Housing

HC Deb 25 November 1980 vol 994 cc321-409 3.32 pm

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

In his statement to the House yesterday, my right hon. and learned Friend the Chancellor of the Exchequer made clear the central need to maintain the Government's economic strategy and to control public expenditure in that context. The House will know that I took over a housing programme in rapid decline. Perhaps the most significant and regrettable part of that background has been the switch within the public provision of housing away from capital investment in housing itself towards the indiscriminate subsidy of public sector tenants that accentuated the decline in housing provision. Finally, across the whole range of departmental housing policy, there have been five years of either total neglect, as in planning policy, or, worse, positive obstruction, as in land supply or in the deterioration of the private rented sector.

There are undoubtedly substantial areas of deprivation, although the housing priorities of today are very different from those of a decade or so ago. Against this background, my priorities are fourfold: first, to make the best available use of the resources available; secondly, to concentrate help on the areas of greatest need; thirdly, to remove planning, land supply and other constraints wherever possible; and, fourthly, to encourage people themselves to make the greatest possible contribution to their own housing provision.

The House knows that recent years have seen substantial reductions in the provision of public housing programmes. From 1974 onwards there has been a year-by-year decline in net captial expenditure in England. The £4.202 billion spent in 1974–75 has been reduced to £1.551 billion for 1980–81. That is a reduction over those years of £2.651 billion in real terms. The breakdown of that amount of over £2½ billion is that £2 billion of the reduction occurred in the last four years of the previous Government and £604 million in the first two years of this Government.

Mr. Jack Straw (Blackburn)

On that point—

Mr. Heseltine

The House will remember that, in administering this programme within the cash limit of £2.186 billion for local authority gross capital spend, I have had to apply a moratorium on new commitments this year.

Mr. Straw

Will the Secretary of State give way?

Mr. Heseltine

I say at once that there are no cuts in the cash limit, but I have no choice other than to strive to remain within it. I therefore issued, on 22 October, a circular to local authorities because there was a serious risk that the housing capital expenditure of local authorities in England would exceed the cash limit by £180 million, or 8 per cent. In that circular I asked local authorities to provide estimates of the expenditure to which they were already committed in October for the year as a whole. Meanwhile, I asked them not to undertake any new commitments except to meet their statutory obligations.

The replies of local authorities showed that authorities as a whole were already committed to expenditure right up to the level of the cash limit. One hundred and five authorities considered that they were committed to expenditure in excess of their permitted level to the tune of £76 million. A further £55 million overall must be counted against the cash limit for spending that has been carried forward from 1979–80 under the tolerance arrangements operating at the time. So the maximum theoretical overspend could be £131 million. On the other side of the picture, 262 authorities considered that their commitments were below their permitted levels of expenditure, in total, by £124 million.

It would seem from those figures that the cash limit had already been fully taken up and that the need for the action that I took had been proved up to the hilt. The right hon. Member for Birmingham. Sparkbrook (Mr. Hattersley) must not have been following the figures. It is evident that even if there is no further spend this year, on the lines of the figures that I have given, the cash limit is fully taken up. That justifies totally the action that I took in imposing the moratorium.

Mr. Donald Anderson (Swansea, East)

If the cash limit is fully taken up, does that Mean that the moratorium will be extended to the end of the financial year?

Mr. Heseltine

I am just about to explain my proposals on this very issue. I am well aware that it is exceedingly difficult for authorities to judge the likely outturn of their annual expenditure even in the autumn. A great deal must depend on the weather and the speed with which buildings are completed and bills are submitted for payment. But the Government, like the local authorities, have to make the best judgment that they can in the circumstances.

It is clear that if the Government were now to lift the moratorium on those authorities that are currently underspending—that is, frankly, what we would like to do—there would be a substantial risk of exceeding the cash limit. We are not prepared to take that risk. There is no option, therefore, but to continue the standstill on new commitments for the time being. [HON. MEMBERS: "How long?"] I shall, however, be inviting the local authority associations to join with me in keeping the closest watch on the situation. Certainly, we shall look at the position again very shortly.

Mr. Roy Hattersley (Birmingham, Sparkbrook)

If the Secretary of State's calculations turn out to be wrong and everybody else's calculations turn out to be right, and, thanks to the moratorium, there is a substantial underspend in this years's capital allocation, will local authorities be able to carry it over into next year?

Mr. Heseltine

I understand the right hon. Gentleman's justified concern about the matter, but if he will let me finish this passage of my speech I think that the Government's proposals will be clear to him and to the House.

As soon as I am reasonably satisfied that the cash limit will not be breached, I shall lift the moratorium on those that seem likely to underspend. I am determined that those that are underspending this year will not lose out because of those that end up with an overspend. Therefore, whatever the results of our further assessment next month, I can say that those that overspend this year will have their overspending deducted from their allocation for next year.

Mr. Andrew Faulds (Warley, East) rose—

Mr. Heseltine

The hon. Gentleman may find that I shall answer several of the questions—

Mr. Faulds

No.

Mr. Heseltine

Even the hon. Gentleman does not know what questions I shall not answer before I have even had a chance to try.

Mr. Faulds

My question is relevant.

Mr. Heseltine

Those that underspend this year because of the moratorium will receive additional allocations next year, and the balance between authorities will therefore be restored.

If, despite all the steps that I have taken, there is an overspend on this year's cash limit, it will be deducted from next year's. Conversely, if as a result of those steps the cash limit this year is underspent, the amount of the underspend will be added to next year's cash limit.

Mr. Faulds

I am grateful to the right hon. Gentleman for at last yielding.

In the spirit of the right hon. Gentleman's statement, would not it be simpler and more rational if he asked the Attorney-General to make the provision of homes for the homeless a criminal offence?

Mr. Heseltine

The provision of homes for the homeless would not be a criminal offence in any housing policy for which I had responsibility.

Mr. Faulds

That is what the right hon. Gentleman is doing.

Mr. Heseltine

The hon. Gentleman misunderstands—

Mr. Faulds

Not at all.

Mr. Heseltine

—the nature of—

Mr. Faulds

Come to Smethwick.

Mr. Heseltine

—the £2 billion-a-year programme that we are currently administering in the provision of capital spending in local authority housing.

Mr. Roger Moate (Faversham)

I think that the measures that my right hon. Friend has announced are fully justified and equitable, particularly because of the extravagance of certain local authorities, but is there no scope within the package for any exceptions to be made for the large number of people who have improvement grants in the pipeline?

Mr. Heseltine

I well understand the concern about this aspect of the capital programmes of local authorities, but I cannot administer each local authority's housing programme in the way that would be implied by my hon. Friend. I very much regret that I have not been able to make an exception of the kind for which he asked. I understand that there are such difficulties, and there are others that have been drawn to my attention, but the overriding national priority to stick within the cash limits, subject only to one exception, to which I shall come, must take precedence.

As important as the scale of expenditure is the use to which it is put. I am particularly pleased that there has been a significant shift of emphasis from the provision of general housing to meeting the specialist needs of the elderly and the physically handicapped. Despite the declining level of spend, the absolute number of starts in the first half of 1980 is very similar to the annual rate for 1978. The Government have further helped these people by enabling them to have much easier access to improvement grants and home insulation grants, and at higher levels; by grant-aiding substantial repairs to pre-1919 houses, of which one-third are occupied by elderly people; by increasing rent rebates and allowances; and by improving the space standards in sheltered housing and hostels. Moreover, we have exempted from the moratorium expenditure on providing essential adaptations to housing in both the public and private sectors occupied by physically disabled people.

The housing associations play a major role in adding to the local authority provision of housing.

Mr. Anderson

They used to.

Mr. Heseltine

This year, the Housing Corporation was given a cash allocation of £420 million for housing association schemes that the corporation would fund. In addition, local authorities had discretion, as they have long had, to fund housing association schemes on their own account. In real terms, the £420 million was some 11 per cent. below the corporation's actual expenditure during 1979–80—a much smaller proportional reduction than was imposed on local authorities. The allocation of £420 million has not been cut back at all. But, as is the case with local authorities, expenditure during the year has run faster than we or the Housing Corporation expected.

One of the chief reasons for this is the considerable backlog of schemes that built up during the years of rapid expansion of housing associations following the passing of the 1974 Housing Act. This means that there is still a great deal of housing association work to be fitted into the corporation's normal expenditure programme. Against this background, and in view of the prospective overspend, we asked the corporation in September to reduce its level of approvals for the time being until its cash flow was brought back on course.

Mr. David Alton (Liverpool, Edge Hill) rose—

Mr. Allan Roberts (Bootle) rose—

Mr. Heseltine

Since then, we and the corporation have been keeping a close watch on the way in which expenditure is moving. I have asked the Housing Corporation so to regulate the flow of schemes as to ensure that its cash allocation is not exceeded and that only projects of the highest priority are allowed to proceed.

Mr. Alton rose—

Mr. Roberts rose—

Dr. Brian Mawhinney (Peterborough) rose—

Mr. Speaker

To which hon. Gentleman is the Secretary of State giving way?

Mr. Heseltine

To the hon. Member for Liverpool, Edge Hill (Mr. Alton), Mr. Speaker.

Mr. Alton

I do not know what I have done to earn this honour, but I am grateful to the right hon. Gentleman.

Does the right hon. Gentleman dispute the figures of the National Federation of Housing Associations, which says that the number of starts this year will decline from 42,000 to 18,000, representing in real terms a reduction of 60 per cent?

Mr. Heseltine

I have discussed this matter with representatives of the housing association movement. I think that the hon. Gentleman's point concerns the confusion between the level of spend and the level of approvals. There is a backlog of approvals, which is one of the difficulties that we face. They are now coming through the system in terms of spend. The cash limits for the Housing Corporation are limits for the expenditure. It is those cash limits that must be adhered to. We shall, of course, leave it to the corporation and the housing associations to work off their backlog of approvals, as they have the flexibility within the cash limits so to do.

Mr. Roberts

Will the right hon. Gentleman explain why the Department of the Environment stopped the Housing Corporation issuing a letter or circular—if that is the technical term for instructions from the corporation—to local authorities and housing associations telling them not to charge excessive fees for licences for short-life housing? Did the right hon. Gentleman know about that? If he did, will be admit that it was a mistake not to issue the circular, because failure to do so will prevent the use of properties that could be used and is likely to keep them standing empty? If he did not know about the matter, will be investigate it?

Is it not an amazing achievement by the right hon. Gentleman that the voluntary housing association movement is campaigning against this Government, which is something that none of us expected?

Mr. Heseltine

I understand that one housing association has made representations to us on the first matter, which is a fairly small administrative point. I am only too happy to have discussions with the association concerned to see whether the matter can be sorted out administratively. I understand that the hon. Gentleman's worst forecasts are not justified by the point that he has raised.

Dr. Mawhinney

Does my right hon. Friend agree that it is regrettable that the National Federation of Housing Associations has tended to give a misleading impression over the past few weeks that the amount of money allocated to the associations had been cut when it had not? Does he also agree that it is regrettable that some members of the ecclesiastical establishment should have given credence to that misleading idea?

Mr. Heseltine

My hon. Friend the Member for Peterborough (Dr. Mawhinney), who has considerable knowledge of the subject of housing, is on to a very important point. At a time when I am doing my best to ensure that available resources are spent fully and that we do not run into an underspend, I deeply deplore that it should be the practice of so many people to present what we are doing as cutting the known programmes when in practice we are trying to ensure that we do not exceed the programmes. I also deeply deplore people speaking on the subject of housing and making headline news about matters on which they are not as fully briefed as they should be.

The House will be aware of one other fact about housing associations. They operate within the disciplines of the fair rents legislation. Their tenants are drawn from the same income group as local authority tenants. They house some of the most heart-rending cases of housing need, and yet, throughout the period of the previous Government, it was accepted that there should be a differential of anything up to one-third in the rents paid by housing association tenants and local authority tenants.

This brings me to one of the most serious legacies that I inherited from the previous Government—their culpable failure to keep council house rents in line with the targets that they set themselves. As a proportion of earnings, rents fell from 8 per cent. in 1974–75 to 6.4 per cent. in 1979–80. We now have a growing problem of badly maintained and indifferently repaired stocks of local authority housing. It is not surprising when the level of rents averaged £6.50 per week out of average weekly earnings of more than £100 per week in 1979–80.

If I allowed this situation to continue, it would lead to further deterioration in the housing stock and larger subsidies from the ratepayers. Against the facts of council housing finance, I reject both these options, and, accordingly, I have today reissued the consultation document to local authority associations outlining the basis of the new subsidy system provided for by the Housing Act 1980.

I should now like to give the House the background to the new housing subsidies and the effect that my determination of the local contribution under the new arrangements set out in the Housing Act 1980 may have on council rents.

The new scheme for housing subsidies comes into effect on 1 April 1981. The amount of subsidy that an authority receives will depend upon three factors: what it received in the preceding year; the change in its reckonable expenditure; and the change in the local contribution—that is, the change in the amount that local authorities have to find whether by rent or by rate. I have to determine matters governing the latter two elements within the framework of the Act. Before making a determination affecting all local authorities, the Secretary of State has to consult the representative local authority organisations.

The new provisions do not enable the Secretary of State to determine the level of local authority rents. That remains the responsibility of each local authority. The new arrangements enable the Secretary of State annually to take a judgment on the ability of local authorities to contribute to their housing costs and to determine an input into the calculations on which subsidy is based.

The two consultation papers first issued on 13 November relate to the treatment of expenditure on management and maintenance and to the determination of the local contribution. It is especially important for local authorities to know without undue delay our decision on the local contribution. We will, of course, consider most carefully the response to the proposals that we are now putting to the local authority associations.

Our consultation paper proposes that the increase in local contribution next financial year should be in the range of £2.50 to £3 per dwelling per week. In addition, there will be some housing costs to be met that do not count towards subsidy.

The House will want me to say something about the effects of these proposals on council house rents. The previous Government set out as their policy on council house rents that they should rise broadly in line with earnings. If the previous Government had done what they said, rents today would average about £10 per week, as opposed to the £8 or so a week currently being paid. Far from keeping pace with earnings, rents were allowed to fall in real terms, with the effect on the capital programme and the maintenance of the stock that is well documented.

This record of financial irresponsibility is all the more reprehensible against the background of the rent rebate and supplementary benefit systems. Forty-five per cent. of council tenants are protected in whole or in part by those allowances. Nearly one-quarter of the council tenants—those with the lowest incomes—will pay no extra at all. About one-fifth more will have 60 per cent. of their increase met for them.

But, if the poorest and poorer families are thus protected, the House cannot ignore the other side of the coin, where nearly one-quarter of council houses have household incomes in excess of—8,000 per annum. Indeed, in 200,000 or so council houses the individual tenant has an income of more than—8,000 per annum. It cannot be seriously suggested that council rents of £8 are a proper charge in these circumstances, and certainly not when that means that often an annual first-year subsidy of some £1,500 is being poured into a particular house, which has to be financed often from the rates or taxes of home owners, many of whom have lower incomes than the tenants they are subsidising.

My consultation paper invites the views of local authorities on a range of assumptions about the contribution that they might make under the new subsidy system. The paper refers to a range of from £2.50 to £3. The actual decisions about rent levels consequential upon such figures are, as I have said, for individual authorities.

Mr. Straw

Does not the Minister accept that, given the constraints that he has imposed not only on the housing subsidy system of local authorities but on the amount of the addition that they can raise in rates, and the fact that he will penalise authorities if they increase their rate fund contribution to the housing revenue account, the idea of consulting local authorities is a sham and that what he is announcing today is a straightforward increase of between £2.50 and £3? If that is not the case, is he saying honestly that he will begin discussions with local authorities about the possibility of these rent increases being only 50p or £1?

Mr. Heseltine

The local authority associations are perfectly free to come back and put to me any proposals that they like in the context of the difficult circumstances that they face. However, the hon. Member for Blackburn (Mr. Straw) will remember from his experiences in the Department of the Environment that this is the first time that there has been a statutory duty on the Secretary of State to consult the local authority associations. That duty has been imposed as a result of the Housing Act 1980, which this Government put on the statute book.

As I said, the actual decisions about rent levels consequential upon the figures that I have given the House have to be for individual authorities.

Mr. David Ginsburg (Dewsbury)

Will the Secretary of State give way?

Mr. Heseltine

Let me give the House an example—and it must, of course, be subject to variations in practice locally.

Mr. Ginsburg rose—

Mr. Heseltine

If we take the average of the figures—

Mr. Ginsburg

Will the right hon. Gentleman give way?

Mr. Heseltine

I apologise to the hon. Member for Dewsbury (Mr. Ginsburg) for not giving way to him. I have a very large number of points to make, and I have already given way a considerable number of times.

Mr. Ginsburg

Again, I ask the right hon. Gentleman to give way. This is very important.

Mr. Heseltine

Very well.

Mr. Faulds

The Secretary of State is at last learning his House of Commons manners.

Mr. Ginsburg

I am grateful to the Secretary of State for giving way. He has just criticised the Labour Party for its failure, when in Government, to raise council house rents. I assume that he is referring to the year 1977. He will be aware that there was a similar event in 1973 when council house rents were not raised. The right hon. Gentleman may be aware that there was a pay pause in operation on both occasions. Is it his view that when pay policies are operating council house rents should be allowed to rise?

Mr. Heseltine

The hon. Member for Dewsbury is not following my argument, which is that over a period of years there has been a significant change in the balance of housing costs in favour of council tenants. The consequences have not worked in the best interests of council tenants, and it is necessary in the interests of housing policy to restore that position if we are not to see a continuing deterioration in the standards of the houses in which they live. The implementation of the policies must be for the best judgment of the indiviual authorities. However, my view, as expressed in the consultation document, is along the lines of the figures that are the subject of that consultation.

I should like to give the House an example, subject to certain caveats. If we were to take the average of the figures that I have mentioned, allowing for the non-subsidisable items, which would come to about 30p per week, the gross rent increases before deducting allowances could be about £3 a week. To the extent that I determine a higher or lower figure than the average, an appropriate adjustment would be required. I add one further point. As the House knows, originally I issued a consultation paper in reply to a written question. That night I explained to the House that I had followed precedent as closely as possible. In the short time available to me, I drew to the attention of the House my written answer of November 1979, in which I did exactly the same. A year ago I announced by written answer rent guidelines in money terms more than twice as large as ever before, and there was no protest whatsoever from the Opposition.

