrontery to talk about enough new house building to meet demand, is certain to leave office with the unenviable record of having not only presided over but deliberately brought about the worst housing programme since the war. That is the grim truth behind this despicable Bill, and that is why we shall vote against it tonight.

9.30 pm
The Minister for Housing and Construction (Mr. John Stanley)

The House will be grateful to the right hon. Member for Manchester, Ardwick (Mr. Kaufman) for setting out the procedure of the right-to-buy legislation so succinctly and for demonstrating so conclusively that the right to buy will achieve its objectives. It was interesting to hear him arguing that insufficient council houses were being sold at present. I do not see how he reconciles that with his opposition to the Bill tonight. We hope to remedy that.

I think that I am right in saying that, in the document from which he quoted, the Tory Reform Group concluded that we were not going far enough and that council houses should be given away. I am not sure whether the right hon. Gentleman's endorsement of the Tory Reform Group goes that far.

The debate has been wide-ranging, and inevitably there have been profound differences on certain aspects of the Bill. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) acknowledged that there were substantial elements of the Bill that were common ground to both sides. We welcome the opportunity to bring forward a number of measures which the previous Administration said were desirable but failed to pass into legislation. The tenants' charter comes into that category, as do the alterations that we are making to the improvement grants system, the reform of the housing subsidy system and many of the changes that we are making with regard to the Housing Corporation and housing associations. Also, we have made at least one important change in the private rented sector. I am glad that we are able to bring forward, in our first Session, a number of major and important legislative changes which the previous Administration were unable to do at any time during their period of office.

The right hon. Member for Sparkbrook said that the tenants' charter was a Labour proposal. I have to tell him that it was a Labour proposal which Labour Members voted against when my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) brought forward his Private Member's Bill on the tenants' charter. My hon. Friend the Member for Chelsea (Mr. Scott) also made an important con- tribution to that proposal in the early stages.

The right hon. Gentleman referred to a number of alterations that we have made and to consultation on rents. My hon. Friend the Member for Reading, North (Mr. Durant) also mentioned this. We carefully considered the representations that we received and the implications for other charges and consultations on rates or water rates. We also looked carefully at the bureaucratic implications, something on which the right hon. Member for Ardwick dwelt.

We were especially struck by the representations that we received from one authority about why it did not seem sensible to continue with the proposal for statutory consultation on rents. It said that the degree of consultation which will be required for matters such as changes in rents and other charges could cause serious delays or increases in administrative costs, particularly for those councils which do not have organised tenants' associations to consult with". I must tell the right hon. Member for Sparkbrook that those were the representations that we received from his former council in the city of Sheffield.

Reference was also made to distraint and a process that we have not changed in the tenants' charter. The right hon. Member for Ardwick quoted from my Shelter speech. If we could find a better way—hopefully we can—that might be a practice that can be dispensed with.

Local authorities made strong representations to us about the size of rent arrears, which total about £50 million to £60 million. That is the current figure for rent arrears. We received representations from one local authority, in which it said: It is acknowledged that this provision is likely to render distress useless as an arrears recovery method. I should tell the right hon. Member for Ardwick that those representations were received from the city of Manchester. Therefore, we felt that that was a legitimate change to make.

The right hon. Member for Sparkbrook asked about the local contribution and the definition of the Secretary of State's powers in clause 89. The form of wording in that clause is taken from the previous Government's Green Paper. That states that one of the advantages of the pro- posed subsidy system is that it will enable a balance to be struck between central and local contributions to housing costs in the light of all relevant factors, including past and expected movements of incomes, costs and prices. We felt it right to reflect all those factors listed in the previous Government's Green Paper, but I am advised that, in making the final decision on the local contribution, there is no difference in the discretion given to the Secretary of State in this Bill compared with that in the Labour Government's Bill.

I turn to the points made by my hon. Friend the Member for Chelsea about our proposals in connection with the leasehold reform legislation—in particular, the special valuation method. My hon. Friend will know that in 1974, when we were in Opposition, the rateable value limits of the Leasehold Reform Act were raised as a result of our amendments. At the same time we provided a special valuation basis so that, for houses of higher rateable value, the price of the freehold would be closer to the market value. We have looked at this matter again and have come to the conclusion that it was right. The effect of repealing the special valuation basis would be to enable leaseholders of these more expensive houses to enfranchise on the original basis, so they would stand to make large windfall gains at the expense of other private owners. We do not think that would be justified. I am sorry if that should disappoint some of my hon. Friend's constituents.