That night I said that I had followed precedent. I wish to qualify that statement in one material way. I followed the precedent established by the Labour Government in 1976–77 and in 1977–78. What I should perhaps have told the House is that in 1978–79 and in 1979–80 the Labour Government issued their rent guidelines to local authorities without an announcement to Parliament at all, so far as I can find. [HON. MEMBERS: "Hypocrites."] That adds to the charge of hypocrisy that I levelled at right hon. Members of the Opposition on that occasion.

Opposition Members might be tempted to argue that it did not matter that they did not report to the House because the rent guidelines were so low. Nothing could more misrepresent the facts. The lower the rent guidelines, the higher the subsidies and the higher the public expenditure consequences.

The fact is that the Labour Government added an average of £200 million a year in real terms to public expenditure on the strength of written passages buried in reports on the rent support grant order in just some of the years for which they were responsible. I shall keep to whatever rules the House decides, but I shall take no criticism from the Labour Party that assumes too readily one set of rules in Government and a different set of rules in Opposition.

Mr. Gerald Kaufman (Manchester, Ardwick)

The right hon. Gentleman has made a great deal of the Labour Government in one year not putting the rent guidelines to the House of Commons in a written answer. Will be be good enough to tell the House what the increase was in that year?

Mr. Heseltine

The right hon. Gentleman has missed the point. Hidden behind the rent guidelines, which were very low, was an implied £200 million of public expenditure, on which the House was not allowed to reach a judgment.

I have covered the capital progress and the rent contributions that play so central a part of the public expenditure allocation for next year. However, that is by no means the whole picture of housing policy. Amongst many factors, I have also to consider the role of the private rented sector, the supply of land and the incidence of the planning system.

The recent Housing Act makes material changes in the private rented sector. The most significant is the introduction of the shorthold tenancies, which is the first serious attempt this decade to slow down the decline in private rented accommodation. During the five years of the last Government 125,000 rented dwellings a year were lost. It is not that the last Government were unaware of the problem. They set up their review of 1975 to study the devastating effects of their 1974 Rent Act. However, the review remained a review and the empty houses remained empty.

Now, when we try to provide a framework when there is an incentive and opportunity for people in housing need to make use of some of this empty or underused property, the right hon. Member for, Sparkbrook uses his every energy to deny them the chance. He is actually creating homelessness, and he is doing it for no better reason than a doctrinal antipathy to the private sector. He talks about the problems of the homeless and the badly housed, and in the same breath he does all that he can to exacerbate the situation.

In addition to our proposals for shortholds, the House will know of the new rights that we have given to council tenants to sublet or take in lodgers, again to secure better use of the available housing. This is part of our wide-ranging proposals for a tenants' charter to enhance the rights and status of the millions of people who will wish to remain as public sector tenants.

I found the same muddled story in land supply for new private building. My first task was to remove the Community Land Act, and my right hon. and learned Friend the Chancellor has set development land tax at rates that do not act as a formidable barrier to the provision of housing land. In our first year, the Commission for the New Towns and the Housing Corporation disposed of 1,400 acres of land and the Property Services Agency disposed of 3,000 acres of non-agricultural land. The Local Government Act introduces land registers to tackle for the first time seriously the wasted land held in the public sector.

The structure plans have been reviewed and approved far faster than under the previous Government, and have added 14 per cent. more housing provision to the plans put before me. I have arranged for the house builders to hold detailed discussions with local authorities to identify land shortages and have requested local authorities to maintain an identified five-year supply of housing land.

Not only are we tackling the problems of land supply; we have examined the workings of the planning machine. I have often made clear my belief that in this country we need a sensitive and comprehensive planning system and that I broadly sympathise with the work that it has done over the past three decades. Equally, I believe that it is necessary for the machine to work with the sense of urgency that our economic problems demand. Next week I shall be issuing a development control circular designed to achieve this purpose.

Already amongst many changes we have introduced a new and more flexible range of procedures into the appeals system and we have published proposed amendments to the general development order to remove about 10 per cent of cases from planning procedures altogether. I shall be requesting local authorities to publish details of the time taken in reaching their planning decisions and I am already publishing timetables for my own Department in the handling of appeals.

Mr. Sydney Chapman (Chipping Barnet)

I welcome the initiatives that my right hon. Friend has taken, but does he recognise that each year about 50,000 acres of good, productive agricultural land are lost to urban development and that it is calculated that 250,000 acres of land remain derelict and unused in our towns and cities? In his circular, will be emphasise the importance of ensuring that the extra supply of land for building comes from the inner city or urban areas, or from non-productive agricultural land in our countryside?

Mr. Heseltine

I am sympathetic to my hon. Friend's view. That is why the land registers under the Local Government, Planning and Land (No.2) Act are the first significant step in listing and making known publicly where underused public land is identified. In the last resort, I have the power to direct that such land should be disposed of to those who will make more profitable use of it. Further, I am considering whether I should ask local authorities to list significant sites that they own over and above the areas designated for registration. There is every argument for using land that to some extent already has been taken away from agricultural use and is not properly used in our urban areas.

Mr. Frank Haynes (Ashfield)

That is interference.

Mr. Heseltine

The hon. Gentleman may think that it is interference, but I want to achieve the more effective use of land without needlessly destroying the countryside.

The performance of housing policy in the private sector depends largely on the performance of the national economy. This sector will not recover independent of the national economy. The announcement by the Chancellor of the Exchequer yesterday of a 2 per cent. drop in the minimum lending rate is a welcome first step. We shall do all that we can to remove the restraints on that recovery in land availability and planning efficiency. We are particlarly anxious to give young couples the opportunity to purchase their own homes. The House is familiar with the range of initiatives that we have taken in that respect. Of course, the right to buy for council tenants is now demonstrating the rectitude of our judgment that large numbers of them want to own homes of their own.

Against an inheritance of rapidly declining housing programmes and a very difficult economic situation, this Government, through the Housing Act 1980 and a range of administrative changes, have initiated the most comprehensive improvement in housing policies for a decade. From the party opposite we have seen nothing but destructive criticism and not a single change in the policies that led to such disastrous results when it was in power. I have no hesitation in commending our policies to the House.

4.10 pm

Mr. Roy Hattersley (Birmingham, Sparkbrook)

The Secretary of State made more or less the speech that we expected from him, and with his reputation standing as it does today I can think of no more bitter criticism than that.

We shall, of course, examine the three parts of the Secretary of State's speech—the inevitable little bluster, the few dubious statistics that may well be corrected by written answers later, and the phoney logic that I shall attempt to expose paragraph by paragraph. But first I draw the attention of the House to what we regard as the extraordinary, even by the Secretary of State's standards, omissions from his speech. Yesterday I sent the right hon. Gentleman a message saying that, although it would be the Opposition's intention to concentrate on housing today, he would understand very well that, with the Chancellor of the Exchequer making less than 24 hours ago a statement that spells disaster for many local authority services, we would expect the Secretary of State in charge of these matters to give the House some of the details that the Chancellor promised.

The Chancellor put out a notice yesterday describing some of his cuts, with poignant little promises: local authority capital expenditure—details will be announced separately in due course; Department of the Environment—a reduction of £158 million in addition to the reduction in local authority spending, the breakdown of which will be given in due course. Faced with that situation, an announcement less than a day old that will affect every council in this country, it is extraordinary that the Secretary of State told us nothing about how the cuts will be managed and where they will fall.

The truth is that the Secretary of State does not know where the cuts will fall, because the Government's policy with regard to local authorities is to cut first and think afterwards. All the Secretary of State knows is that he is required by the Chancellor to reduce his expenditure, and he is now deciding where the reductions shall come, irrespective of the policy merits of individual items of reduction. Notwithstanding that fact, the Secretary of State has said not a word about the cut in the rate support grant that was prophesied yesterday.

I understand that there has been some dispute on the Government Benches about who should wind up this debate and that the Under-Secretary of State for Wales drew the short straw. It is the duty of the Under-Secretary of State to fill in the omissions left by his senior colleagues, and I am sorry that he is left with the duty of answering the difficult questions—difficult questions concerning the operation of the new Local Government, Planning and Land Act, which, it is now obvious, is as administratively unworkable as it is politically disreputable. It was passed without a single voice being raised in this House in support of the Minister who proposed it.

No one who understands that Act can have any doubt that the new technique that it involves for the distribution of rate support grant was never intended to provide a fairer allocation of funds between authorities but was simply invented as a technique for enforcing a constant reduction in local authority expenditure. I have no doubt that the local authorities, with this weapon now available to them, will achieve that aim. Local authority expenditure will be held down year after year, but it will be held down at a terrible cost to the people of this country who depend on the services that local authorities provide—the old who need home helps and meals on wheels, the parents who need nursery places for their children, and the sick and the handicapped, for whom the quality of care and the level of amenity is deteriorating.

The hon. Member for Devizes (Mr. Morrison) was right when he said yesterday that the cuts in local authority expenditure of the size proposed by the Government this week cannot be achieved by anything that is loosely called the elimination of waste or the marginal improvement of efficiency. Local authorities must damage and destroy whole programmes, and that the Secretary of State should know that and preside over it and not say a word about it today is, in our view, both typical and a disgrace.

Let me tell the Secretary of State some of the facts that he did not tell the House. If, as the Secretary of State is instructed by the Chancellor, planned local authority expenditure is to be reduced next year by 3 per cent., that amounts to a cut in programmes of £430 million. The Chancellor of the Exchequer said yesterday that not only will the total budgets of local authorities be cut by that amount on their anticipated programmes but that the proportion of rate support grant allocated to them by the Government, even on the smaller programmes, will also be cut. That can mean only a savage deterioration in the services that the councils provide.

We must not get into the slipshod habit of talking about cuts to councils as if it is the councils and the councillors who are affected by them. The people who are affected are the men and women who depend on council services for their health provision, welfare, education and housing—not the sort of people who sit on the Government Front Bench, but people who are dependent on the public services provided by local government. All the signs are that not only will their overall levels of services deteriorate next year but that the Secretary of State will use his discretion to ensure that even within the lower level of provision the areas that need help most will get the least help and that the areas that need help least will get the most help. By that I mean that the towns and cities will be penalised and that the counties will receive a special benefit. The towns and cities will be penalised for voting Labour, and the counties will be helped because of the agreement that the Secretary of State reached with the Association of County Councils in order to get his Local Government, Planning and Land (No. 2) Bill through the House of Lords.

Mr. John Major (Huntingdonshire)

Will the right hon. Gentleman bear in mind that many counties, such as Cambridgeshire, have accepted an increase of between 30 and 50 per cent. in population, largely from the cities, over the last 10 or 12 years? During that period, the Government of which he was such an illustrious ornament year after year cut the rate support grant to the counties. Will the right hon. Gentleman bear in mind that it might be a small measure of justice to return some of that money to where the population is?

Mr. Hattersley

I shall certainly bear that in mind, but I do not agree with it. I mean no offence to the county of Cambridgeshire when I say that for the hon. Member for Huntingdonshire (Mr. Major) to imagine that the problems of his county are comparable with the problems of my constituency, in the decaying central area of Birmingham, and that the money spent in his county is as necessary in volume as it is in my constituency is to fly in the face of the facts.

Mr. Major

The right hon. Gentleman may care to bear in mind that the whole of my background is concerned with Brixton, in the middle of Lambeth. I need no lectures from him about the problems of inner cities. I have seen far more of them than he has, and I am equally aware of the way in which many of the inner London boroughs have created their own problems and wasted vast amounts of money.

Mr. Hattersley

Of course, I accept that the hon. Gentleman knows about Brixton, but it simply makes his first question all the more inexcusable.

Mr. Heseltine

Although all hon. Members know that the regrettable statements made by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) do not conform with parliamentary practice, there may be a wider audience, and perhaps I should explain—

Mr. Denis Healey (Leeds, East)

This is the Mace bearer.

Mr. Heseltine

—that the subject for debate today was decided by the Opposition. It was the express request of the Opposition that there should be a debate on housing. My office made every effort to check that that was the view of the right hon. Member for Sparkbrook. That is why I remained on the subject that the Opposition asked me to deal with. It is monstrous for the right hon. Gentleman to suggest that I should have devoted my speech to local government affairs. He knows full well that if I had done so he would have suggested that I was trying to avoid discussing housing. I was not prepared to discuss local government affairs as the Opposition had expressly requested that I should deal with housing.

Mr. Hattersley

As the right hon. Gentleman chooses to descend to these levels, I must tell him the facts. At 6 o'clock yesterday evening I had the Government notified that, thanks to the statement of the Chancellor of the Exchequer, local government finance was an unavoidable subject. I was told that the Minister for Housing and Construction would not reply to the debate and that someone more suitable would do so, namely, the Under-Secretary of State for Wales. If that message was not conveyed to the right hon. Gentleman, it is not my fault. Perhaps with his permission I can pursue the speech that I always intended to make.

I have said that when the rate support grant is allocated in about a month's time the county authorities will be advantaged at the expense of the towns. However, it is clear that not all Conservative authorities will be so advantaged. The Secretary of State's record indicates that he is as ministerially incompetent as he is politically prejudiced. We now have the advantage of knowing some of the ways in which the rate support grant will work out next year—[Interruption.]

Mr. Speaker

Order. I appeal to the hon. Member for Warley, East (Mr. Faulds) to control his exuberance. I think that we shall have a better debate if the hon. Gentleman will make a mighty effort to be quiet.

Mr. Hattersley

I was saying that the Secretary of State is as ministerially incompetent as he is politically prejudiced. It seems that not all Conservative authorities will benefit from his new allocation of grant in the way that he anticipated. Civil servants in his Department are queueing up to tell newspapers the inner secrets of the workings of his rate support grant system. The only part of the construction industry that is benefiting under the Secretary of State is moles.

One of the moles reporting to the Financial Times last week told us two things that I hope the Under-Secretary of State for Wales will confirm or deny as the evening wears on. First, we have been told that the Minister for Local Government and Environmental Services met some Conservative Back Benchers, and I fear that he did what he often does, by breaking ranks with the rest of his Department and making a speech that was both well-informed and honest. The right hon. Gentleman said to the group of Consevative Back Benchers "It is just too bad. We cannot get it right and the districts will have to live with it."

The Minister for Local Government and Environmental Services (Mr. Tom King)

The remarks that the right hon. Gentleman attributes to me are quite untrue. I am grateful to him for providing me with the opportunity to correct that statement.

Mr. Hattersley

I throw up another soft ball for the right hon. Gentleman to hit. During the course of the discussion in which he did not say that which has been attributed to him, was it revealed that a number of authorities under the present rate support grant allocation scheme seem likely to receive no grant? We are told that a number of highly rated authorities are to receive nothing. I shall ask the right hon. Gentleman about only one, Ellesmere Port. Will be tell us—or will the Under-Secretary of State for Wales do so when he replies—whether the scheme that Conservative Members voted for with so much enthusiasm 11 months ago will result, for instance, in Ellesmere Port receiving no grant? If that is so, perhaps the hon. Member for Bebington and Ellesmere Port (Mr. Porter) will tell the House what he has to say about Ellesmere Port receiving no grant. If he will not tell us, perhaps the 468 Ellesmere Port voters who comprised the hon. Gentleman's majority at the General Election will have some view about Ellesmere Port receiving no rate support grant under the present Conservative scheme.

Mr. Barry Porter (Bebington and Ellesmere Port)

I am much obliged to the right hon. Gentleman for giving me notice that he intended to mention my constituency. This morning I received a representation from the very learned clerk to the Ellesmere Port district council. He does not indicate that Ellesmere Port will be receiving no rate support grant. I shall be fair to the right hon. Gentleman and say that the learned clerk shows some disquiet about what he might be receiving. It was certainly nil-plus. My majority was 486, not 468. I am confident that I shall improve on that at the next election. I was happy to vote for my right hon. Friend's Bill and I am happy to make my own representations on behalf of my constituency.

Mr. Hattersley

The hon. Gentleman's local patriotism does him credit. I look forward to his next election result with the warmest anticipation.

It is not only I who think that the present rate support grant system is unworkable. I understand that as late as yesterday the leader of the Association of District Councils, Councillor Ian McCullum from Working, who does not serve in the Labour interest and who represents an authority that is dominated by a substantial Conservative majority, wrote to the Department of the Environment to remind it that everybody said that the new system would work and that he had proposed that it be postponed for a year. He asked whether the Department of the Environment was determined to go on with this folly.

I hope that the Under-Secretary of State for Wales will tell us the reply to that question that the Government anticipate and whether the Government are determined to continue with this unworkable scheme, despite the fact that every local authority association says that the way in which the rate support grant is to be distributed next year is chaotic and unworkable. If they continue with it, the only possible result will be a massive increase in rates, a massive reduction in services and the threat of substantial local government redundancies. When that happens, the country will have no doubt who is responsible: the Government will be responsible and no one else.

As well as imposing the cuts that the Chancellor of the Exchequer announced yesterday, the Government are imposing a covert and surreptitious cut which is best described, and which is described by them, as the 6 per cent. cash limit which they propose for the pay element in local authority spending next year.

The 6 per cent. cash limit on pay can be considered in two ways. First, there can be a general Government expectation that local authority pay increases will be held to 6 per cent. If the Government want that, expect that and hope that they can enforce that, a 6 per cent. cash limit is no more than a limited wages policy in the public sector. It is a limited wages policy which clearly the local authority workers will not accept, because inflation will outstrip 6 per cent. by a substantial amount. Local authority workers will reject the idea of a cut in their standard of living next year. They will be right to reject it. They will have my support in rejecting it.

The Government tell us that that is not really what they want. They say that it is not a half-pay policy imposed in the public sector but an indication of the sort of funds that should be devoted to the purpose. The Secretary of State for Employment said last week that authorities do not have to hold earnings increases down to 6 per cent. and that there are other ways in which they can be financed. He said that they can be financed out of rate increases. Presumably the right hon. Gentleman has not discovered that penalties are exacted on authorities that increase their rates beyond the level that is regarded as appropriate by the Secretary of State for the Environment. The Secretary of State for Employment also said that authorities can finance pay settlements by cutting other services and subsidising pay from other economies.