My hon. Friend also asked about the position of tenants of the Crown estates. We have received a number of representations from Crown estates' tenants for their inclusion in the provisions of the Bill. I am glad to tell my hon. Friend that, in the light of the representations made by those tenants in connection with the Bill, the commissioners are reviewing arrangements relative to tenants' rights and are inviting suggestions for improvements from the various tenants' associations. I shall keep in close touch with the commissioners on that matter.

I turn now to the various proposals that have been made about the private rented sector.

Mr. W. R. Rees-Davies (Thanet, West)

Would it be possible to alter the terms of compensation in relation to the leasehold enfranchisement provisions, whilst raising the limits? I should have thought that it would be equitable to do that. Will the Government consider taking action along those lines?

Mr. Stanley

We are proposing not to raise the rateable value limits but merely to continue the special valuation basis. However, I shall consider what my hon. and learned Friend said. The Bill is drafted widely enough to enable me to consider that matter.

I turn now to the private rented sector. We have debated the shorthold proposal at considerable length, but, having listened to some of the speeches by Opposition Members, I found a fundamental contradiction in the approach that they seemed to adopt towards the rented sector. Again and again they expressed concern about the need to increase the availability of accommodation in the public rented sector, but at the same time they seemed reluctant to contemplate measures which would increase the availability of accommodation in the private rented sector.

The right hon. Member for Sparkbrook made his position clear. He said that private landlords were an anachronism. On many occasions Opposition Members have made it clear that they do not regard the private sector as having any future. They do not want it to have any future. Many, it seems, would be happy for it to slide into extinction.

At a time when there is a demonstrable need for short-term rented accommodation, and when, at the same time, there are those in the private sector who are both willing and able to make that accommodation available at no cost to public funds, provided that the legislative framework is right, it is irresponsible for the Labour Party to continue to pursue its vendetta against private landlords when there is a means of easing the problem of rented accommodation.

I agree very much with what my hon. Friend the Member for Uxbridge (Mr. Shersby) said about shorthold and when he called for, as far as possible, a bipartisan approach. That is an approach that we wish to follow, because the confidence factor is all-important. We shall consider carefully the proposals that have been made and the arguments advanced by the right hon. Member for Sparkbrook, by the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) and by others. However, I cannot agree that the shorthold proposals are basically unreasonable or unfair to tenants. Tenants will have to pay no more than a fair rentas provided by other rent legislation. They will qualify for rent allowances. They will have security of tenure during the periods of tenancy that they have agreed.

The right hon. Member for Sparkbrook said that clause 51(3) was important to the degree of support that he is prepared to give to shorthold. It may be that he does not fully understand that part of the clause. I appreciate the difficulties at this stage in our proceedings. That provision does not imply that the Secretary of State will have power to go to market rents for shorthold. There will be no deregistration to market rents. At present, a fair rent must be registered at the outset of shorthold.

If clause 51(3) were used, it would not have an effect on existing shorthold and it would not prevent the tenant, or the landlord, under a subsequent shorthold, from applying for and having a fair rent registered. In other words, it would produce exactly the same position as already applies under existing Labour Rent Acts to fair rents, where there is no compulsory obligation to go for fair rents. It is an obligation that is at the option of either the landlord or the tenant.

The hon. Member for Mitcham and Morden asked why clauses 71 to 74 had been included. I am sure that the hon. Gentleman appreciates that under the Bill, unlike the previous Labour Government's Housing Bill, we are conferring the right to an improvement grant on the private sector tenant as well as on the public sector tenant. Therefore, we have to reproduce the equivalent provisions that appeared in the Labour Government's Bill, namely, the clauses that applied to public sector tenants and their rights in respect of improvement grants. We have endeavoured to produce the equivalent provisions for private sector tenants. I note the hon. Gentleman's comments, but there is no basic difficulty. There is probably no basic disagreement between us.

Mr. Scott

Before my hon. Friend moves on from shortholds, I ask him to deal with an issue that is of particular interest in central London. When a tenant comes to the end of a shorthold and the lease is determined, will he be eligible for rehousing under the homeless persons legislation or will he be treated as if he has made himself homeless intentionally?

Mr. Stanley

The interaction of the homeless persons legislation and the short-hold proposals is exactly the same as the interaction between the homeless persons legislation and existing Rent Acts. It will be for local authorities to determine—ultimately it will be for the courts todecide—whether there is an element of intentional homelessness. The Bill's provisions will apply to the tenant in the position that my hon. Friend describes in the same way as in other legislation.