The Opposition regard it as intolerable that freely elected councillors are to be forced to make intolerable choices between making workers redundant and increasing the cost of school meals or between cutting their employees' living standards and giving up buying books for their schools. When councillors refuse to make such choices, as I believe they will, and when the people they represent rise in revolt against a Government who impose those choices upon them, I hope that the Secretary of State will spare us the usual platitudes about how desirable it is for local authorities to respect the will of the national Government.

The partnership that once existed between local government and national Government has been destroyed by the Secretary of State. It has been destroyed because he introduced a coercive Bill and because he has mounted a constant and reckless attack on local authority services. I repeat that the result of that attack can only be damage to services that are necessary for this country, massive rate increases and substantially increased redundancies in the public sector, all of which will bring chaos to local government—chaos compounded by the Government's attitude to housing.

I want to say something about the Government's housing record and intentions. I am careful not to call it a housing policy. Within any reasonable definition of that term, the Government do not possess a housing policy. They will make no estimate of the number of new houses needed to meet demand between now and the end of the decade. They will make no forecast of how many houses are likely to be built this year or next in the public sector. They make no attempt to relate the rents that are charged in the public sector to the capital that is necessary to mount a satisfactory new building programme. All that the Government's housing policy amounts to is a mindless determination to cut—to cut subsidies by continual rent increases and to cut capital by slashing the building programme.

Some of my hon. Friends would argue—and I feel some sympathy with them—that increasing rent levels for families who are already well housed may well be justified if as a result extra resources become available to build new houses for families in slums, in multi-occupation and on the waiting list. However, our complaint against the Government is that they are both increasing rents and cutting the building programme. The extent of those cuts is still obscure, because the Secretary of State refuses absolutely to publish the forecast for house building next year and the years beyond, although nobody, certainly no one with experience in government, believes for a moment that such forecasts do not exist in the right hon. Gentleman's Department and the Treasury. They are there, but for one reason or another he prefers not to publish them.

We have indications, however, of the sort of movement in house building and the programme that we are likely to endure. There are clues. The first is the White Paper on public expenditure. Most of the columns concerning housing in that remarkable document are left blank, but the total for housing spending is ominous enough. Between 1979–80 and 1983–84, housing expenditure will fall by 48.06 per cent.

The second clue is the housing investment programme statement of February—or shall I say the revised housing investment programme statement, after some of its figures had been corrected by a written answer? That revealed that between 1979–80 and 1980–81 the total was to fall by 33.4 per cent.

The third clue is the work of the Select Committee on the environment, which has estimated that for 1983–84 the best figure for housing starts that can be genuinely anticipated is 31,000 and that in the years before the starts will probably be less.

However, even in the face of those facts, the Secretary of State continues his bluster about his housing policy being no different from ours—and that was before the Chancellor told us yesterday that the Department of the Environment must face an additional cut of £158 million, which, it is reliably expected, will involve a cut of £100 million to £130 million from housing and will, therefore, knock a further 5,000 starts off next year's programme and the programme the year after. The truth is that for the next three years completions—houses actually built in England and Wales—are likely to run at about 25,000 a year, rather less than one-third of the houses built during the worst year in the five-year record of the Labour Government. That is the real comparison.

We can also make a comparison on the ground among the authorities that are suffering. Let me give the Secretary of State examples of what is really happening—reports from the boroughs that are being affected. Norwich reports that its progamme of 600 starts, including five sheltered housing schemes, has been scrapped—thanks to the Secretary of State. Wolverhampton says that there are no new contracts and no new builds in 1980–81—thanks to the Secretary of State. West Derbyshire says that there are no new houses, no further improvement schemes for council dwellings, no general improvement area schemes and no further adaptations for the disabled—thanks to the Secretary of State.

I hope that the House will forgive me if I mention in passing my constituency, to which I referred a few moments ago. It is a classic decaying central area which in the days when my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) was in control of these matters was just beginning to receive the assistance that such areas need. My constituents' chances of being rehoused have been reduced by the reduction in the new building programme. The help that my constituency was receiving from the housing associations has disappeared overnight because of the attacks on housing association programmes. Perhaps most disastrous of all, the general improvement programmes have been stopped at literally 24 hours' notice. One area of improvement has been completed and another is left with houses half derelict, boarded up, empty and decaying.

Mr. Heseltine

I happen to have here the figures for the authorities that the right hon. Gentleman is citing. He seems to be divorced from any sense of reality. Norwich is this year spending £7,832,000.

Mr. Hattersley

I tried to explain this to the Secretary of State previously, but I shall do so again. His housing investment programme allocation has to accommodate two elements. One is work already in contract, which may last for more than one year. The other is new starts. Norwich is doing work that began last year, but it cannot afford the building that I have described because its HIP allocation will not allow new starts. What the Secretary of State gloried in last year when he talked about completions were completions begun under the Labour Government. What he is talking about now is work already begun before his February announcement.

Mr. Straw

If my right hon. Friend would like another example, I can tell him that in Blackburn the allocation has been cut so much that the council can start only four dwellings this year compared with 124 in the lowest year under the Labour Government.

Mr. Hattersley

I fear that the example that my hon. Friend gives can be duplicated in borough after borough all over the country. I chose three examples virtually at random. I could have chosen 33. The extraordinary thing is that the Secretary of State does not seem to understand that but believes that what is left from last year's programme is somehow a justification of the cuts that he is making next year. He should get to grips with such matters before he comes to the House.

Mr. Heseltine

I understand exactly the significance. However, I can look up the fact that Blackburn, if I read across correctly, is spending about £8. million this year. The right hon. Gentleman fails completely to understand the situation. He does not appear to realise that new homes can be started within existing contracts.

Mr. Hattersley

Charity would oblige me to take the Secretary of State through the matter again, but I must move to the other element of his programme—not simply the programme but the moratorium. The right hon. Gentleman has said three or four things about the moratorium. I wish to press him on each one.

When the Under-Secretary of State for Wales replies, will be explain the point of the moratorium if overspending authorities this year will have their overspending deducted from next year's programme? If their gain on this year's swings will be lost on next year's roundabouts, the whole economic purpose of a moratorium is destroyed. Of course, the publicity purpose still exists. It is still possible for the Secretary of State to posture about how toughly he is reacting to economic necessities. There is no real economic advantage in simply postponing and then correcting the following year. What is more damning in terms of the Secretary of State's performance is the simple fact that the figures on which he based the moratorium are being proved by all the local authority associations to be wrong.

The Secretary of State knows, or he should know, that in the autumn of every year the anticipated contracts put out by local authorities exceed their total capital allocation. He knows, or he should know, that by the end of the year those contracts have been so adjusted that local authorities are within their spending total. That will happen this year. Already, the Association of Metropolitan Authorities has convinced him that, far from the £92 million overestimate that he once claimed, it is at worst a £32 million overestimate. As the financial year goes on, he will find that there is no general overspending.

The moratorium can have only two purposes. The first is its publicity value. The second, which is increasingly feared by local authorities, is that it is a calculated attempt to complicate their tendering procedures for next year and, therefore, artificially hold down the number of starts that can be allowed, even under the Secretary of State's provisions. The number of starts remains a mystery because the Secretary of State persists in making no estimate of the Government's proposals.

I hope that the Minister will respond not to me but to this rhetorical question: is the Secretary of State seriously saying that he will reduce expenditure on housing by 50 per cent. and that he has given no serious thought to the consequences that may follow from that reduction? That question is not mine but a question posed by the Secretary of State's hon. Friend the Member for Peterborough (Dr. Mawhinney) in the Select Committee on the environment. He, like me, was unable to believe that the Government do not possess forecasts of building for next year and the year after. He shared my suspicion that, although the forecasts existed, the Government were not prepared to reveal them.

I turn from the house-building programme to rents—the subject of an announcement made earlier today by the Secretary of State. The same thing can be said about the Secretary of State's attitude to local authority rents as is said about his attitude to local authority capital expenditure. There are no policy and no attempt to relate capital programmes to the cost of building, equate it with rents and ensure a decent level of building. All that the Secretary of State has done in his rent policy since he came to office 18 months ago is to use the wide powers available to him to determine subsidies and to cut public expenditure. He told us on Prorogation day—and he repeated it again this afternoon—that his statement was no more than that he had in mind making a determination prescribing a flat rate increase figure within the range of £2.50 to £3.00 per dwelling per week. He said that that was simply a first step in consultation.

I do not believe that. I do not believe that there is the slightest chance of his determination being changed. It is my view that the Treasury already anticipates that council rents will increase by that amount. The Secretary of State signally refused to answer the question posed by my hon. Friend the Member for Blackburn (Mr. Straw) on that subject. I hope that the Minister will address himself directly to that question. Do the Government believe for one moment that there is a chance that rents, on average, will not rise by the amount specified in the consultation paper? Of course not—not least because the councils, when they receive the determination and find the subsidies slashed, will have no other source of income with which to subsidise their rents. If they risk doing that out of the rate fund, they may fall foul of the Secretary of State's wrath and have the penalties in the Local Government, Planning and Land Act imposed upon them. As a result, rents will rise by that amount.

The House should know, and the Minister should comment on, the changes in the amount of income that local authority tenants will now be required to pay. The Chancellor of the Exchequer has a clear view on these matters. In another Select Committee he said: The percentage of average income going into local authority rents has fallen from 7.4 per cent. to 6.7 per cent. over the last five years. By April this year the Conservative Government had begun to redress the balance. The percentage had increased to 6.9 per cent. The October comparison is not yet available, but, through the courtesies of the local authority associations, the Library of the House and other people whose statistical ability is far greater than mine, it is possible to make a general, if rough, calculation.

The local authority associations say that both the £1.50 increase and the 60p increase already imposed by the Secretary of State have, in general, been applied. They say that the average rent in the public sector is now about £9. That pushes the average up to 7 per cent. of earnings. But the £9 rent will be increased by almost 33 per cent. if today's announcement is implemented. That £9 may rise to £12. The House should be aware of the proportion of income that that amounts to if the Government's policy in other areas has its way. If earnings increase only by what the Government wish during the next 12 months—we shall take 6 per cent. as an indication of their intention—by the end of next year the average council house rent will be 9.5 per cent. of the average council house income. Will the Secretary of State now, or the Under-Secretary later, say whether the Government think that that is a proper and appropriate proportion?

Let us not have any prejudiced nonsense about the head of the house in council houses earning £8,000 a year. On the Secretary of State's own admission, that amounts to three out of every 100 council dwellings. We need to talk about the generality of council tenants. Do the Government really think that they should pay 9.5 per cent. or do they think that they should pay more? May we have some vague indication of the principles on which the Government have based the rent increases, if such principles exist? My fear is that we shall have none of that information provided as the night wears on. We have not had it during the past 18 months, and I see no reason why we should have it tonight.

Mr. Kevin McNamara (Kingston upon Hull, Central)

My right hon. Friend has spoken about rent. The majority of council tenants' rents include rates and water rates. More specifically, rent for the modern houses includes either electricity or gas for central heating. What does that mean in relation to the increases that the nationalised industries have been forced to impose on domestic energy prices?

Mr. Hattersley

I shall not talk about rate increases, because the Secretary of State gets into a tizzy when I do that. I shall say two things related to my hon. Friend's points. I believe that council rents are now pushed to such a height that they are beginning to amount to a tax on council tenancy. If we combine with that the unnecessarily high prices for energy—the price increases imposed on the gas and electricity industries by the Government's financial policy—many council tenants are paying two disguised taxes, one for their gas and one for their rents.

I turn to what the Government regard as a solution to all those problems. I have no doubt that before the night is over we shall be told—the Secretary of State almost said it in his opening speech—that the problems of the homeless, the badly housed, the slum dwellers and the overcrowded will be solved in the Government's brave new world by a greater reliance on the private sector.

Greater reliance on the private sector means three things. First, it means the sale of council houses. The sale of council houses will not increase the housing stock by a single dwelling. It will only deny rented property to some of the families who are in greatest need of rented property.

Secondly, the Housing Act will move the balance of advantage further away from the private tenant and closer towards the private landlord. I find something particularly squalid in parts of that Act. I give one simple example. The idea of shifting the time at which a fair rent is enforced from the day on which the tenant applies for it to the day when the landlord, after much delay and prevarication, has it imposed upon him seems to me the most petty way to maximise the landlord's advantage. But the great example of how the Government seek to solve our problems in the housing area by private enterprise is through the shorthold provision, about which the Secretary of State has already spoken.

The Secretary of State says that the shorthold provision has been dealt a cruel blow by the Opposition's promise to repeal it. My personal hope is that it is suffering from mortal wounds. If that provision is dead, it died unmourned by those who worry about housing. For our part, we shall not be party to a pretence that the housing crisis in this country can be overcome by making tenants survive on one-year tenancies. Anyone who believes that we could conceivably continue that provision of the Housing Act misunderstands both the nature of that provision and the nature of the Labour Party.

Thirdly, the Secretary of State said that he believed that there ought to be and that he would provide increasing provision for owner-occupation. I only wish that it had been like that during the past 18 months.

Let me remind the House of some of the figures that the Secretary of State again failed to provide. While he talks in generalities about improving the prospects of owner-occupation, he fails to give us the figures which demonstrate that owner-occupation is being reduced in this country, thanks to what he is doing. In the first six months of 1979, the building societies lent £4.32 billion, which accounted for 352,000 new mortgages. In the first six months of this year, they lent £240 million less, so that 45,000 fewer owner-occupiers were able to take out mortgages.

Thanks to the Government's policy, mortgages have become so expensive that fewer and fewer families are taking out mortgages. The Secretary of State says that the reduction in the minimum lending rate announced yesterday ought to bring some hope to these people. No one on the Labour Benches will regret that MLR was reduced from the uniquely high level at which it has been held for a uniquely long period. No one will regret that belated reduction; it is highly welcome. But we delude ourselves if we believe that it will bring very much relief to owner-occupiers.

I talked to the Building Societies Association yesterday, shortly after the announcement. I was told—I am sure that the Secretary of State knows this, but he could not bring himself to say it this afternoon—that mortgage holders should not anticipate any early relief. The reason why the building societies do not anticipate a fall in mortgage rates is partly because they are still remedying the damage done to their reserves by the false hopes held out to them by the Prime Minister in the summer of 1979. A further reason is that the index-linked national savings certificates, the so-called granny bonds, have taken from building society funds amounts which the societies estimate to be between £500 million and £750 million—money which would otherwise be available for new borrowing and to reduce the mortgage rate.

The Chancellor of the Exchequer's announcement yesterday, that index-linked bonds are to be extended in scope and that a larger issue of £3.6 billion is soon to be made available can only mean a further reduction in the funds available to building societies and the prospect of a reduction in the rate being pushed further and further into the future.

In short, in all three areas the Government's housing policy has been a ghastly failure. Never have mortgages been so expensive. Never have house building figures for local authorities been so dismal. Never have local authority rents been so high. Never has there been a Government who cared so little about housing the people. It is for that reason that we chose to debate this subject today.

4.55 pm

Mr. John Heddle (Lichfield and Tamworth)

I warmly endorse the announcement today by my right hon. Friend the Secretary of State for the Environment concerning the consultation document. My support for it is endorsed by the fact that it carries out to the letter the recommendation of the previous Labour Government in their Green Paper of 1977, in which they said that they considered that over a run of years rents should keep broadly in line with the changes in money income.

The rents of council houses then represented about 8 per cent. of the incomes of those houses, but that subsequently dropped to about 6.4 per cent. The amount spent by owner-occupiers on mortgage repayments represents 20 per cent. of a household's income. Even if the calculations of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) are correct, and the rent increase is £2.50 or £3 per week for those homes which can afford the increase—excluding the 45 per cent., nearly five in every 10, of council tenants who for one reason or another get either supplementary benefit or rent rebates—the rent of a council house is still incredibly reasonable compared with the mortgage repayment paid by the owner-occupier.

That is further endorsed by the fact that the Government have raised the maximum rent rebate this year to£25 for homes in central London and to£23 elsewhere, whereas those figures previously stood at £13 for London and £10 elsewhere. I shall, therefore, spend no time in sharing the crocodile tears which are wept by the Opposition Benches today.

Last year's Queen's Speech promised a whirlwind of activity in housing and local government, and because of the Housing Act and the Local Government, Planning and Land Act a breath of fresh air is now beginning to sweep through the streets of our council estates—and also through the filing cabinets, the in-trays, the pending trays and the out-trays of every planning department in the land. May that continue and may it gain momentum during the next 12 months.

But there are three scars on the nation's housing scene. I refer to the growing number of homeless families, to the still increasing number of empty homes and to the ever-rising level of council house rent arrears. As was predicted by Opposition spokesmen on the Conservative Benches at the time when the Housing (Homeless Persons) Bill was debated in 1977, the Act has not reduced the number of homeless families. As in the case of other Acts introduced by the previous Labour Administration, the fullness of time has proved that Act to be counter-productive and contradictory. It has actually increased the number of homeless families from 32,000 in 1977 to nearly 56,000 today, most of whom are accommodated in hostels or in bed and breakfast accommodation at enormouse expense to the taxpayer and with great disruption of the family life of those poor people.

Yet at the same time there are more than half a million empty homes in the country today, some owned by local authorities and some owned by private individuals—;half a million homes waiting to be occupied by a similar number of families hoping forlornly, because of the lack of an alternative choice, for the key to a council house or flat.

If there is a housing crisis, it is not a crisis of demand or a crisis of supply. Nor is it a crisis of mortgage finance. It has been visited on the nation because of the Opposition's failure to acknowledge that the role of local authorities is to provide homes for those in genuine need and that the private sector has an equally important part to play in meeting the needs of those demanding a home to rent or buy. The crisis has also been caused by the inability of local government to allocate vacant homes quickly enough.

I share the view of those who are calling on Parliament today to allow councils to abolish, or drastically to revise, council house waiting lists. They cost an enormous sum of money and waste an enormous amount of manpower because they need to be kept up to date. After a delay of 10 years, an applicant may reach the top of the list, but he may then not be prepared to take the accommodation offered.