I assure my hon. Friend the Member for Mid-Sussex (Mr. Renton) that short-hold is additional to the existing provisions that enable temporarily absent owner-occupiers to regain possession. I believe that the Bill's provisions meet my hon. Friend's comments about renewal. Our intention is that shorthold should operate flexibly so that lettings may be carried on by mutual agreement.

The right hon. Member for Ardwick expressed criticism of the arrangements that we are making in other parts of the private rented sector. I was surprised to hear the criticisms he appeared to apply to people in controlled tenancies. Let me tell the right hon. Gentleman that the average controlled rent is estimated at about £1 per week. It is patently obvious that that is not enough to maintain a house in a decent state of repair, let alone to provide any return to the owner.

The result has been all too predictable. Over the last 20 years, the rent regime for controlled tenants has assured that the properties have decayed around the tenants who live in them. On any dispassionate assessment, the bringing of controlled tenancies into rent regulation should have been completed years ago. I recently received a letter from two owners of controlled tenancies which highlights the problem: What we would like to know now is when you as Housing Minister will let us get a fair rent on the house that we keep in good repair and let to a lady tenant for 88p a week. This is a controlled rent. … We pay repairs, tax, insurance and painting and the rent does nowhere cover it. So, please remember us, you can't rent a tent for 88p a week. I turn to the right to buy. My hon. Friend the Member for Harrow, Central (Mr. Grant), in a strong speech, asked about the option provision. I assure him that the provision is in the legislation, as we promised in our manifesto. A number of hon. Members, including my hon. Friends the Members for Morecambe and Lonsdale (Mr. Lennox-Boyd) and Peters-field (Mr. Mates) and the hon. Member for Merioneth (Mr. Thomas), referred to the question of rural areas and the concern that they have about the provisions that will affect those areas. We are aware of the representations that have been made and we shall consider those further, in particular the representations in relation to areas of outstanding natural beauty and national parks.

I turn to the points made about the financial effects of the sale of council houses, about which Labour Members have expressed such a deep and newfound interest. I only wish that the degree of interest and concern about the financial effects of assets going out of the public sector had been matched by a similar degree of interest about the financial effects of taking assets into the public sector. Criticisms have been made of the financial appraisal that we have produced, but they come pretty ill from a party that, for example, nationalised the steel industry with no financial appraisal at all and without the faintest glimmer of thought that over the next 13 years or so it would cost the taxpayer about £5,000 million.

To be fair to Labour Members, in their last period in Government they carried out a detailed and exhaustive study of housing policy. No doubt the right hon. Member for Brent, East (Mr. Freeson) and others would claim that it was as exhaustive and comprehensive a study of housing policy as any that has been carried out for many years. It is interesting that such was the unimportance of the financial effects of the sale of council houses to the previous Administration, so low down did it come in their order of priorities, that when their Green Paper, with its three technical appendices, was published, volume I contained detailed statistics of such burning contemporary importance as the annual number of marriages in England and Wales in the year 1871. Volume II contained a detailed and interesting study of mortgage lending in Australia. There one can find an interesting study of housing policy in Denmark. There are no statistics, information or financial data on the financial effects of the sale of council houses.

It has been suggested that the assumptions that we have used are partial. We could have used far more favourable assumptions than those used in the worst case in our financial appraisal. The rent assumption that we used in the worst case is a rate of increase in rent that has not taken place over the last 50, 20, 10 or five years. We have used an assumption for savings on management and maintenance that gives a less favourable result than those assumptions used in the study of the Chartered Institute of Public Finance and Accountancy, the Nottingham study or even the Shelter study.

I understand why our financial appraisal does not come up to the expectations of the Labour Party. I do not believe that the Labour Party is in the least interested in making an objective financial appraisal. It is merely interested in trying to show that the sale of council houses is bound to make a loss. No doubt it came to the embarrassing conclusion that the sale of council houses was likely to be profitable and, therefore, it chose a policy of saying nothing when it was in Government. If the right hon. Member for Sparkbrook is so exercised on this issue, why do the Opposition not publish their financial appraisal? Everyone else has published financial appraisals. The CIPFA has published its financial appraisal, and so have Nottingham and Shelter. Eveyone has published a financial appraisal except the Labour Party. Why does the right hon. Gentleman not publish his appraisal?

Mr. Hattersley

I shall be overjoyed to publish our financial appraisal. The only difficulty is that the right hon. Gentleman will not give me permission.

Mr. Stanley

The right hon. Member now has every possibility, as the data is available, to publish his appraisal. He can produce his own appraisal. That was his responsibility when he was in Government. He has had nine months to publish it, yet he has done nothing.

I turn to the arguments put forward about the right to buy and the arguments that have been made against it. The argument that only the best houses will be sold is contrary to the experience of home owners up and down the country. Their experience is that all types of houses are sold—houses of every type, size, location and condition. If it is thought that only the best will be sold, one need look no further than the experience of the GLC with homesteading. Accommodation has been sold that could not be called the best by any stretch of the imagination. Indeed, those houses would be described by estate agents as being in need of sympathetic hands—to use a euphemism. The degree of dilapidation involved has been exceeded only by the enthusiasm of those applying to purchase them.

Turning to the arguments concerning waiting lists, we said in our financial appraisal—where it is analysed in detail—that the majority of re-lets occur because of old age or death, yet the bulk of people buying council houses do so when they are in their thirties or forties and they will remain in that accommodation unless they buy.

The most conclusive evidence that has emerged about the doubts within the Labour Party on the question of waiting lists can be found inside Labour-controlled authorities. For example, Labour-controlled Dartford, with a total waiting list of 1,900 people, is now selling council houses at discounts of up to 50 per cent. In Labour-controlled Easington there is a waiting list of about 5,000 people, yet that authority is selling council houses with discounts of up to 50 per cent. Labour-controlled Bassetlaw, with a waiting list of 2,100, is selling council houses at discounts up to 20 per cent. Labour-controlled Derby and Labour-controlled Nottingham, with waiting lists of about 5,000 and 8,000 respectively, are also selling at discounts up to 20 per cent. The frailty of the waiting list argument comes out from what Labour councils are doing.

We have heard a great deal about the local democracy argument. I am sorry that the hon. Member for Liverpool, Edge Hill (Mr. Alton) did not consult his hon. Friend the Member for Isle of Ely(Mr. Freud) to refresh his memory of the observations his hon. Friend made on that question during the Second Reading debate on the Education Bill.

The right hon. Member for Sparkbrook said that he would vote against the Bill, but he has not made clear whether the Labour Party would withdraw the right to buy from 6 million council tenants. Would the Labour Party withdraw the right to buy? [HON. MEMBERS: "Answer."]

Mr. Hattersley


Mr. Stanley

I am most grateful to the right hon. Gentleman. That answer will be noted by 6 million council house ten-ants.

It is interesting to note the degree of enthusiasm that is being expressed by Labour councillors throughout the country in buying their council houses even in advance of the Bill becoming law. The House would like to know of a recent cutting which came into my hands about a Labour councillor who bought his council house and then voted against the sale of council houses by his local authority. The cutting is headlined: My house sale vote by Labour Rolls-Royce councilor". It reads: A gleaming P registration Rolls-Royce stands outside the semi-detached house which George Collett's wife, Nellie, brought from their local Council. George, like his wife, a Sandwell Labour councillor, is a man who says he believes that people should be able to benefit from their own hard work. He agrees, however, that he supported a council resolution which has now stopped all further council house sales. The resolution has put at risk the plans of hundreds of other tenants who have applied to buy. Councillor Collett said: Just because I am in business and drive a Rolls does not mean I have to support Tory policies That may be Councillor Collett's view, but by what right does he deny others the benefits of Tory policies which he is prepared to get for himself?

I doubt whether there have been many other supposedly controversial measures that in fact have enjoyed such overwhelming popular support. The opinion poll taken by The Observer before the election showed that the proportion of Labour voters suporting the right to buy was no less than 75 per cent., and no wonder.

The case for the right to buy is the case for giving to millions of people and to their children a chance of access to capital that at the moment they are wholly denied. It is the case for giving people greater ability to move. It is the case for giving individuals greater control over their own lives. It is the case for a massive redistribution of wealth from the public sector to private individuals.

On this issue, as on so many others, the Labour Party is fundamentally out of touch; and not merely that. This debate has exposed as vividly as any we have had the false prospectus of the Labour Party. The Labour Party says that it favours the redistribution of wealth, yet here it is resisting it. The Labour Party says that it favours public ownership because it means ownership by the people, yet here it is opposing the greatest opportunity for ownership that 6 million people have ever had. It says that it favours greater equality, yet here it is about to vote against as important a measure to reduce inequality as has ever been put before the House. Tenants want the right to buy, and they are right to want it. They want it now, and I ask the House to give it to them.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 319, Noes 267.