Mr. Alton

Hon. Members have listened with interest to the hon. Gentleman's suggestion that waiting lists could be abolished. Will be explain in greater detail how the system would work and what would happen to those currently on waiting lists?

Mr. Heddle

I think that the hon. Gentleman was, for a while, chairman of Liverpool's housing committee, so he will understand that the majority of those on council waiting lists do not necessarily want council accommodation. Such people want rented accommodation. Whether that accommodation is owned by the local authority, private landlords or a housing association matters not one jot or one title to them.

A large proportion of the 400,000 or so people on waiting lists are not heads of separate households. Only a minority are married couples or one-parent families who have been forced to live with their parents-in-law. A large proportion of the remainder are young people who simply wish to leave home. Their wishes are understandable. Most of them are not housed in bad accommodation, and their needs may be for relatively short-term accommodation. The right hon. Member for Sparkbrook deliberately missed that point. The private sector rather than the local authority can provide the short-term accommodation that such people require.

I join those who call for a more flexible approach by individual councils so that local needs can be better and more quickly identified. I also join those who eagerly await my right hon. Friend's announcement on the review of the Housing (Homeless Persons) Act 1977. Why do not private owners let their vacant houses and flats? Are they eagerly awaiting Friday 28 November, when the shorthold provisions of the Housing Act 1980 will come into effect? Time alone will tell. I hope so; I think Have they already been dissuaded from letting their vacant property on shorthold tenancies because of the irresponsible threat, made by the Opposition again this afternoon, to include the repeal of the shorthold provisions in their next election manifesto?

Last January, the right hon. Member for Sparkbrook uttered that irresponsible threat in an interview for the Local Government Review. He probably did so without having given full thought to the implications that it would have for his party's prospects at the next general election. I listened to his speech, and it appears that he has not yet tempered that threat. Let us hope that between now and the next election he will think again. Let us hope that at the next election he will not run the risk of being a leading member of a Labour Party branded by these Benches as the handmaiden of homelessness.

In 1975, the nation's rent arrears amounted to £34.8 million of recoverable rent. That represents about 3 per cent of total rents collected. In 1979, the nation's total rent arrears amounted to almost £64 million. That is almost double the previous figure and represents about 3.5 per cent. of the total rent recoverable. Much of that enormous debt is written off by local authorities because the cost of collection is completely out of proportion to the sums recoverable. Inevitably, much of the debt is owed by those in receipt of supplementary benefit.

Will my right hon. Friend consider taking measures, in conjunction with the Secretary of State for Social Services, to ensure that during the lifetime of this Parliament the rent element provided by the DHSS is paid directly to the local housing authority in a greater number of cases? That would immediately ensure a considerable reduction in rent arrears. The tenant may be in default through circumstances that are beyond his control and can thereby be spared the agony of a court order or of the threat of eviction.

I express my regret at three omissions from this year's Queen's Speech. First, the Government have not found the time or, perhaps, the commitment to include legislation that admits the need for a total restructuring of the Development Land Tax Act. That tax threatens to erode the asset base of house-building firms. Despite the two constructive amendments made by the Chancellor of the Exchequer, it remains a time bomb ticking away at the very foundations of the construction industry.

I also regret that Parliament will not have time to consider implementing a building societies Bill. However, I understand that regulations—the European directive on credit institutions—may be introduced that will apply to building societies. A large proportion of the Building Societies Act 1962 is, in practice, obscure, inadequate and out of line with current needs and attitudes. Why should the major 20 or so building societies be restricted by the same rules and regulations as apply to hundreds of smaller local societies, which perform a useful local job? Why should not building societies be encouraged to provide homes for sale and rent in partnership with local authorities, housing associations and land owners? Why should the liquid funds of building societies be restricted to authorised investments, consisting mainly of gilts, local authority paper and bank deposits?

At present, the building society movement is restricted by a legislative framework that was designed for the nineteenth century. It effectively debars more active and progressive societies from even beginning to move towards the challenges of the twenty-first century. Wider powers should permit diversification, which might transform the investment scene for the man in the street.

I hope that my right hon. Friend will be in a position this year to publish his Department's conclusions on the study relating to the rating system. The system is ever more unfair, because it is not related to ability to pay or to the services received. It is a system in which the very basis of valuation gives rise to inconsistencies and anomalies. It is a system that cries out for reform to meet future needs and demands. When the economy has recovered, the system might encourage the introduction of a scheme whereby a proportion of domestic rates could be treated as an allowable expense against income tax liability.

Mr. Straw rose—

Mr. Heddle

If the hon. Gentleman can contain himself a little longer, I am sure that he will have the privilege of catching your eye, Mr. Deputy Speaker.

It is a system that exposes commercial and industrial ratepayers and makes them pay disproportionately high rate increases when they do not have a voice to express how they wish the revenue that they have raised to be spent by local authorities.

5.8 pm

Mr. Frank Allaun (Salford, East)

I hope that the hon. Member for Lichfield and Tamworth (Mr. Heddle) will excuse me if I do not take up his remarks. I intend to go for bigger fry, namely, the Secretary of State. I wish that the Secretary of State, who is now in conversation with one of his colleagues, would attend my advice bureaux. It would be good for him and for the council tenants.

I believe that the Secretary of State does not understand how deep the housing shortage bites. If he does understand, he is a man without feeling. Nine out of 10 of those who come to my advice bureaux come about housing. Twenty-five years ago they came because they were living in terrible slum houses and wanted to get out of them. Today, whilst thousands are still living in those conditions, the majority of constituents who come to my advice bureaux are living in council property.

I shall give a typical example, by no means the worst, and one that could be multiplied one hundred thousandfold in this country's industrial cities. Mr. and Mrs. A. H.—I do not give their full names because I have not sought their permission to do so—live in a flat in Silk Street, Salford, which is a long street and which the right hon. Gentleman may know. They have two lovely young children, who have nowhere to play. The windows have to be tied up to prevent a fatal fall. There is underfloor electric heating, which is not used because it is too expensive. Partly as a result of that, the flat is continually damp, and this has serious effects on the children's health.

Mr. and Mrs. A. H. have recently been told that it will be three years before they can be transferred, since those living in slum clearance areas have priority—quite properly. Therefore, these children have been and will be denied the right to a decent home. If and when they get one, it will be too late. They will have had their childhood without a proper home.

But now the prospects have infinitely worsened, thanks to the present Government. These families are dependent upon getting a council house, since even with a mortgage they cannot afford to buy. The Secretary of State has dealt a death blow to council housing. To be more accurate, he has dealt four blows simultaneously. Considering the misery that he is causing, he is not a man or a Minister but a monster, as I propose to show.

The Secretary of State has cut down to 30,000 council houses the number that will be started this year. In the 1960s, up to 200,000 were built annually. Secondly, he has now imposed a complete halt on all council house starts and improvements, which will reduce that figure. Thirdly, he has deliberately raised rents by up to £3 a week. There will be little difference between the rent and the instalments on the purchase price. This is intended to drive rents so high as to force tenants to buy even when they do not want to buy. Fourthly, he is compelling councils to sell houses, which means that they will no longer be available for reletting to the homeless or those needing transfers.

I should like to deal with those four bitter ideological attacks on council housing, which the present Government hate. This morning, the National Federation of Building Trades Employers said: There is no denying that total starts, both public and private, are unlikely to be much more than 150,000. This is half the level of four years ago and half the annual 'requirement' projected in the housing policy review Green Paper of 1977. It is not the building trades employees who say that; it is the building trades employers, who are represented on the Government side of the House and who gave fortunes, through CABIN, to put the present Government and the present Secretary of State on the green seats opposite.

Mr. Anderson

Can they ask for their money back now?

Mr. Allaun

I do not think that they will get it back, but I hope that they will not grant any more to the present Government or the Conservative Party.

There is worse to come. The Government are estimating for a 48 per cent. reduction in housing expenditure between now and 1983. Next, there is the moratorium announced four weeks ago. The excuse was that the Minister wanted local authority figures to be considered by 31 October. It is now 25 November. When will the freeze on building end? We have not been told this afternoon. We were given a vague phrase to the effect that it would be announced in due course. Some experts have made estimates that it will end next April. Others even wonder whether it is to continue for as long as the economic slump. God help us in that case, because it will continue for years. If it is necessary to cut public expenditure to such an extent, presumably the Government will think it necessary to have this freeze on council housing indefinitely.

Salford council had 11 building contracts about to be signed. They will no longer be signed. The Minister evidently thinks that the homeless and the building firms and their workers can go on waiting. This year, 1980, is already by far the lowest year on record for total housing starts in both sectors since 1946. The freeze is bound to worsen the record, and next year's starts will be lower still. Council housing has been virtually ended. It has been slaughtered.

Twelve days ago, as we all know, there were dramatic events in this Chamber. They arose because the Secretary of State tried to sneak through council rent increases of up to—3 a week. On that occasion he deceived the House. When he was faced with serious trouble, not far from where I am standing, he stated that his letters to the local authorities, released that evening, were only for consultation. That is untrue.

The only matter for consultation is whether the increase is to be £2.50 or £3 a week. I quote from the document: Taking the above considerations into account the Secretary of State has in mind making a determination prescribing a flat rate increase figure within the range of £2.50 to £3 per dwelling per week. However, before reaching a decision, he wishes to know the views of the associations on the point at which the fiat rate would be fixed within the range quoted. These figures relate exclusively to calculations of housing subsidy. So it was merely a question whether the increase would be £2.50 or .3.

But that is not everything. The document continues—and the Secretary of State presumably wrote it, or put his name to it: In addition there will be some housing costs which are not subsidisable which also have to be met from local sources Therefore, rents may be increased by well over £3 a week. That is on top of a £2.10 a week increase earlier this year. Most workers regard a huge rent increase as a big decrease in their real wage and will act accordingly.

The subsidy on council rents is a big figure—£2,060,000 a year. The subsidy for owner-occupiers is £1,640,000 a year—another big figure. The Labour Party says "Hands off both". It is brutally unfair to increase the subsidy for owner-occupiers while slashing it for council tenants. The Minister for Housing and Construction may say that the subsidy for owner-occupiers is not being increased, but it is, because the increased number of those buying their own houses, whether they be private or council-owned, will mean an increase in the total sum lost to the Exchequer through income tax relief on mortgage interest.

Fourthly and lastly, far from increasing the stock of council houses to accommodate the 1,200,000 families on the waiting list, that stock will be deliberately cut. Huge bribes are to be paid to tenants to induce them to buy their homes. There will be discounts of between 33 and 50 per cent. on market prices. But who will pay for those bribes? It will be the rest of the community: the tenants who cannot buy; taxpayers, who will pay the tax relief on the mortgage interest; and ratepayers, who will have to bear the local authorities' loss. That loss, which in many cases amounts to £8,000 per house, results from the councils having to continue to pay the interest on the 60-year loans originally incurred by councils in order to build the houses.

The Minister seeks to evade responsibility for those four blows by making the local authorities the instrument and thus the scapegoat. He hopes that the local authorities, which are increasingly under Labour control, will be blamed for the rent increases and the loss in house building for which he is responsible. Meanwhile, Mr. and Mrs. A. H. and their children continue their existence, penned up in their damp, multi-storey flat, their hopes of a proper home gone, and the 300,000 building trade workers will see ever more building operatives signing on each week at the employment exchange.

The alternative is that which was applied with such brilliant success by President Roosevelt. With 13 million unemployed walking the streets of America in the 1930s slump, his new deal dramatically expanded the building of homes and ambitious projects such as the Tennessee Valley Authority. It is possible to kill two birds—unemployment and homelessness—with one stone. To solve the bitter problems of the homeless and the unemployed, the Government must increase, not reduce, the housing programme. The first step would be to sack the Secretary of State and the Chancellor of the Exchequer.

5.24 pm

Mr. Robin Squire (Hornchurch)

I hope that the hon. Member for Salford, East (Mr. Allaun) will forgive me if I do not follow him into the highways and byways of Salford, enjoyable though that place may be, although I suspect that some of its problems are due to the nature of the council that has administered its housing for so long.

I turn to some of the distortions that we have heard about in relation to housing. My hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) highlighted the distortion we have heard in recent weeks and months about housing association funds. The Government were portrayed as having cut back when they had merely sought to ensure that total spending was kept within the previously agreed estimate. Something similar is entering the annals of folklore with regard to the alleged effects of the moratorium announced four weeks ago. I speak as one who would wish to see more money spent on housing and who believes and trusts that, as and when the upturn comes, greater resources in real terms will be devoted to this area rather than to others. But that is a subject for separate discussion.

Whatever our political views, we must surely support the determination of government, local and national, to live within previously established budgets. That was the purpose of the moratorium. That has been confirmed, and I do not think that it is a matter of disagreement. Yet it is being put about that the effect of the moratorium, to quote the hon. Member for Salford, East, will be to leave more people homeless.

There will be no medium-term or long-term gains for anyone, be they the homeless, local authorities, landlords or anyone else, if local authorities and Governments continue to overspend against what was previously arranged. That is no solution. It is merely the beginning of anarchy. The solution is to live within our means, to set budgets and to argue, as we shall and do in this House and in local authorities, and not to criticise Governments, of whatever political persuasion, who seek to ensure that those limits, once fixed, are adhered to.

I turn to the question of rents. I do not believe that we as a party in Government should be concerned at being seen to support the need for tenants in council housing to pay a greater percentage of the cost of that housing. We live in an age when, rightly and properly, a rebate scheme and a series of safety nets can and do provide for the poorest—those who are unable to meet increasing costs. That being so, I believe that many people expect the better-off council tenants to meet a greater proportion of the cost.

The figures supplied by my right hon. Friend the Secretary of State indicate that the percentage of income devoted to rent has fallen from about 8 per cent. to about 6.4 per cent. Given the importance of housing in the average family or individual budget, I defy anyone to suggest that 6.4 per cent. is other than a derisory figure. In real terms, it masks a great increase in cost to everyone else, because the subsidy on that housing must be paid for in one form or another. We cannot have it both ways. I was grateful that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) recognised that the argument for some rent increase was possibly in order. I can only agree with him.

It is a pity that he did not point out that the absence of such increases placed a direct burden upon other people. It is not money conjured out of thin air. It must be met by ratepayers and taxpayers. We owe a responsibility to all people, regardless of their tenure. I should like to see some of the money raised through increased rents ploughed back into an area with which I shall deal later.

I hope that my right hon. Friend the Secretary of State, in his discussions with my right hon. and learned Friend the Chancellor of the Exchequer, will look closely at the question of mortgages and mortgage interest tax relief. I refer in particular to relief on the higher rates of income tax. We are moving to a stage, particularly in view of the welcome reduction in the higher rates granted in the 1979 Budget, when we should not exect those paying higher rates also to receive mortgage interest relief at those rates. We should be looking closely at a package that may well extend and remove the present £25,000 upper limit. That limit, if not amended, will in any case fall by the wayside as a result of inflation. A package along those lines would raise considerable extra funds, which I should like to see devoted to the area that concerns me most. I speak of the quality of housing and the nature of the repairs and renovations that can or cannot take place.

The Select Committee on the environment, on which I have the privilege to serve, recently published a report on housing projections, and some of its recommendations and comments have received wide publicity on both sides of the Chamber. One of its recommendations, which has achieved little publicity and which I seek to elevate this afternoon, concerned the state of repair of the nation's housing stock. After all, that is the legacy that we leave to future generations. If the figures are as bad as they seemed to the Select Committee, we face a problem that the Government—any Government—must immediately and carefully consider.

On the Select Committee's figures, the present level of housing repair and maintenance is one-third of what it would need to be to meet the Department of the Environment's criteria for repairs and maintenance. Moreover, within the three years ending 1982–83 it is likely that the amount expended under this heading will fall by a half, thus exacerbating the problem.

I do not take any pleasure in mentioning these figures. I hope that the Government, either today or more probably in their answer to the Select Committee's report, will seek to show where those figures are in error. If they are right, or approximately right, we must contemplate a major shift of resources in the immediate future and not in five or 10 years, or face a bill for housing that, with the best will in the world, it will be difficult for us to meet.

I have so far concentrated solely on housing. I turn now to local government, a subject on which I have spoken in this Chamber perhaps more than on any other in the short time that I have been a Member of the House Local government has been and is still a valuable, loyal servant of the country, under Governments of whatever political persuasion. Local government is now being asked to shoulder a very heavy burden in terms of the requirement to reduce grants, to cut services and to impose ever higher rate bills. It is right that local government should take its fair share of the national misery, for want of a better expression, because, like other areas of expenditure, it spends a considerable amount. I suggest that local government be judged in the same light and by the same criteria as we judge the Government's performance in the handling of their economic affairs. I am not making a party point; I speak of Governments of all political persuasions.

I do not believe that local government receives a fair press. At times we rightly concentrate on the lunatic fringe and overlook the fact, which is also overlooked in the national newspapers, that the majority of the 460 or so authorities comply with every possible statute, instruction, order, request, pledge, or whatever it may be, in a formidable and successful way. I make that point because at times it goes without mention in the House generally.

My hon. Friend the Member for Lichfield and Tamworth correctly highlighted the duplicity of the Opposition on shortholds. One of the problems that has bedevilled housing over the years has been that it has been allowed to become a political football. I have endeavoured to show that I believe in a positive role for local authorities and the Government in assisting those who wish to purchase their own homes. But that is not the beginning and the end of the matter. It is dishonest of the right hon. Member for Sparkbrook to dismiss shorthold tenancies as being not on because they do not solve the housing crisis. No one said that they would. But they are a major contribution and could be an even greater contribution if they were given the chance.

I very much regret that the Opposition, by their words and actions, would seek to eliminate the shorthold option or to reduce its effectiveness. We need to get away from the stereotyped belief that we can have only council housing or owner-occupation. We need to be flexible. We should take and consider each option. I hope that even now the Opposition will listen to wiser words from more important and illustrious persons than me and think again about that pledge, because that is the root of bad housing. The hon. Member for Salford, East asked what would be done about rehousing some of his constituents who are living in poor conditions. I suggest that we should be flexible and look at all the options. The answer does not lie only in council housing.