Division No. 135 AYES [10 pm
Adley, Robert Biffen, Rt Hon John Bryan, Sir Paul
Aitken, Jonathan Biggs-Davison, John Buchanan-Smith, Hon Alick
Alexander, Richard Blackburn, John Buck, Antony
Amery, Rt Hon Julian Body, Richard Budgen, Nick
Ancram, Michael Bonsor, Sir Nicholas Bulmer, Esmond
Arnold, Tom Boscawen, Hon Robert Burden, F. A.
Aspinwall, Jack Bottomley, Peter (Woolwich West) Butcher, John
Atkins, Robert (Preston North) Bowden, Andrew Butler, Hon Adam
Atkinson, David (B'mouth, East) Boyson, Dr Rhodes Cadbury, Jocelyn
Baker, Kenneth (St. Marylebone) Braine, Sir Bernard Carlisle, John (Luton West)
Baker, Nicholas (North Dorset) Bright, Graham Carlisle, Kenneth(Lincoln)
Banks, Robert Brinton, Tim Carlisle, Rt Hon Mark (Runcorn)
Beaumont-Dark, Anthony Brittan, Leon Chalker, Mrs. Lynda
Bell, Sir Ronald Brocklebank-Fowler, Christopher Channon, Paul
Bendall, Vivian Brooke Hon Peter Chapman, Sydney
Bennett, Sir Frederic (Torbay) Brotherton, Michael Churchill, W. S.
Benyon, Thomas (Abingdon) Brown, Michael (Brigg & Sc'thorpo) Clark, Hon Alan (Plymouth, Sutton)
Best, Keith Browne, John (Winchester) Clark, Sir William (Croydon South)
Bevan, David Gilroy Bruce-Gardyne, John Clarke, Kenneth (Rushcliffe)
Clegg, Sir Walter Hurd, Hon Douglas Percival, Sir Ian
Cockeram, Eric Irving, Charles (Cheltenham) Peyton, Rt Hon John
Colvin, Michael Jenkin, Rt Hon Patrick Pink, R. Bonner
Cope, John Jessel, Toby Pollock, Alexander
Cormack, Patrick Johnson Smith, Geoffrey Porter, George
Corrie, John Jopling, Rt Hon Michael Powell, Rt Hon J. Enoch (S Down)
Costain, A. P. Joseph, Rt Hon Sir Keith Prentice, Rt Hon Reg
Cranborne, Viscount Kaberry, Sir Donald Price, David (Eastleigh)
Crouch, David Kershaw, Anthony Prior, Rt Hon James
Dean, Paul (North Somerset) Kilfedder, James A. Proctor, K. Harvey
Dickens, Geoffrey Kimball, Marcus Pym, Rt Hon Francis
Dorrell, Stephen King, Rt Hon Tom Raison, Timothy
Douglas-Hamilton, Lord James Kitson, Sir Timothy Rathbone, Tim
Dover, Denshore Knight, Mrs Jill Rees, Peter (Dover and Deal)
du Cann, Rt Hon Edward Knox, David Rees-Davies, W. R.
Dunn, Robert (Dartford) Lamont, Norman Renton, Tim
Durant, Tony Lang, Ian Rhodes James, Robert
Dykes, Hugh Langford-Holt, Sir John Rhys Williams, Sir Brandon
Eden, Rt Hon Sir John Latham, Michael Ridley, Hon Nicholas
Edwards, Rt Hon N. (Pembroke) Lawrence, Ivan Ridsdale, Julian
Eggar, Timothy Lawson, Nigel Rifkind, Malcolm
Elliott, Sir William Lee, John Roberts, Michael (Cardiff NW)
Emery, Peter Lennox-Boyd, Hon Mark Roberts, Wyn (Conway)
Eyre, Reginald Lester, Jim (Beeston) Ross, Wm. (Londonderry)
Fairbairn, Nicholas Lewis, Kenneth (Rutland) Rost, Peter
Fairgrieve, Russell Lloyd, Ian (Havant & Waterloo) Royle, Sir Anthony
Faith, Mrs Sheila Lloyd, Peter (Fareham) Sainsbury, Hon Timothy
Farr, John Loveridge, John St. John-Stevas, Rt Hon Norman
Fell, Anthony Luce, Richard Scott, Nicholas
Fenner, Mrs Peggy Lyell, Nicholas Shaw, Michael (Scarborough)
Finsberg, Geoffrey McCrindle, Robert Shelton, William (Streatham)
Fisher, Sir Nigel McCusker, H. Shepherd, Colin (Hereford)
Fletcher, Alexander (Edinburgh N) Macfarlane, Neil Shepherd, Richard (Aldridge-Br'hills)