5.36 pm

Mr. Ronald W. Brown (Hackney, South and Shoreditch)

I agree with the hon. Member for Hornchurch (Mr. Squire) only on what he said about dishonesty. His speech showed a lack of knowledge, or he was being dishonest. He knows that the shorthold proposition was deliberately brought in to take the place of council housing. [HON. MEMBERS: "No."] It is no use hon. Members saying "No". Council housing has been cut back deliberately in the hope that people will be forced to take shorthold tenancies. That is the whole point of the exercise. Otherwise, there is no point in it.

Mr. Majorrose—

Mr. Brown

I shall not give way. When the hon. Gentleman was a housing chairman in London, I heard him demand more money for London. Now, he has the effrontery to demand more money for Cambridgeshire. The hon. Gentleman is the kind of Member described by his hon. Friend the Member for Hornchurch—purely dishonest—and he knows it.

Mr. Majorrose—

Mr. Brown

Cambridgeshire may need the money, but it does not lie in the hon. Gentleman's mouth to speak about it in that way. I find it absolutely nauseating that he should make that kind of intervention.

Mr. Major

Will the hon. Gentleman give way?

Mr. Brown

No.

Mr. Majorrose—

Mr. Tristan Garel-Jones (Watford)

Give way.

Mr. Brown

No. The hon. Gentleman has heard me challenge him before when he has done the very same thing. I think that he should have made his remarks in the context of London. London needs the money, and he knows it. The hon. Gentleman may argue on behalf of Cambridgeshire now, but he should not put forward an argument that is so different from the argument that he put forward when he had a London responsibility. I hope that he will sit back and consider what I have said. If so, he will be a wiser man.

Mr. Major

Will the hon. Gentleman give way?

Mr. Brown

I have tried—

Mr. Major

Will the hon. Gentleman give way?

Mr. Brown

I have tried to advise the hon. Gentleman. We have discussed this matter before. The hon. Gentleman has again done that to which I have drawn his attention. I urge him to sit back and take a little time to consider whether the way that he is going on does him any credit. I was friendly towards the hon. Gentleman riginally, but the more I see him doing this sort of thing, the more nauseating I find it. I urge him to take my advice, to sit still and to listen to the debate. If he is called, he can make any points he wishes to make. I think that it would be better if, on this occasion, he were to give his tongue a rest instead of doing what he so often does.

Mr. Major

On a point of order, Mr. Deputy Speaker. The hon. Gentleman's advice was unsought and unwanted. Perhaps I may try to catch your eye in a few minutes, to answer the totally dishonest and unscrupulous remarks that have been made by the hon. Gentleman.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

That is not a point of order. It is a declaration of intent.

Mr. Brown

I tried to be helpful in advising the hon. Gentleman. We have discussed the matter before. He chose to intervene in someone else's speech to make his point. I do not accept what he said.

It is incredible that we should have a Gracious Speech that contains no reference to housing. It is as if it were a solved problem. The Government's only excuse is that they did a lot of work on housing in the previous Session. But that does not excuse them for failing to recognise our enormous housing problem. It is sad that we have to rely on that well-worn phrase in the Gracious Speech that Other measures will be laid before you. The Secretary of State's speech gave the House an insight into his total misunderstanding of the real world. He sets out in his doctrinaire, party political way what he feels are the issues to be served. One might have thought from his speech that everything in housing was satisfactory and resolved.

The Secretary of State implies glibly that underspending authorities are the good ones and that the overspenders cannot manage and do not do what they ought to be doing. To put it another way, he is saying that those who see the housing needs in their areas and walk away from them by underspending are the good guys in the mythology of Toryism. In the Secretary of State's view, the councillors who see the desperate situation, recognise the problems facing families on waiting lists who stand no chance of being housed unless something is done, see the needs of single persons becoming increasingly evident in the inner cities, appreciate that pensioners must be brought down from other accommodation to ground floor accommodation, recognise the need for sheltered housing and try to do something about those problems are the bad guys who have to be shot at. That is where the Secretary of State makes a fundamental error. He takes the simplistic view that those who undershoot are all right and those who overshoot are wrong. He does not take into consideration the problems facing individual authorities.

The situation in the London borough of Hackney illustrates that we cannot carry out the sort of exercise on which the Secretary of State is embarked. In Hackney, there are 13,000 households sharing accommodation, 8,100 overcrowded households and 838 families accepted as homeless. There is a waiting list of more than 14,000 families, and it is growing at the rate of 100 families a month.

There are 9,700 unfit private dwellings and a further 6,100 private dwellings that are substandard or in urgent need of renovation. There are 16,000 households in the private sector that lack exclusive use of basic amenities and 5,500 public sector dwellings, owned by the borough council, the GLC and housing associations, that are unfit.

Another 15,750 public sector dwellings, mainly on estates, are in need of urgent renovation. Against that background, I cannot understand how the Government can categorise councils as overspenders and take action against them.

The hon. Member for Hornchurch said that the Government had not forced a stop on council house building. They are forcing such a stop. In Hackney in 1977, the total number of lettings from all sources, the borough council and others, was 4,185. In 1980 it will be down to 2,263. There will be 15,838 families on the Hackney waiting list this year, and the figure will increase by about 100 families a month—perhaps even more.

Some people are taking the advice of the Prime Minister and moving to Hackney from other parts of the country. They lodge or squat in the borough and have to be rehoused by the council because they are homeless. How can that situation be described as being of no consequence? How can it be alleged that Government policy is not causing that state of affairs? An independent study has concluded that no one on the Hackney housing waiting list will be rehoused in the next five years. It is an incredible position.

The Government's political friends on the GLC have compounded their felonies. The GLC was set up to act as a strategic housing authority. It was to provide homes over a wide area of greater London so that people could move from one borough to another. The GLC held 250,000 properties throughout London. The particular attraction to my constituents was that the properties in the outer areas were little houses with gardens. Many of my, constituents were anxious to move to the outer areas as their circumstances allowed. That was happening. There were not sufficient places, but the GLC contributed to improving the housing of some of my constituents.

The GLC has now decided to get out of the housing market. It has handed over houses to local boroughs and is selling homes. Of course, the only properties that have been sold are the most desirable houses—the sort that people living in inner London wanted to move to.

The GLC has left thousands of houses standing empty in pursuance of its policy of selling. My constituents see GLC houses in Loughton, Ongar and Debden that are empty. They come to my surgeries, and I then approach the GLC district offices, but my constituents are unable to get those houses because they are being held for sale.

An estate in my constituency is due to be completed in December or January. We have argued for years that in Hackney we should have houses with gardens. Now that we are to have them, we find that the GLC is advertising in every conceivable place that any of my constituents can purchase one of the houses on the estate for £41,400. They are told that the price is likely to go up because of inflation. That is happening in an area where we desperately need houses to rent.

I know that the Minister for Housing and Construction is sensitive to these issues. How does he think my constituents feel about what is happening? They are desperate for homes. The figures that I have read out have not been concocted. They are known to the Minister and he has agreed them, yet we are faced with a situation in which the Hackney borough council finds it impossible to help anyone on the waiting list.

As the House knows, the Secretary of State has identified the London borough of Hackney, with all these problems and many more that I could mention if there was time, in the "hit" list of authorities to be penalised. During a recent debate in the House, I tried to put it to the Secretary of State that his attitude to Hackney was wrong. I deployed reasons why I thought that he was wrong. I assured him, as I assure the House again today, that this is not a party political issue. There are people in Hackney who are suffering. My two colleagues representing Hackney—I see my hon. Friend the Member for Hackney, Central (Mr. Davis) sitting in the Chamber—and I have tried desperately to draw attention to the fact that the decision taken by the Secretary of State was based on a false premise.

At the end of that debate I thought that the Minister for Local Government and Environmental Services had agreed that he would review the situation and let me know whether he would see me again, and perhaps invite representatives of the Hackney borough council to see him, to discuss the terms upon which the "hit" list was formed and Hackney was included. I have not had the benefit of hearing from the right hon. Gentleman. I again appeal to the Minister for Housing and Construction to intervene with his colleague to see whether there can be another review of the situation and to examine the information that I am presenting, because I believe that Hackney is being unfairly dealt with.

I am aware that the Secretary of State has indicated that his criteria are simple: "If you have overspent, you are a bad boy and should be penalised. If you have underspent, you are all right." I do not believe that Hackney can be seen to have overspent. Such overspending as can be identified by the Secretary of State is adequately explained by the council's attempt to solve problems, not in a profligate way, but in a way that the Secretary of State, as a human being, would have expected.

Hackney is one of the most successful of the partnership authorities. There is, however, clear evidence that the resources available to the council, especially now that it is on the "hit" list, cannot match the problems that it has to face. I believe there should be an increase in the allocation to enable a proper level of investment to take place in an area such as Hackney, with all its problems. A higher level of subsidy and expenditure should be allowed in all the priority programmes. Ministers have been chairmen of the committees. They have agreed those priority programmes and have commended Hackney on the value of those programmes. Ministers of this Government and of the previous Government were involved. There is common ground that the programmes are relevant to the problems facing Hackney. It is right to ask the Secretary of State to consider allowing a higher level of subsidy and expenditure on the priority programmes.

I urge the right hon. Gentleman to continue or to inaugurate special programmes of assistance. The Minister, who has been to my constituency, is monitoring a valuable contribution that is being pursued by the Department together with Hackney borough council. That is going well. It brings praise from everyone, particularly those whom it is intended to help. I urge the Secretary of State to consider whether further help should not be given to other parts of my constituency that are equally bad. I had thought that the idea of the experimental programme was that it was a forerunner to others in areas such as that which I represent.

Another request that I would make is that the restriction on the acquisition of properties should be reduced. Unless that happens, properties will continue to fall into disrepair and become unusable. Such a move, above all, would give the authority an opportunity to manoeuvre and allow it to offer people things that they want. Otherwise, authorities are put in a straitjacket which makes it impossible for them to operate. I plead with the Secretary of State to invite members of Hackney council to see him to discuss the problems that they are facing. I ask him to treat them not as supplicants, demanding that they should come to him cap in hand and on bended knee, saying that they are sorry. They have no reason to be sorry. They have tried desperately hard to tackle problems that are faced by few other areas in this country. It would be a happy situation for Hackney if it faced only the problems of the hon. Member for Huntingdonshire (Mr. Major). That is not the situation. Hackney has every kind of problem. There is not one problem that any hon. Member can name that Hackney does not have in some measure.

Even at this late hour, I request the Minister to ask the Secretary of State to invite the Hackney representatives to see him. I hope that he will ask my Hackney colleagues and myself to join him, to see whether we can resolve the differences between the right hon. Gentleman and the authority. At the end of the day, we are dealing with human beings. We are not dealing with chequers on a chequer board. People in my constituency are suffering badly. It is the duty of this House, and especially my duty on their behalf, to say "For God's sake, let us find a solution."

5.57 p.m.

Mr. John Major (Huntingdonshire)

I had not intended to intervene in this debate, because I am looking forward to a most pleasant engagement this evening which, as you will be aware, Mr. Speaker, will keep me away from the House for much of the evening. I hope that the right hon. Member for Manchester, Ardwick (Mr. Kaufman), who is at the moment leaving the Chamber, will forgive me if I am unable to return in time for his winding-up speech. I hope that he will acquit me of discourtesy. I assure him that there is an engagement of long standing and of considerable importance to myself and to many of my colleagues.

We always welcome your return to the Chair, Mr. Speaker, on this solitary occasion, but we are a trifle sorry that you did not arrive a few seconds later. I had hoped to congratulate Mr. Deputy Speaker on his sixtieth birthday today. He sat patiently through a spirited exchange a moment ago. His good humour maintained the good nature of that exchange and prevented it becoming something rather more.

Mr. Speaker

Will the hon. Gentleman forgive me? I will convey the good wishes of the hon. Gentleman and of the House to the Deputy Speaker. I hope that he will reach my ripe old age.

Mr. Major

We trust, Mr. Speaker, that if and when he does, he will retain your good humour and health.

There are two specific reasons why I feel I must intervene in the debate. The first is what I thought was a smug and selective speech by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). I am sorry that he is not in his place. Secondly, there was a remarkable outburst by the hon. Member for Hackney, South and Shoreditch (Mr. Brown) referring specifically to myself. I will deal with his remarks first, as he neglected to afford me the courtesy of responding at the time. The hon. Gentleman remembers correctly that when I was housing chairman of Lambeth in the mid-1960s I was greatly concerned about the housing and other problems of Lambeth. I did all that I could to attract to the area that I sought to represent the resources that the area needed.

I ask the hon. Gentleman to reflect on the fact that one of the initiatives taken not by myself but by my colleagues and me in concert at that time was to set up an exchange scheme in which many of the people who lived in poor housing conditions in Lambeth were enabled to move out of Lambeth into Cambridgeshire and other areas, but specifically into the new town of Peterborough—which was then beginning and is now a startling success. That new town, to which many of the people that I represented in Lambeth have moved, now falls partly within my constituency of Huntingdonshire and partly in the constituency of my hon. Friend the Member for Peterborough (Dr. Mawhinney).

I hope that on reflection the hon. Gentleman will acquit me of the charge of dishonesty—surely an unparliamentary allegation—that I thought he made. I have made the point repeatedly about the rate support grant allocation that from the inner London areas, and in this case specifically from Lambeth to Cambridgeshire, there has been a dramatic movement of population to the outskirts, the shire counties beyond London.

Cambridgeshire, the county for which I pleaded at Question Time a few days ago, and on behalf of which I intervened in the speech of the right hon. Member for Sparkbrook earlier today, has the fastest growing population of any county in Great Britain. My constituency of Huntingdonshire is the fastest-growing part of Cambridgeshire. The electoral register reveals that its population has more than doubled since the general election of 1966. People are arriving at an astonishing rate.

The net loss to Cambridgeshire resulting from the allocation of rate support grant under the previous Government over the four years preceding the general election was more than £20 million in revenue terms. It is against that backcloth that I am appealing on behalf of Cambridgeshire, though not for special treatment, because I understand, remember and recognise the problems that exist in inner London, including the hon. Gentleman's constituency.

What I am saying is that Cambridgeshire, with the best will in the world, has endeavoured to help London. It has said that it is willing to help many of the people who live in inner London by bringing them into the environment of Cambridgeshire. That has happened, and the people of Cambridgeshire have accepted those people with an open heart and a ready will. However, if the people of Cambridgeshire are to provide what is necessary they should not be asked to accept the population and then be denied the wherewithal to deal with that population. If they were asked to do that, the time would come when they and the people of other areas, including new towns, such as Bracknell, would say "No more will we go out of our way to help solve the problems of inner London."

I hope that the hon. Gentleman will accept that I have consistently sought not preferential treatment for the county that I represent but a fair allocation of rate support grant—that and no more.

Mr. Ronald W. Brown

I unreservedly withdraw the abuse that I poured upon the hon. Gentleman's head. I thought that he said that London had more than was sufficient for it and that it should now be transferred to places such as Cambridgeshire. I now understand that he was saying that there should be a fairer balance of the needs of London and the needs of Cambridgeshire. Therefore, I withdraw any imputation that he was arguing for less for London and more for Cambridgeshire.

Several Hon. Membersrose—

Mr. Major

I am most grateful to the hon. Gentleman. I point out to those hon. Gentlemen who are keen to speak that I gave way to the hon. Gentleman but that, doubtless to their great regret, I have not yet finished my speech. However, I promise not to detain them for long.

I remind the right hon. Member for Sparkbrook that the rate support grant allocation is a matter of general concern throughout the country. In addition to what I have just said about growing rural populations, I hope that the right hon. Gentleman will bear in mind that, while the problems of the inner cities are great, there is such a thing as rural deprivation, too. The hon. Member for Bootle (Mr. Roberts) need not explode. He can explode on his feet later.

There are many areas in my constituency where the sewerage system, for example, is utterly inadequate. The weight of capital debt passed on to the Anglia water authority has meant water rates far above the rates in inner city areas. That aspect of rural deprivation must not be overlooked when we consider the great problem of housing—I acknowledge that it is great—in the inner cities and many other areas.

I turn to some of the right hon. Gentleman's remarks about housing. I think that I heard him accuse my right hon. Friend the Secretary of State of bluster, dubious statistics and phoney logic. I do not believe that I could have fashioned a phrase so adequately and clearly identifying the nature of the performance that we have come to expect from the right hon. Gentleman. His speeches are typified by a dubious use of logic and a smug assertion that everything done by my right hon. Friend is done for the worst of all possible reasons, to create the worst of all possible problems.

It has been suggested that the introduction of shorthold in the Housing Act was a specific aid to the ending of council houses and that the cutting of the capital allocation was also geared to that end. If the cutting of the capital allocation for housing is intended to cut out council housing entirely, we are bound to ask the Opposition whether that was the Labour Government's motive when they halved the capital allocation for housing in the last two or three years before the last general election. If it was their motive, will they admit it? If it was not, how can they suggest that it is my right hon. Friend's motive?

That is the sort of malicious and irrelevant remark that deliberately divides the House far more than necessary when we face great housing and economic problems. I hope that I shall not sound pompous when I say that, as one who looked at the House from outside until recently, I believe that that kind of extravagant remark devalues its prestige among those who elect us.

We heard from the right hon. Gentleman all the pat socially conscious phrases that he can produce. If there is a problem, we can be certain that the right hon. Gentleman knows about it and has an opinion on it and that, whatever that opinion is, it will be on the side of the angels of the day. I sometimes think that he would embrace any folly and absurdity if he saw a temporary advantage for himself in doing so, with no recognition of the underlying causes of the problems that we face in housing and many other aspects of our current society.

I turn to some specific housing matters that the Opposition have touched on today, though they have done so perhaps less squarely and clearly than I would have wished. The right hon. Gentleman hoped that local authorities would reject the 6 per cent. cash limit within the rate support grant. What would be the effect of that? If bigger salaries are paid, either the services about which he was rightly concerned will be cut yet again or there will be a further and bigger haemorrhage of job losses from local authorities. The only alternative is bigger rate increases or a large and greatly expanding public sector borrowing requirement.

We know from the remarks of the right hon. Gentleman today and of the right hon. Member for Leeds, East (Mr. Healey) yesterday that it is the Labour Party's policy in the present circumstances to increase the PSBR. I understand that. It is a credible position, although I do not believe it to be right. What is not credible by any logical assessment is the suggestion that it is possible to seek a 4 per cent. reduction in the minimum lending rate and to expand the PSBR immediately by £7 billion. How does the right hon. Gentleman think that with a 12 per cent. MLR he would fund an £18 billion PSBR? Would he raise the money by taxes? He could do that, but, if my arithmetic is accurate, it would be necessary to raise the standard rate of income tax to 42p in the pound.

We cannot have that sort of absurdity portrayed as the policy of the official Opposition. If they hold themselves out as ready to step into the role of Government in the near future, they have to produce better solutions to the economic and housing problems, which inevitably are intensified at a time of economic difficulty. The comments of the right hon. Member for Sparkbrook on the 6 per cent. cash limit were utterly unrealistic in the situation facing us at present.

I turn briefly to the Housing Act 1980. I served on the Standing Committee that considered the legislation, and I see a number of other hon. Members present who joined me in examining the Government's proposals, eventually seeing them emerge as the Housing Act.

On balance, the tenants' charter was welcomed by the Committee and throughout the country, although a part of it is arguably the most controversial section of the whole Act, namely, the right to buy. I hope that I do not misrepresent the Opposition when I say that the two principal arguments against the right to buy were that only the best would be sold and that it would disproportionately damage the prospects of those not yet housed. I think that I reflect accurately what was argued in Committee.

Mr. John Tilley(Lambeth, Central)indicated assent.

Mr. Strawindicated dissent.

Mr. Major

I notice that the hon. Member for Lambeth, Central (Mr. Tilley) agrees with me but that the hon. Member for Blackburn (Mr. Straw), who clearly has enjoyed an early dinner and only just returned to the Chamber, does not.

Mr. Straw

The hon. Member for Huntingdonshire (Mr. Major) anticipated my dinner. I have just enjoyed one of the Tea Room's coconut buns, which is all that I have had since lunchtime.

The hon. Gentleman refers to two of the arguments advanced by the Opposition against the so-called right to buy. He omits a third one, which is that the right to buy at this level of discount will waste an enormous amount of public investment and public funds in housing.

Mr. Major

The hon. Member touched on that. I touched on what I thought were the two fundamental objections. However, if he wishes me to do so, I shall deal with the third one that he mentions.

I understand that the difference between the parties on this issue may not be bridgeable, but I hope that we can reach more of an accommodation than has yet been apparent. The point about the best houses being sold can only be true if the housing allocation policies of the local authorities have been utterly wrong in the past. If the people in greatest need were placed in houses of which they had the greatest need, it is extremely likely that most of the people in the two-and three-bedroom houses with gardens which it is said are likely to be sold would be precisely the people—provided that the allocation policies were right—who would not be able to take up the option to buy in the first place.

As for the bad houses not being sold, that is eminently disprovable simply by glancing at the GLC homesteading scheme and its record over the past two or three years.

In my view, the most damaging criticism was that selling council houses would damage the prospects of the homeless. However, we know that the vacancy rate for local authority dwellings is about 5 per cent., although it is not directly measurable. That 5 per cent. gives rise to a very small reduction of the housing waiting lists about which so many hon. Members are so emotive on so many occasions. The counterpoint to keeping the 5 per cent. vacancy rate would have been to deny to 6 million people the opportunity that so many of them seek to become home owners, thereby removing themselves from local authority tenancies, would not least for the security and prospects for capital allocation that that would create for themselves and their families in the future.

Taking the medium-term view for those who seek to be first-time owner-occupiers in five years from now, the sale of those council houses will add dramatically to the volume of low-priced accommodation available in the private market. The greatest gainers over the next five to 10 years from the sale of local authority dwellings may well be those who wish to become owner-occupiers but who at present perhaps are just leaving school and not yet in a position to buy homes for themselves. The supply of relatively low-priced properties in the private sector in five or six years will be infinitely higher than it would have been without this legislation.

I want briefly to touch on two other specific aspects of housing. The first is the housing investment programme capital allocations. My view of that is clear cut and simple. I understand our economic problems, caused not least by the effects of the international recession that has been threatening us for three, four or perhaps five years. As a contribution to our economic retrenchment, the housing programme has played a significant role. I accept and I support the reductions in the capital allocation that have proved necessary thus far. However, if the Treasury comes back looking for more, I can assure my right hon. Friend the Secretary of State that he will have a far greater measure of support from Government Back Benchers than he may realise if he tells the Chancellor of the Exchequer that there is no capacity for further capital cuts in the housing investment programme in the foreseeable future. Housing has borne its share of cuts and, in capital terms, a substantial share. There should be no more.

I turn even more briefly to a statement made earlier by the right hon. Member for Sparkbrook on the subject of the shorthold provisions of the Housing Act. He said "Shorthold dies unmourned", assuming that the Opposition persist with their intention to repeal it should they ever be given the chance to do so. However, it does not die unmourned by the people who might have been housed by it. Nor does it die unmourned by people who may be homeless in the near future and may have enjoyed and wished for a short-term let. It does not die unmourned by students who may move round and require short-term lets. It does not die unmourned by people who, had they been satisfactory tenants, would have expected their tenancies to be renewed time and time again by their landlords.

Never has the Conservative Party claimed that shorthold provided the renovation of the private sector. My right hon. Friend the Secretary of State said that it would arrest the decline in the private sector. That has always been our position. It may and will arrest the decline in my constituency and, but for the pledge by the Opposition, it would yield up fresh lettings which otherwise would not have been there given the rental policies which applied before.

Mr. David Winnick (Walsall, North)

Does not the hon. Member understand that the fundamental disagreement between the two sides of the House about this issue is the Opposition's belief that tenants should have proper security? What security can there be in a one-year tenancy, especially when the tenant will not know from year to year whether the tenancy will be renewed?

Mr. Major

We debated this matter ad nauseam in Committee. However, there is even less security in being homeless than in having 12 months' security of tenure, with the possibility of its being renewed.

There are many people who will be made homeless because the right hon. Member for Ardwick decided that the Opposition would repeal the shorthold provisions in the Housing Act if they were ever given the chance. They chose not to wait to see whether the scheme was a success. They made up their minds, with the result that the scheme was crucified before it had a chance to operate. In an interview reported in the Local Government Review, the right hon. Member for Sparkbrook expressed clearly his opposition to shorthold before the Standing Committee had even met to discuss the matter.

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

Before Second Reading.

Mr. Major

Before Second Reading, my hon. Friend says. What an open mind that portrays to those who are homeless and to those who might have benefited from this innovation in housing.

If shorthold had been tried, if it had been allowed to operate for three or four years, and if then it had failed, I should have agreed with the Opposition's decision to scrap the measure if they became the Government. But what did they do? They decided to bring the guillotine down on its neck before it had a chance to make a contribution to help homeless people. Hon. Members who have had experience, such as the hon. Member for Hackney, South and Shoreditch, should know that shorthold could make a significant contribution to remedying the plight of many homeless people. It is a tragedy that the Opposition's closed mind has locked that out.

The economic climate has driven the Secretary of State and the Government to difficult decisions about housing. We recognise the problem. However, many innovations have taken place. I have heard no mention from the Opposition of the near-doubling of maximum rent rebates introduced by the Government. Many aspects of Government policy are wholly welcome, beneficial and desirable and would have been enacted many years ago had the Opposition not been so blinded by their dogmatic refusal to face the realities of our housing problems.

6.20 pm

Mr. John Tilley (Lambeth, Central)

I spent 136 hours on the Housing Bill Committee, and I am inured to the blandishments of the hon. Member for Huntingdonshire (Mr. Major) when asking for a bipartisan policy. In the last few moments of his speech, he revealed that by that he means that the Conservative Party should adopt a housing policy and that the Labour Party should then accept it.

I shall keep the House for only a few moments to talk about an aspect of housing on which there was considerable support from both sides of the House in Committee. I refer to housing co-operatives. On Second Reading the Secretary of State said: 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."—[Official Report,15 January 1980; Vol. 976, c. 1454.] If the Secretary of State has taken that interest, he will know that the housing co-operative movement is suffering serious blows as a result of his Government's policies. All that we have had is lip service from Ministers. The reality spells disaster for the co-operatives.

There has been a cut in cash available to the Housing Corporation. The corporation has had to impose cuts on all the housing associations, and upon co-operatives in particular. Partly as a result of that, it is in the process of disbanding its team of co-operative specialists. That means that housing co-operatives that want to enter that sphere will not have the detailed help that they had before. The corporation is pushing housing associations to concentrate on houses for sale rather than on providing decent rented accommodation. The other source Of funds for housing associations and co-operatives—the local authorities—is drying up as local authorities struggle to maintain their own building programmes under the reduced housing investment programme.

A co-operative in my constituency is facing a typical experience. I refer to the Bonham and Strathleven Road co-operative. It was formed four years ago by about 60 people living in a small area of Brixton. The Metropolitan Housing Trust agreed to buy and improve houses for the co-operative so that some members could move in and people still waiting would have the chance of decent housing in the not-too-distant future. Eventually, as the co-operative acquired skills and experience, the houses were to be handed over to the tenants, who would have full control.

So far, homes have been provided for about 18 people. A further 12 were to have been housed under this year's development programme, but that programme has had to be scrapped. The co-operative has explained some of the consequences in a letter which states: No. 67/67a Strathleven Road, SW2 was to have been converted into two flats for four members. We actually own this house but cannot convert it so it is likely to stand empty. 3 Lambert Road, SW2 was to have been a scheme for 8–10 single members, some of whom have been in the Co-op since the start and contributed a great deal to its progress. This house cannot be bought and is in such bad condition that it is unlikely anyone else will convert it, other than a private speculator. The letter continues: I am sure you can imagine the bitter disappointment of those members who had expected to get improved houses in the near future when they realised the prospect of that is now as distant as ever. They were encouraged 3 years ago to form a co-op and have put a great deal of their time and energy into making that co-op work, only to be told that there are no funds to keep it alive. Many of our members are already living in substandard conditions in short-life properties and joined the Co-op to find an alternative to this. Many of our members are young single people who have no eligibility for housing in the rest of the public sector. That is only one example from several parts of the country of co-operatives being blighted by Government action. The co-operatives were trying to find a way between local authority housing and owner occupation. In spite of verbal Government support, those involved are suffering directly as a result of Government cuts.

There is a strong chance that it will no longer be possible for par value, or fair rent, co-operatives to get off the ground even if they do receive funds. That is because of the strong evidence that the Housing Corporation is considering refusing to register such co-operatives. Equity-sharing co-operatives, under which people pay large cash deposits or rents that are way above the fair rent level, are being encouraged. I do not suggest that they should not continue, but if the par value co-operatives are not registered and cannot be formed, co-operative housing will be well beyond the reach of many low-income families. Many families can afford only a fair rent as fixed by the rent officer, with the possibility of a rent allowance where appropriate.

In Southwark, the Greater London Secondary Housing Association is involved in a "new build" scheme If that were an equity sharing scheme, the weekly payments would be—38.50 for a one-bedroomed flat. If it were a par value co-operative, the fair rent would be about £13 a week. That shows that if only equity-sharing co-operatives are allowed, normal working people and retired people will have no chance of being involved in co-operatives. That will defeat the purpose of housing co-operatives.

Par value co-operatives were begun in 1976 in response to special needs. Large numbers of empty properties existed in inner city areas, but there was still a critical housing shortage. People affected by the lack of housing fell outside existing structures. They were single, one-parent families or pensioners on low or fixed incomes who could not obtain mortgages, did not qualify for council housing and were unable to afford real private sector rents.

The co-operatives have boomed since 1976. More than 100 have been formed, with more than 6,000 homes provided. If the Housing Corporation decides to refuse to register fair rent co-operatives, public funds will no longer be available and further expansion will be killed stone dead.

The only reason given for this attitude is that too much time and effort by Housing Corporation officials has to be spent checking up on the co-operatives. Officials have to do their work in the evenings or at weekends because the tenants themselves are involved in the co-operatives and paid officials are not available. I hope that the excuse of bureaucratic inconvenience will not be allowed to stop the work of the Housing Corporation. I hope also that the excuse does not hide a more fundamental, ideological opposition to such co-operatives. I hope that Ministers are not expressing to Housing Corporation officials their dislike of such co-operatives because they fall outside the right-to-buy provisions of the Housing Act, because it would be extremely unfortunate if they were doing so.

The Government must accept that there are people who want to own their homes collectively, without making a profit. We want the Government to show that however much they favour individual owner-occupation—they rarely lose an opportunity to tell us that they are in favour of it—they also must appreciate that there are other ways of providing decent housing and that par value—fair rent—co-operatives are such a way. Unless the Government intervene now to make sure that the Housing Corporation does not refuse to register par value cooperatives, a new and important pioneering form of cooperatives will be killed stone dead, and the responsibility for that will rest fair and square with the Government. Either tonight or in the near future, the Government must make a public declaration of support for this sort of housing co-operative, to which Ministers paid lip service in Committee and on Second Reading. We want a real declaration of support, to ensure that these co-operatives do not die.

6.32 pm

Sir Albert Costain (Folkestone and Hythe)

During the years since 1959 that I have been a Member of Parliament we have had a number of debates on housing. I have attended every debate and have spoken in all but one. I chose not to speak then, in order to give new Members with many new ideas on housing an opportunity to express their views.

When I spoke in 1959 I said that the only commodity in this country that was in short supply was houses to rent. I pointed out that that was the only commodity that was controlled. I prophesied than that unless the then Labour Opposition made a statement saying that they would not alter the Rent Acts we would continue to have a shortage. I went one stage further. I was then a director of several companies, many connected with building and property. I told Mr. Michael Stewart, who was then the Opposition spokesman on housing, that my group would build 5,000 houses every year to rent if the then Opposition would pledge that they would not introduce any further rent legislation. Following that discussion, three other leading property owners said that if my company built 5,000 houses a year for rent their companies would do likewise. That would have been 20,000 houses a year—20 years ago. We would by now have had 500,000 houses to rent, and we would not have needed a debate on housing today.

Our debates today are about ways of getting round the shortage, but we still keep control and we still have shortages.

Immediately after the First World war, in the early 1920s and 1930s, my company used to build what were called "spec" flats in Liverpool, Bootle, London and other parts of the country. Dolphin Square is one of those buildings, and about 60 hon. Members live there. Having built those flats, we sold them to the trustees of pension funds—many of them trade unions which bought them as a good investment.

Mr. Allan Roberts

Is the hon. Gentleman aware that in the Housing Act 1980 there is a new concept in tenancy called an assured tenancy, which has not been made great play of by Conservative Members today who have concentrated instead on the shorthold provisions in the Act? That provision allows developers or speculative builders to build houses for private rental, without being subject to any Rent Act provision. Is the hon. Gentleman saying that, now that those provisions apply, it would be viable for his company to build such houses and get people to live in them at economic rents?

Sir Albert Costain

I am only a shareholder in a property company now, so I cannot comment on that, but, if the hon. Member for Bootle (Mr. Roberts) wishes to test that, would he care to ask some of his friends in the union pension funds whether they would be prepared to buy such flats if they could not get a guarantee that an incoming Labour Government would not alter the law? I was almost driven to tears this afternoon when I heard the Opposition fighting and saying that they would rescind the shorthold tenancy provision. The shorthold provision is vital if we are to get people to let their houses instead of selling them. Many people wish to let their houses and will do so if that provision remains in the Act. At present there are many houses for sale at prices that people cannot afford to buy, which the owners would let if they could be assured that an incoming Labour Government would not rescind the shorthold provision. They could be sold to property companies or pension funds.

Why on earth do the Opposition try to make housing a political issue? It is because they basically hate the landlord. Do Labour Members realise that a number of landlords are trade union pension funds?

When my company used to build flats for letting, the trustees of certain pension funds owned by trade unions said that they would prefer us to build offices. So we built offices, when houses were needed. Many hundreds of thousands of people are homeless today because we continue to bring politics into housing.[Interruption.] Hon. Gentlemen may laugh, but let their laughter be recorded in their constituencies.

Mr. Stan Thorne (Preston, South)

Will the hon. Gentleman explain how we keep politics out of housing?

Sir Albert Costain

I know that it is there, but it should not be there. It used not to be there. It is there now because there seems to be some political mileage in it.

I remember, as a young boy, travelling with my father in the first Ford car he ever bought to the first council housing scheme in Bootle, which had been built by the Bootle corporation to ease the housing shortage there. The price that I had to pay for riding in my father's Ford—which used to have to go backwards up a hill—was to write a report about what I had seen and learnt on the site. If I made a good report, I got a ride in the car the next day, so I did my best to take it all in. I remember people saying that those houses were built by Lloyd George as homes for heroes.

There were those who said "They will not live in them for long. They will say that they are alms houses. They will say that it is charity. How are we to fill them when there is no demand?"

As I have said, the first council housing estate was built at Bootle. What has happened? Council houses have not become homes for heroes. The only "heroes" are those who do not need the houses and who get them on the cheap. There are many who will admit that they do not mind whether their house is provided by the council or by private enterprise. They merely want a house. There are some who prefer a private landlord because they can get to know him better than council officials. There are some who do not want council officials to know the details of their rent and their income.

The general public want houses to rent. They are prepared to have a private landlord. However, Labour Members must build the image of the private landlord being a character from Charles Dickens who wants to rape the daughters of those who do not pay their rent. That is nonsense. The private landlord is often a private corporation.

If the Opposition are prepared to say today that they will not rescind the shorthold tenancy provisions, there will be an enormous number of houses put on the market for sale.

I have been writing to my right hon. Friend the Secretary of State about the difficulties of having houses altered for invalids. There is a rather pathetic example in my constituency. I am glad that my right hon. Friend has exempted alterations of houses for the disabled from the requirements that otherwise would apply. It is a good move. It may be only chicken feed, but for those concerned it is great.

How is the Secretary of State to deal with a local authority that overspends? Until very recently, any local authority that overspent could do a Harvey Smith to the Secretary of State and he would not be able to do very much about it. As in all the biblical stories and all the stories that we heard at school, the whole world must suffer because of a few naughty people. That is why local authorities suffer.