Fletcher-Cooke, Charles MacGregor, John Shersby, Michael
Fookes, Miss Janet MacKay, John (Argyll) Silvester, Fred
Forman, Nigel Macmillan, Rt Hon M. (Farnham) Sims, Roger
Fowler, Rt Hon Norman McNair-Wilson, Michael (Newbury) Skeet, T. H. H.
Fox, Marcus McNair-Wilson, Patrick (New Forest) Smith, Dudley (War. and Leam'ton)
Fraser, Rt Hon H. (Stafford & St) McQuarrie, Albert Speed, Keith
Fraser, Peter (South Angus) Madel, David Speller, Tony
Fry, Peter Major, John Spence, John
Galbraith, Hon T. G. D. Marlow, Tony Spicer, Jim (West Dorset)
Gardiner, George (Reigate) Marshall, Michael (Arundel) Spicer, Michael (S Worcestershire)
Gardner, Edward (South Fylde) Marten, Neil (Banbury) Sproat, Iain
Garel-Jones, Tristan Mates, Michael Squire, Robin
Glyn, Dr Alan Mather, Carol Stainton, Keith
Goodhart, Philip Mawby, Ray Stanbrook, Ivor
Goodhew, Victor Mawhinney, Dr Brian Stanley, John
Goodlad, Alastair Maxwell-Hyslop, Robin Steen, Anthony
Gorst, John Mayhew, Patrick Stevens, Martin
Gow, Ian Mellor, David Stewart, Ian (Hitchin)
Grant, Anthony (Harrow C) Meyer, Sir Anthony Stewart, John (East Renfrewshire)
Gray, Hamish Miller, Hal (Bromsgrove & Redditch) Stokes, John
Greenway, Harry Mills, Iain (Merlden) Stradling Thomas, J.
[...]eve, Percy Mills, Peter (West Devon) Tapsell, Peter
[...]hs Eldon (Bury St Edmunds) Miscampbell, Norman Tebbit, Norman
Gr[...] Peter (Portsmouth N) Mitchell, David (Basingstoke) Temple-Morris, Peter
Griffith [...] Moate, Roger Thatcher, Rt Hon Mrs Margaret
Griffiths [...] Molyneaux, James Thomas, Rt Hon Peter (Hendon S)
Grist, Ian [...]elwyn Monro, Hector Thompson, Donald
Grylis, Michael [...]hie (Epa'm & Ew'll) Montgomery, Fergus Thorne, Neil (Iiford South)
Gummer, John S[...] (Salisbury) Moore, John Thornton, Malcolm
Hamilton, Hon Ar[...] Morgan, Geraint Townend, John (Bridlington)
Hamilton, Michael Morris, Michael (Northampton, Sth) Townsend, Cyril D. (Bexleyheath)
Hampson, Dr Keith Morrison, Hon Charies (Devizes) Trippier, David
Hannam, John Morrison, Hon Peter (City of Chester) Trotter, Neville
Haselhurst, Alan [...]eel Murphy, Christopher Van Straubenzee, W.R.
Hastings, Stephen Myles, David Vaughan, Dr Gerard
Havers, Rt Hon Sir Michael Neale, Gerrard Viggers, Peter
Hawkins, Paul Needham, Richard Waddington, David
Hawksley, Warren Nelson, Anthony Wakeham, John
Hayhoe, Barney Neubert, Michael Waldegrave, Hon William
Heddle, John Nott, Rt Hon John Walker, Bill (Perth & E Perthshire)
Henderson, Barry Onslow, Cranley Walker-Smith, Rt Hon Sir Derek
Heseltine, Rt Hon Michael Oppenheim, Rt Hon Mrs Sally Waller, Gary
Hicks, Robert Osborn, John Walters, Dennis
Higgins, Rt Hon Terence L. Page, John (Harrow West) Ward, John
Hill, James Page, Rt Hon Sir R. Graham Warren, Kenneth
Hogg, Hon Douglas (Grantham) Page, Richard (SW Hertfordshire) Watson, John
Holland, Philip (Carlton) Parkinson, Cecil Wells, John (Maidstone)
Hooson, Tom Parris, Matthew Wheeler, John
Hordern, Peter [...] Christopher (Bath) Whitelaw, Rt Hon William
Howe, Rt Hon Sir Geoffrey [...] John (Oxford) Whitney, Raymond