Housing should come under capital account, but the public financing of housing comes under revenue account. The cost of building council houses comes under revenue account when in civilised private enterprise accounting it would come under capital account. It would be written off over a number of years.

Labour Members talk about the sale of council houses in terms of taking away public assets. As I understand it, no council house can be sold for less than the value that is entered in the council's books. No council can make a physical cash loss on selling a council house. However, a council is permitted to sell a house at a price that is up to 50 per cent. of its market value with vacant possession. The house that the council sells does not have vacant possession. If the council were ruthless and obtained vacant possession, it might get its price. However, it is allowing the house to be sold with occupation. There is a 50 per cent. discount. The council is not losing money.

Indeed, it will be enjoying a gain. I note that some Labour Members are laughing. If they want a course in property dealing, let them come to see me some time.

Mr. Anderson

Will the hon. Gentleman put into the equation the cost of replacing the asset at current values?

Sir Albert Costain

The cost of replacing the asset at current values will be greater than the sale price. The sale price includes the occupation factor. It will cost more to build a new house, but there will be two houses. The house that has been sold has not, as it were, been blown sky high. The person who bought the house will be living in it.

Mr. Allan Roberts

That is nonsense.

Sir Albert Costain

Is the hon. Gentleman suggesting that a person will buy a house and not live in it? The more that we probe these issues, the more we come to realise that housing is in a mess. It is no wonder that it is in that mess. We must get back to reality. The reality is that if one house is sold and one house is built, there are two houses. There is another house to let.

One of the problems that has resulted in unemployment is lack of mobility. If a person owns his house, it is much easier for him to move to another area. He is able to sell his house and buy another one in the area where he wishes to live. It is not so easy for a tenant to move. If he has a council property, he will have to put a notice in a newspaper that states "I want to move from Folkestone to X. Is there someone living in a council house in the area where I want to live who wishes to retire to Folkestone?" It is much easier to sell a house. That results in more mobility of labour.

The Government have now produced a granny bond. They have come to the conclusion that it is a good thing that the public are as anxious to enjoy a capital appreciation as they are to receive income. The object of the granny bond is to hedge bondholders against inflation. Why do we not produce a housing bond on exactly the same lines as the granny bond? There are many who invest in building societies, but that investment is no hedge against inflation. There is merely a high rate of interest.

If half of an investment were placed in ordinary building societies and the other half in a housing bond, the result would be rather similar to what happened in America during a period of recovery. That type of financing would remove housing from the country's capital account.

I thought that some Labour Members would say "That is what housing associations are all about." They have not, and that indicates the extent of their knowledge. In fact, they are about that, but only in part. I suggest that a housing bond on the lines that I have suggested would enable us to start building again regardless of the financing problems of local authorities. There is an idea for the Minister. It is equally an idea for the Opposition. I should be delighted if Labour Members had the guts to say "We shall not reverse the law on shortholds." Anyone who tries to reverse the shorthold provisions is stopping the supply of housing and should be ashamed of himself.

6.39 pm

Mr. David Alton (Liverpool, Edge Hill)

It was interesting to listen to the recollections of the hon. Member for Folkestone and Hythe (Sir A. Costain). He made an interesting observation about homes for heroes. That was one of the promises made after the First World War. One of my constituents put it very well to me recently. She lives in a home without an inside toilet or bathroom, and she said "In these days you have to be a hero to live in these conditions." There are over 1 million people in Britain who are still living in homes without inside sanitation and for them the set-piece battles that take place so regularly when policies are swung drunkenly to and forth have no real value.

In a perceptive speech, the hon. Member for Hornchurch (Mr. Squire) talked of the dangers as our housing funds are slashed. That point was also made by the hon. Member for Huntingdonshire (Mr. Major). I entirely agree. We have now passed the first piece of major housing legislation. It is disappointing that the Queen's Speech makes no mention of future housing legislation. The old battle cries are becoming increasingly irrelevant to the problems. The housing authorities of the future will have a complex mixture of roles, for which the old slogans will be a poor guide. The steam has gone out of the housing argument. The biggest slum clearance programme anywhere in the world, having been completed, and the biggest housing improvement programme of any country in Europe having been mounted, a variety of unorganised and less popular minorities are now left in housing need. Their requirements are often forgotten.

The hon. Member for Lichfield and Tamworth (Mr. Heddle) mentioned the Housing (Homeless Persons) Act. My hon. Friend the Member for Isle of Wight (Mr. Ross) sponsored that Bill. It was not promoted primarily by the Labour Party, as the hon. Member suggested. He said that he hoped that the Act would be repealed. That would be appalling and would cause immense problems for the homeless. However, we all know that there are no votes in homelessness.

Mr. Heddle

I said that I looked forward not to the legislation being repealed but to my right hon. Friend's review of the Act. Since its enactment in 1977, it seems not to have done that which it set out to do. It has increased the incidence of homelessness from 36,000 to 56,000 families.

Mr. Alton

That remark shows the naivete of the hon. Gentleman. The Act has not increased homelessness. The policies of this Government, and those of the previous one, have increased the number who have become homeless and need to be helped by local authorities, upon which a statutory requirement is laid under the Act. That is why the Act is so important. Those people were not previously a figment of the imagination. The hon. Gentleman, by his remarks, has turned homeless people into scapegoats, which is most unfortunate.

Mr. Keith Best (Anglesey)

I might be able to assist the hon. Gentleman. Is he aware that in 1978–79 about 40,000 lettings were made to homeless people, which was only 13 per cent. of the total number of lettings? Sometimes, the furore over the Housing (Homeless Persons) Act is unjustified.

Mr. Alton

The point that I am making is that to talk about repealing part of the Act or to try to diminish the need for that legislation does the homeless no service. The recommendations of CHAR and the comments of the hon. Member for Leeds, West (Mr. Dean) on the way in which we deal with homelessness prove that we need additional legislation. We should not try to diminish the provisions of the existing Act

Mr. Allan Roberts

The hon. Member for Liverpool, Edge Hill (Mr. Alton) is not the only hon. Member who represents Liverpool, as the two previous interventions appear to suggest. Many of us represent Liverpool constituencies. Does the hon. Gentleman agree that the Housing (Homeless Persons) Act should be extended to cover single people? Does he agree also that the intentional homeless clause should be looked at, because it is being used by reactionary councils to get round their responsibilities?

Mr. Alton

I agree with the hon. Member—whose constituency falls outside the boundaries of Liverpool—that the intentionally homeless clause. is being used wrongly by some local authorities. Again, there are no votes in the single homeless. It is not a popular issue in the electoral battleground. We seem to spend too much time on the old arguments about whether houses should be sold and not enough time dealing with fundamental issues.

Since the Secretary of State took office, rents have gone up by 23 to 28 per cent. His announcement today means that they will have gone up 50 per cent. in two years. However, practical measures can be taken to reduce local authority rents. It is a problem that all local authorities, the Government and the Opposition have to face. There would have been some increase whichever party was in power. The Opposition's objection is to the way in which the Secretary of State made his announcement, in a written reply, at the eleventh hour and tried almost by subterfuge to prevent hon. Members from knowing about the increase and taking action. He could not be challenged during the several days of recess before the new Session began.

The scale of the rent increase perturbs us all.

Mr. Kaufman

Is there not a further point? This is not a rent increase that is being decided by local authorities to deal with the needs of their housing revenue accounts but one that is being imposed by the Government by the use of a section in an Act which, when the Bill was being discussed in Committee, the Government denied was designed for that purpose.

Mr. Alton

That adds to the subterfuge. It is a further erosion of the right of local authorities. They should determine the levels of rents and rates. The erosion of local authority power is evidenced not only in the Housing Act but in local government and planning legislation. Local councillors are elected on mandates to deal with rents and rates. Their rights to take such decisions are being eroded.

One of the most perturbing aspects about the state of housing revenue accounts is the high levels of rent arrears. Between 1978 and 1979, rent arrears were £61 million. We should tackle that problem. Many council tenants pay their rent regularly and, whatever the increases, will continue to do so. I feel that it is unsatisfactory that they should subsidise those who cannot be bothered to pay their rents. I am not talking about those who cannot afford to pay. There are rebates and allowances to help such people, and it is also possible to have rent paid direct.

But there is insufficient co-operation between the Department of Health and Social Security and local authority housing departments. Perhaps the Minister could try to bring them together. Often one of the biggest debtors to a local authority is the DHSS, which does not always pay the backlog of arrears. We should try to reduce the high level of arrears for local authorities.

We should also try to reduce the large number of empty properties owned by local authorities. The hon. Member for Folkestone and Hythe and others referred to the private sector, but properties are empty in the public sector and are bringing in no revenue. We must try to increase the speed of lettings and ensure that vandalism does not occur between lettings. That would be a more constructive approach in getting value for money than arbitrarily putting up rents by extortionate amounts.

It is also a more constructive approach than suddenly imposing a moratorium, again before Parliament reassembles. No one can convince me that the Government could not have waited five or six days so that the announcement could be made in the Chamber. It was most unfortunate that the Secretary of State made the decision before Parliament reconvened. We have heard nothing about when the decision will be rescinded or the moratorium lifted. It has halted house improvement programmes and stopped the construction of new homes. More construction workers will be on the dole as a result. It makes no economic or social sense to pay £6 billion or £7 billion a year to keep construction workers and other unemployed people on the dole when there is work to be done and their talents and skills could be used.

I come now to the improvements programme. Some years ago, the bulldozers were pensioned off and it was decided to renovate and modernise homes. Millions of pounds have been invested in housing action and general improvement areas. But, as a result of the moratorium, there will probably be a patchwork quilt of decay and renovation in our inner-city areas. It will mean that many homes will not now be improved. It will also mean that those that have been improved will linger and languish alongside houses that are derelict, ugly horrible eyesores, a breeding-ground for vermin and totally unfit for people to live in. That is why the moratorium was unwise. I hope that the Minister will give us some indication of when it will be lifted.

There is also the question of the right to buy—an idea that was much vaunted during the first 12 months of the Government's period of office. We were given no indication today by the Secretary of State of what level of sales had been achieved. I am sure that those figures will be interesting when they are brought to the House in the near future. From my experience in my own constituency, where more than 30 per cent. of the people are out of work—many of them council tenants—I know that the sad truth is that they simply cannot afford to buy their own homes. Many of them will not be able to take up the opportunities afforded to them by the legislation that the House has enacted. Rather than bandy slogans about the right to buy, it would be more realistic and helpful if the Government would let us know how this scheme is working. If they did so, the House could perhaps reconsider its attitude.

I turn now to shorthold. I am not against the idea of empty properties in the private sector being used for a short period by people in housing need—far from it. It is a good idea and it is one that I supported when it was recommended by Conservative Members in a Private Member's Bill. However, the provisions that the Government brought forward were very different from the provisions in that original Private Member's Bill. Many Opposition Members felt that they could not support the shorthold arrangements because many of the safeguards were removed and it could become a charter for Rachmanism. Many of us would like to see the introduction of shorthold experimental areas on a limited basis, to see how the proposal works. If we were convinced that it could go ahead without causing all the problems about which we have fears, I am sure that the Government would receive support from Opposition Members.

I turn to the mortgage rate. It is ironic that before the 1974 general election it was the Prime Minister herself who talked about fixing the mortgage rate at 10 per cent. She said that it would not go higher than 10 per cent. if a Conservative Government were elected.

Mr. Kaufman

The right hon. Lady actually promised 9½ per cent. by Christmas.

Mr. Alton

Perhaps an allowance for ½ per cent. can be made, but the present mortgage rate is 15 per cent. That is why many people cannot afford to buy their own homes. It is a reason why many people have been forced to sell and have become a burden on the local authorities. Perhaps it is one of the reasons why the number of homeless people is increasing. People are being forced to give up their owner-occupied property. I have met such people at my housing advice surgeries, and I can supply factual evidence of that.

Mr. Anthony Steen (Liverpool, Wavertree)

Is the hon. Gentleman aware that more than 4,000 houses and flats in the ownership of Liverpool city council are at present unoccupied? Does he consider that they should be occupied first?

Mr. Alton

Had the hon. Gentleman bothered to be present for the earlier part of the debate, and had he been here at the beginning of my speech, he would have heard me refer to the scandal of empty properties in the public sector. I agree that something should be done about that problem. Indeed, the number of empty properties in Liverpool has doubled since I was chairman of the housing committee. I do not think that that is the fault of the local authority, be it Labour or Liberal-controlled—it has rotated between the two for the last 10 years. It has far more to do with the reduction in funds that are made available to the local authority. As a result of the Government's policies, Liverpool is at present overspent by £2.5 million due to the reduction in funds to the housing investment programme. The number of vacant dwellings are increasing at the rate of 30 a month. Rents are to go up by £2.85 this year, plus the increase that will have to be added as a result of the Secretary of State's announcement.

The how Gentleman's party has nothing to write home about. He would do far better to question his own Ministers about the reduction in funds which enable local authorities to turn over vacant properties at a faster rate. One must also accept that the community itself should do more to try to detect those who are committing crimes of vandalism, and it should ensure that the police are made aware of who are the culprits.

I want to refer to the question of housing co-operatives. The hon. Member for Lambeth, Central (Mr. Tilley) referred to the lack of help that housing co-operatives receive. II is a great shame that there are no recommendations in the Gracious Speech to enable tenants on council estates to take over the management and control of their properties. If such management co-operatives did exist, I am sure that many of the problems referred to by the hon. Member for Liverpool, Wavertree (Mr. Steen) would be removed, because tenants would have a greater responsibility and involvement in the running of their own affairs. That will not be achieved by the sale of a house here or there. We must go far deeper into the problem, and that means initially the establishment of management cooperatives.

I turn next to the question of sheltered accommodation. In Liverpool at present, one-third of the people are over the retirement age. There is a massive shortage of sheltered accommodation. That inevitably means that many houses are under-occupied—houses that could be used for people and families in need who are now on the waiting list. While there is a shortage of sheltered accommodation, it is impossible to rehouse those elderly people. It means that people are remaining in under-occupied property, and that is something to which the Government should turn their attention.

Then there are the problems of the North-West in general. The cuts in housing association budgets will exaggerate the region's growing housing crisis. Local authority building has been cut back to the core. Private building for sale and rent is in serious decline. The Select Committee on the Environment has looked at the output from the private housing sector over the next few years and has concluded that The private housing sector will at most make only a small contribution to offset the reduction in public sector investment. Furthermore, in 1979 more than 25 per cent.—600,000 out of 2.4 million, the highest proportion of any English region—of all the homes in the North-West were unfit for human habitation, lacked basic amenities or needed major renovation. A total of one-third of the region's housing stock was built before 1914. The Department of the Environment's quality of life indicators show that the North-West is below the national average in respect of 21 out of the 26 factors selected. Unlike some parts of the country, there is an absolute shortage of homes in the North-West.

Local authorities have estimated that there is a need for 223,000 additional dwellings by 1984. Homelessness is on the increase. Waiting lists are swelling. More than 150,000 families are on local authority waiting lists in the North-West alone, and more than 400 families are in bedand-breakfast or hostel accommodation. The elderly, single parents, those who are already in substandard housing and the poorest in our community will be the hardest hit as a result of these housing cuts.

One of the groups that has done most to try to tackle the problems of bad housing is the voluntary housing movement—the housing associations. Housing associations have produced 235,000 homes through new building and property rehabilitation. In the 10 years 1970 to 1979, 135,675 new homes were created as a result of new building and 99,857 as a result of property rehabilitation. In the last four years of that period, completions averaged 36,000 each year, including an average of just over 1,000 in Wales. This year, however, North-West approvals are down from 8,429 to 3,450, and the total stock of the voluntary housing movement was approximately 410,000 homes at the beginning of 1980. It will be interesting to see what the effects of the cuts will be on the voluntary housing movement.

In the years 1977–78, 1978–79 and 1979–80, loan approvals to housing associations in England through the Housing Corporation provided for an average of about 33,500 homes each year. There were 34,579, 32,455 and 34,494 in those three years successively. About half were in schemes of new build and half in schemes of rehabilitation. In 1980–81 the housing association movement had to shoulder a heavy share of the public spending cuts. The level of Housing Corporation loan approvals for the year was cut by 35 per cent. this year, to 21,700 homes in England. However, because it became clear that the cost of the new programme, when added to the cost of schemes coming through the pipeline, would exceed the cash targets set by the Government, the moratorium announced by the Minister on 12 September was suddenly called. For a month no schemes proceeded. Now, a much-reduced programme has been resumed, with loan approvals down to 14,900, and building work on a large number of sites and properties has been postponed until next year or, in some cases, indefinitely.

That is not the whole story, because housing associations have also borrowed money for their work from local authorities. Loan approvals for about 8,000 homes were given by local authorities to housing associations in 1979–80. Because of the need to cut their spending, many local authorities have stopped lending for further schemes and are cutting money for schemes already approved. The effect of that loan approval in 1980–81 will probably come down below 3,500 homes for the year. The picture for 1980–81 is of a probable level of loan approvals for about 18,000 homes, compared with 42,500 last year. That represents a cut in the programme of nearly 60 per cent.

Mr. Stanley

Will the hon. Gentleman acknowledge that the figures that he has given for loan approvals are highly misleading and in no way represent the level of activities of housing associations? As I am sure he knows, there is a substantial pipeline of housing association activity, and the Department estimates that at the beginning of this financial year about £700 million of housing association activity was in the pipeline. That represents about 50,000 units of accommodation.

Mr. Alton

The figures that I have given were provided for me by the National Federation of Housing Associations. Frankly, I believe its figures. After all, its members are people working at the coalface. They are having to administer the Government's policies and shoulder the burden of the cuts. The difference between funding in 1981–82 at £420 million and, say, £400 million makes a huge difference to the work of associations. Falling below 20,000 homes because of corporation funding means depriving people in extremely harsh circumstances of a decent home. It also reduces the level of activity of the movement at large to a point from which it may prove impossible to recover in the years ahead.

I wish to relate that to the cuts that have been made in the public sector. The Government's White Paper on public expenditure set out proposals for cutting public expenditure. The aim is to reduce it from £69,500 million in 1980–81 to £60,100 million in 1983–84. That is at constant 1979 prices. In reality, it will actually be an overall cut of £2,400 million. The cuts in public sector housing over those three years amount to £1,910 million, and 80 per cent. of the cuts come from the housing section of Britain's economy. The cash to housing has been cut by 40 per cent.