Howell, Rt Hon David (Guildford) Pattern Geoffrey Wickenden, Keith
Howell, Ralph (North Norfolk) Patter James Wiggin, Jerry
Hunt, David (Wirral) Pattie,
Hunt, John (Ravensbourne) Pawsey,
Wilkinson, John Wolfson, Mark TELLERS FOR THE AYES:
Williams, Delwyn (Montgomery) Young, Sir George (Acton) Mr. Spencer Le Marchant and
Winterton, Nicholas Younger, Rt Hon George Mr. Anthony Berry.
Abse, Leo Fitt, Gerard Marshall, David (Gl'sgow, Shettles'n)
Adams, Allen Flannery, Martin Marshall, Dr Edmund (Goole)
Allaun, Frank Fletcher, Ted (Darlington) Marshall, Jim (Leicester South)
Alton, David Foot, Rt Hon Michael Martin, Michael (Gl'gow, Springb'rn)
Anderson, Donald Forrester, John Mason, Rt Hon Roy
Archer, Rt Hon Peter Foster, Derek Maxton, John
Armstrong, Rt Hon Ernest Foulkes, George Maynard, Miss Joan
Ashley, Rt Hon Jack Fraser, John (Lambeth, Norwood) Meacher, Michael
Ashton, Joe Freeson, Rt Hon Reginald Mellish, Rt Hon Robert
Atkinson, Norman (H'gey, Tott'ham) Freud, Clement Mikardo, Ian
Bagier, Gordon A. T. Garrett, John (Norwich S) Millan, Rt Hon Bruce
Barnett, Guy (Greenwich) Garrett, W. E. (Wallsend) Miller, Dr M. S. (East Kilbride)
Beith, A. J. George, Bruce Mitchell, Austin (Grimsby)
Benn, Rt Hon Anthony Wedgwood Gilbert, Rt Hon Dr John Mitchell, R. C. (Soton, Itchen)
Bennett, Andrew (Stockport N) Ginsberg, David Morris, Rt Hon Alfred (Wythenshawe)
Benyon, W. (Buckingham) Golding, John Morris, Rt Hon Charles (Openshaw)
Bidwell, Sydney Gourlay, Harry Morris, Rt Hon John (Aberavon)
Booth, Rt Hon Albert Graham, Ted Moyle, Rt Hon Roland
Boothroyd, Miss Betty Grant, George (Morpeth) Mulley, Rt Hon Frederick
Bottomley, Rt Hon Arthur (M'brough) Grant, John (Islington C) Newens, Stanley
Bradley, Tom Hamilton, James (Bothwell) Oakes, Rt Hon Gordon
Bray, Dr Jeremy Hamilton, W. W. (Central Fife) Ogden, Eric
Brown, Hugh D. (Provan) Hardy, Peter O'Halloran, Michael
Brown, Ronald W. (Hackney S) Harrison, Rt Hon Walter O'Neill, Martin
Brown, Ron (Edinburgh, Leith) Hart, Rt Hon Dame Judith Orme, Rt Hon Stanley
Buchan, Norman Hattersley, Rt Hon Roy Owen, Rt Hon Dr David
Callaghan, Rt Hon J. (Cardiff SE) Haynes, Frank Park, George
Callaghan, Jim (Middleton & P) Heffer, Eric S. Parker, John
Campbell, Ian Hogg, Norman (E Dunbartonshire) Parry, Robert
Campbell-Savours, Dale Holland, Stuart (L'beth, Vauxhall) Pavitt, Laurie
Canavan, Dennis Home Robertson, John Pendry, Tom
Cant, R. B. Homewood, William Penhallgon, David
Carmichael, Neil Hooley, Frank Powell, Raymond (Ogmore)
Carter-Jones, Lewis Horam, John Prescott, John
Cartwright, John Howell, Rt Hon Denis (B'ham, Sm H) Price, Christopher (Lewisham West)
Clark, Dr David (South Shields) Howells, Geraint Race, Reg
Cocks, Rt Hon Michael (Bristol S) Huckfield, Les Radice, Giles
Cohen, Stanley Hudson Davies, Gwilym Ednyled Rees, Rt Hon Merlyn (Leeds South)
Coleman, Donald. Hughes, Mark (Durham) Richardson, Jo
Concannon, Rt Hon J. D. Hughes, Robert (Aberdeen North) Roberts, Albert (Normanton)
Conlan, Bernard Hughes, Roy (Newport) Roberts, Allan (Bootle)
Cook, Robin F. Janner, Hon Greville Roberts, Ernest (Hackney North)
Cowans, Harry Jay, Rt Hon Douglas Roberts, Gwilym (Cannock)
Cox, Tom (Wandsworth, Tooting) John, Brynmor Robertson, George
Craigen, J. M. (Glasgow, Maryhill) Johnson, James (Hull West) Robinson, Geoffrey (Coventry NW)
Crowther, J. S. Johnson, Walter (Derby South) Rodgers, Rt Hon William
Cryer, Bob Johnston, Russell (Inverness) Rooker, J.W.
Cunliffe, Lawrence Jones, Rt Hon Alec (Rhondda) Roper, John
Cunningham, George (Islington S) Jones, Barry (East Flint) Ross, Ernest (Dundee West)
Cunningham, Dr John (Whitehaven) Jones, Dan (Burnley) Ross, Stephen (Isle of Wight)
Dalyell, Tam Kaufman, Rt Hon Gerald Rowlands, Ted
Davies, Ifor (Gower) Kerr, Russell Ryman, John
Davis, Clinton (Hackney Central) Kilroy-Silk, Robert Sandelson, Neville
Davis, Terry (B'rm'ham, Stechford) Kinnock, Neil Sever, John
Deakins, Eric Lamble, David Sheerman, Barry
Dean, Joseph (Leeds West) Lamborn, Harry Sheldon, Rt Hon R[...]
Dempsey, James Lamond, James Sheldon, Rt Hon Pet[...]
Dewar, Donald Leadbitter, Ted Short, Mrs Renée[...]bert (A'ton-u-L)
Dixon, Donald Leighton, Ronald Silkin, Rt Hon J[...]er (Step and Pop)
Dobson, Frank Lestor, Miss Joan (Eton &Slough) Silkin, Rt Hon S[...]
Dormand, Jack Lewis, Arthur (Newham North West) Silverman, ju[...]hn (Deptford)
Douglas, Dick Lewis, Ron (Carlisle) Smith, Rt [...] C. (Dulwich)
Douglas-Mann, Bruce Litherland, Robert Snape, p[...]lus
Dubs, Alfred Lofthouse, Geoffrey Soley, [...]on J. (North Lanarkshire)
Dunn, James A. (Liverpool, Kirkdale) Lyon, Alexander (York) Spear' [...]ter
Dunnett, Jack Lyons, Edward (Bradford West) Sprig [...]Clive
Dunwoody, Mrs Gwyneth Mabon, Rt Hon Dr J. Dickson Stal[...]ng, Nigel
Eadie, Alex McDonald, Dr Oonagh Ste[...]gs, Leslie
Eastham, Ken McElhone, Frank St[...]lard, A. W.
Edwards, Robert (Wolv SE) McKay, Allen (Penistone) S[...]el. Rt Hon David
Ellis, Raymond (NE Derbyshire) McKelvey, William [...]oddart, David
Ellis, Tom (Wrexham) MacKenzie, Rt Hon Gregor [...]tott, Roger
English, Michael Maclennan, Robert [...]trang, Gavin
Ennals, Rt Hon David McMahon, Andrew Straw, Jack
Evans, loan (Aberdare) McMillan, Tom (Glasgow, Central) Summerskill, Hon Dr Shirley
Evans, John (Newton) McNally, Thomas Taylor, Mrs Ann (Bolton West)
Ewing, Harry McWilliam, John Thomas, Dafydd (Merioneth)
Field, Frank Magee, Bryan Thomas, Jeffrey (Abertillery)
Fitch, Alan Marks, Kenneth Thomas, Mike (Newcastle East)
Thomas, Dr Roger (Carmarthen)
Thorne, Stan (Preston South)
Tilley, John Welsh, Michael Winnick, David
Tinn, James White, Frank R. (Bury & Radcliffe) Woodall, Alec
Torney, Tom White, James (Glasgow, Pollok) Woolmer, Kenneth
Urwin, Rt Hon Tom Whitehead, Phillip Wrigglesworth, Ian
Varley, Rt Hon Eric G. Whitlock, William Wright, Sheila
Wainwright, Edwin (Dearne Valley) Wigley, Dafydd Young, David (Bolton East)
Walker, Rt Hon Harold (Doncaster) Willey, Rt Hon Frederick
Watkins, David Williams, Rt Hon Alan (Swansea W) TELLERS FOR THE NOES:
Weetch, Ken Wilson, Rt Hon Sir Harold (Huyton) Mr. George Morton and
Wellbeloved, James Wilson, William (Coventry SE) Mr. Hugh McCartney.

Question accordingly agreed to.

Bill read a Second time.

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