The Secretary of State has not made clear how the global figure will be achieved by local government or how it will affect different sorts of housing activity. That is part of the new freedom that he gave to local authorities—the freedom to determine how to make their cuts. Local authorities are having to face cuts, Housing Corporation Loans to associations are being reduced and local authority loans to associations, expenditure on council housing, home loans, improvement grants and so on are all being cut. In overall terms, housing is taking the brunt of public expenditure cuts, which means that local authority and housing association activities are being reduced in real terms and placed in competition with each other in achieving cuts.

The Secretary of State suggested that a substitute for the funds could be found in three separate areas, all of which will badly hit housing associations. First, he suggested that more money could be found by raising rents. If rents are raised at a higher rate than costs increase, the net gain can make a significant difference to the housing revenue accounts of local authorities. However, the housing association rents are currently 30 per cent. higher than those for comparable council houses. In any case, they are set by rent officers and are not under the control of the housing associations. Raising the rents is no use to them. It does not compensate for the funds that they will lose.

Secondly, the housing associations have been told that they can find more funds by selling properties to existing tenants. Although there may be opportunities for local authorities to do so, few housing association tenants have the statutory right to buy or the associated favourable mortgage and other arrangements. Most association homes are owned by charities and meet specialist needs where sales would not be appropriate. Because half of the stocks of the voluntary movement have been completed in the past eight years, there are few surpluses, after deducting discounts, from any property.

Thirdly, the Secretary of State suggested that the loss of funds could be compensated by reducing the number of employees and by ensuring wage restraint. Again, that has a minimal effect on the financial problems of housing associations. Only just over 1 per cent. of the total expenditure of the voluntary housing movement's programme goes in salaries to association staff, because it does not have direct labour departments. Only in a minority of cases does it employ in-house professionals. Where it has its own architects or surveyors, it normally contributes a surplus that offsets other costs.

It is important to remember that local authorities are passing on much of the burden of public expenditure cuts direct to the housing associations and the voluntary housing movements. They are in an extremely exposed position, and a threat to their very existence hangs over their work. Even though it may be fully acknowledged that they are doing an important job, without public funds they will wind down, to the detriment of those who desperately need their help. That is why I said to the Secretary of State during one Question Time that by his policies he is turning what was known as the third arm of housing into the dead arm of housing.

I recall the words of the Secretary of State when he spoke to the CBI a couple of weeks ago. He said that sacrifice "was not an option" and that "someone would have to make sacrifices". He then compared himself with Wellington before the Battle of Waterloo. It is precisely that sort of pretentious nonsense that is at the core of our problems. While he is fighting imaginary battles, people are living in homes that are turning into rotting slums. They are living in conditions that defy description. Local authorities and housing associations are grinding to a halt because of the Government's policies. Instead of fighting imaginary battles, the Secretary of State should come and see the real battles that are being fought, not only in our inner city communities but in our rural areas, where there is rural deprivation and when houses there are also in a great state of decline. To ignore those problems is to fly in the face of disaster.

7.18 pm

Mr. Keith Best ( Anglesey)

I hope that I shall be forgiven if I do not fight any battles tonight, because the spectre on housing is a damned close run thing anyway. I hope that I can find some degree of consensus, notwithstanding that housing is always a tendentious matter. I shall seek to be brief, not least because I know that my hon. Friend the Member for Ilford, South (Mr. Thorne) wishes to speak. We have an important engagement tonight. I am sure that you, Mr. Deputy Speaker, know what that is. It would be wrong for us to miss it.

We are all agreed that it would be beneficial to spend more money on housing. We can all find ways in which to do that. We all have our own pet schemes, arid some of them have been articulated tonight. That is why it is important to ascertain whether the money that we now spend on housing is spent wisely. Perhaps there are no Members in the House tonight who feel that more poignantly than those who represent Wales and who know of the poor housing stock and the need to do something drastic for Wales on the housing front.

The hon. Member for Liverpool, Edge Hill (Mr. Alton) mentioned the number of houses throughout the United Kingdom which do not have inside toilets and bathrooms. There is a million of them. In 1978 there was a million more which needed in excess of £1,000 to be spent on them to bring them up to a suitable state of repair.

I should like to pose one very simple question to the House tonight: can we continue to spend money as we do in the public sector when it is obviously not the most beneficial way of using the resources available?

I remember reading a newspaper in which there was a headline referring to the staggering cost of a council house. The report stated that Every three-bedroomed council home now being built in London will cost a staggering £216,000. Even in low cost South Wales the eventual cost will be nearly £80,000. It went on to explain the source of those figures as being the interest charges on the loans required to finance council house building, which dwarf the subsidies paid and, indeed, the construction costs and the costs of buying the land in a particular year. That is surprising in itself. What is even more horrifying perhaps is that the report was from a newspaper dated 15 November 1975. The position today is even graver than that.

The other matter that one has to throw into the equation is the amount that is found from the people occupying council houses as a contribution towards the cost. I know that in the Financial Times yesterday it was stated that that figure was no more than 40 per cent. of the annual cost. I choose figures which are even unfavourable to my argument, but I choose them because they come from Wales and because they were given to me in a written answer on 14 June last year. The answer showed that the council house costs in Wales that were covered by gross council rents went from 78 per cent. in 1972–73 to 58 per cent. in 1978–79. That means that the taxpayer and the ratepayer are having to fund a tremendous amount—in excess of £1,600 a year now—on every new council house that is being built.

I am not one of those who see no role whatever for council housing, because one acknowledges that there will always be some people who need to be rehoused by the public sector. What concerns me is whether the people in the greatest need are the ones presently occupying council housing.

We know that about a quarter of council house tenants are in receipt of supplementary benefit. It is perfectly right that they should receive a considerable subsidy from the public purse to fund their housing. We also know that 1 million people in public sector housing are in receipt of rent rebates and that two-thirds of any new increase will be refunded in increased rent rebates. Those people also are in need of assistance from the public sector. But that leaves a considerable number of people who could perhaps fund themselves in the private sector, without relying upon the taxpayer and the ratepayer to assist them in the public sector. This is what concerns me, because we all know the way in which money could be spent on housing.

My hon. Friend the Minister knows my concern about the single homeless and the need to provide more in that direction. I know also of the need to provide more improvement grants. My only criticism of the block grant principle that will come into force is that it perhaps leaves too much latitude to local authorities in deciding whether to spend any money at all on improvement grants.

The August edition of the journal of the Environmental Health Officers Association shows that they carried out their own survey and informed my right hon. Friend that of some 300 local authorities 43 per cent. had already cut out improvement grants or had severely rationed grants for house improvement work. That surely is not the way in which we should be looking at our housing. Much more needs to be channelled into the improvement of the existing stock.

I welcome the initiatives which have been taken by my right hon. Friend the Secretary of State for Wales. I hope that the Under-Secretary, my hon. Friend the Member for Conway (Mr. Roberts), will refer to these initiatives in the new housing grant system which was announced in the Welsh Office paper entitled "The Proposed Framework of the Home Renovation Grant System for Wales", published in April of this year.

If we are to adopt a sensible course for public sector housing in this country, I firmly believe that we must grasp the nettle at some stage and decide that the people in the greatest financial need should receive the subsidies from the taxpayer and the ratepayer, that those in the greatest housing need can often be better assisted through the medium of improvement grants and that those who are in need of specific forms of accommodation, such as the single homeless, can be better provided for through hostel accommodation.

Those matters all require public expenditure. That public expenditure is available. The fact remains that in many cases, unfortunately, the wrong people are getting it. Until we grasp that nettle, we shall continue to have a disastrous system of housing in this country.

7.26 pm

Mr. R. B. Cant (Stoke-on-Trent, Central)

I rise, alas, without the expertise of many of my colleagues in this subject. I speak as one entering his twenty-eighth year in local government, and I want to try to communicate to the Secretary of State—although I gather that he is a rather insensitive type — some of the grave misgivings of people in local government, whether they are Labour or Tory, about what exactly the Government are doing.

It is one of the ironies of history that a Government of one complexion always seem to manage to crucify the people who represent them on local authorities. Having come here in the middle 1960s, I know that that has been the cycle of events. Obviously, it is happening again, in the sense that the Tories of the shire counties are likely to be routed next May.

One of the problems with the Government, and particularly the Secretary of State—or, if not the Secretary of State, at any rate the officials who advise him—is that they believe, quite simply, that every major problem facing the Government can be solved by reference to some rather simple formula, whether it is M3 or anything else.

The Secretary of State recited a few statistics about housing, such as that the amount paid in rent, as a percentage of personal income, has been falling over the past five or six years from 8 per cent. to 6.4 per cent. Being of a statistical frame of mind, my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) asked the Secretary of State whether he would update those figures and bring them somewhat nearer to what was likely to be the position in May 1981. It may well be that the percentage will be somewhere nearer 8 per cent. or 9 per cent. It is true that in 1962 the percentage of income attributable to rent in the housing revenue account was 70 per cent., whereas last year it was 40 per cent. Of 5 million council house tenants, 2.3 million have their rents paid either in whole or in part. Of the £1.2 billion of housing subsidies, more and more is spent on rent support rather than on construction. The claims about the numbers of council tenants earning £7,000 or £8,000 are more suspect.

Many of those involved in local government are worried not only by the Secretary of State's total lack of style and the way in which he thinks he can introduce measures such as the consultative documents but by the way in which 6 per cent. wage increases are introduced through the back door one week, to be followed by rent increases of £3 a week in the next. It is an affront to the people, and particularly to those who suffer severely from the Government's policies, to suggest that they can find some consolation in the Secretary of State's rather simple calculations.

By May 1981, rents will have increased by 50 per cent. One great characteristic of the Government is that they always fight inflation by increasing prices. It does not matter what those prices are. It does not matter to them whether they increase rents or the price of energy. The Government think that they can defeat inflation—the great spectre in our midst—by increasing any price over which they have influence. In such an atmosphere, those in control of councils and housing committees would find the Government's policy more acceptable if they had an assurance that this great shift in the use of subsidies would involve the building and improvement of council houses. We would accept that.

I share the grave concern expressed about the decline in the condition of our council housing stock. Perhaps some rent increases are inevitable in the case of those who can afford them. The Secretary of State makes his announcements in a characteristic manner. He announced the moratorium at the drop of a hat. Of course, he gave us some sort of statistical assurance that everything in the garden would be beautiful and that his actions were justified.

That authoritative journal of public opinion, the Financial Times, states: Education Department officials are admitting privately that later calculations have shown this to have been ill judged and unnecessary. If that had appeared in the Morning Star, I might have suspected its veracity. However, as it appeared in the Financial Times one must accept that t'tere is something to it. There is a tendency for many authorities to underspene.

My right hon. Friend the Member for Sparkbrook referred to private housing and home ownership. Those who have mortgages and those who hope to obtain them had great hopes. My right hon. Friend explained that because the Government had launched their wonderful granny bond plus savings scheme between £1.5 billion and £2 billion would be taken from the funds of building societies. The details have not yet been announced, but presumably grandfathers start at the age of 55.

There is another factor that will keep mortgage rates at their high level and to which my right hon. Friend did not refer. I refer to a change in the probable composite rate. Those who own the £50 billion of building society deposits are increasing—like some hon. Members—reaching the age of 60 or more. Next year, when the triennial review of building society composite rates is undertaken, the composite mortgage rate will increase from 22.5 per cent. to 25 per cent. That will hold up the mortgage rate by 1 per cent.

I wish to refer to the broader problems of local government and the rate support grant. Those of us who were members of the Local Government, Planning and Land (No. 2) Bill Committee and those who spoke on Report were led a merry dance about the change in the rate support grant. The new Act will introduce all sorts of uncertainty. I received a letter from the treasurer of a county council on which I have had the honour to serve. I do not say that he is a good Tory; I do not think that he has any politics. However, it is a Tory county council. Its members are in fear and trembling about what will happen next May, but they remain a solid phalanx of 80 Tory councillors. They took over from the Labour Party at the last election and have left us with a mere godly remnant of 15 "Labourites". The treasurer speaks on behalf of a shire county that has a population of 1 million and a budget of about £360 million per annum. One should read the list of uncertainties that face such councils not in relation to the Budget for 1984–85 but in relation to next year's Budget. They face all the problems of capital expenditure control.

When the Secretary of State introduced the new system, he said that in the interests of greater efficiency and democracy he would decide how much money local authorities would get. He said that he would allow them to have a measure of switching, so that they could decide how to spend the money under the various heads. Obviously, we face a totally unsatisfactory and unreal situation.

Great concern has arisen over other services. For example, it now costs about £750,000 to buy the hole in which refuse is placed. When that is considered in relation to what the Secretary of State will allow for the total "other services" block, the mind boggles. There will still be a 100 per cent. grant for land reclamation, but that grant will have to come out of the "other services" block. That means that land reclamation—one of the post-war glories of Stoke-on-Trent—will come to an end in Staffordshire.

There is the problem of the building of nursery units on industrial estates. Despite all the work that the present Government say they want to do for private enterprise, they will make that increasingly difficult because they will not accept a simple arrangement under the head lease agreements, to say nothing of gipsy caravans, and so on.

That is merely under the heading of capital expenditure. Under the block grant itself, what the Secretary of State has done in lopping off £200 million already and what he proposes to do in taking another £165 million from local authorities will make the position extremely difficult. The uncertainties have also been introduced because of changes in the way in which the grant is lo be settled. Every authority is faced with the problem of what it will get, what will be the effect of the multipliers and what sort of options the Government will adopt in the long run.

In Committee, it was argued that the great virtue of this block grant capital expenditure control system was its simplicity and that all the difficulties associated with the rate support grant would be thrown out of the window. Yet every expert who has written or spoken about this problen has stated without equivocation that the new system is far more complicated and uncertain in its incidence.

The problems that face local authorities are almost insuperable, not only in terms of the handling of these complex technical formulas but in terms of making the cuts that are necessary in order to keep within the cash limits. It was stated that we should know by 21 November what the block grant for authorities would be. That date was moved to 4 December. Now, it is hoped that authorities will be told some time before Christmas. I suppose that the problems and traumas of local government are chicken feed compared with what is happening in industry.

The Government's decision deliberately to deindustrialise the nation is causing problems of unemployment on a scale that we could not possibly contemplate a few months ago. In that context, perhaps problems of local government seem to be minimal. However, for those who work in local government, for those who have the responsibility—such as officials and councillors in local government—and for those who find, day by day, that the services for which local government is responsible are being continuously eroded, one must. as a representative in this House of a local authority, say that the future is bleak indeed.

7.43 pm

Mr. Neil Thorne (Ilford, South)

My hon. Friend the Member for Anglesey (Mr. Best) has already mentioned that he and I have an engagement of long standing and of great importance this evening. Therefore, I must apologise to the speakers who will be winding up the debate for the fact that I shall not be present to listen to them. I should also like to apologise for the discourtesy that I must show by leaving the Chamber very shortly after I sit down.

I commence by thanking my right hon. Friend the Secretary of State for the Environment for the help that he gave to co-owners to enable them to purchase their properties, because these people had paid out substantial sums of money in paying off the mortgage on the property during the term of their tenancy, and it is only proper that they should be given that right.

The hon. Member for Lambeth, Central (Mr. Tilley) said that there were special classes of tenant in housing associations who were in special categories. I hope that there will be provision for these housing associations not to give automatic rights of purchase to their members. I am thinking particularly of the associations that were set up primarily to help people with a first start on the housing ladder, where, more often than not, the money was raised privately and no call has been made on public funds. Such people were given an opportunity to occupy accommodation, for the first two or three years after they had started their married life, in very reasonably priced accommodation. It would be very unfortunate if that accommodation, which was let to them for a specific short period, were then to be removed from the housing market because it was sold to those who happened to be in occupation at the time, quite contrary to the agreement into which they entered when they first took the tenancy.

I had the pleasure of serving on a housing association in which it was intended right from the beginning to give people a start and to give them an opportunity to save sufficient money to put down the deposit to purchase a house giving them three years of tenancy, at the end of which time their tenancy was reviewed and unless they could show very good reason why they had not managed to save enough money in the nyantime they were asked to make alternative arrangements. In this way, with very few exceptions, the system worked extremely satisfactorily. I should deplore the possibility that such an opportunity should be lost unless some alternative arrangements were to be provided.

I welcome the intention of giving back to ratepayers from council rents a little of their investment. The investments made over the years by ratepayers, as well as taxpayers, have been very substantial. It is important that ratepayers should now begin to see the benefit of some of the historic costs that have been invested on housing in their local areas.

I like to think that all hon. Members are in favour of taking care of those who cannot take care of themselves, at whatever stage in life that may be. However, it seems wrong to me that the Department of the Environment rather than the Department of Health and Social Security should be making a contribution in this regard. I have always considered the Department of Health and Social Security to be the proper Department for dealing with claims on the public purse of this nature.

Has my hon. Friend the Under-Secretary considered the desirability of encouraging a much greater investment by pension funds and insurance companies, and trade unions for that matter, in the private residential sector? They have vast resources, and week by week their funds increase. At present they invest substantial sums of money on the stock market. They also invest substantially in commercial and industrial property. The time is well past when they should be making considerable investments in the housing market. I am certain that many builders would welcome the opportunity to accept work in building accommodation of this sort for institutions such as these.

Perhaps the reason why such institutions do not do this is that the present fair rent system does not allow them sufficient return to make it viable and distracts them from investing their members' funds in this way. This is a grave mistake. If people who occupy houses and flats are unable to meet the rents, they ought to be helped by the Department of Health and Social Security. I see no reason why institutions of that nature should not make a major contribution of this sort. As regards new properties and new lettings, I consider it to be a failure of the fair rent system if it is not possible for these organisations to make such investments profitably. I address my remarks principally in respect of new buildings and lets, but to some extent they are true of properties which are already let. Many opportunities have been lost in the past because of major problems which discourage investment in housing. I hope that my hon. Friend will do everything possible to ensure that this situation does not continue for much longer.

7.51 pm

Mr. David Ginsburg (Dewsbury)

It has been agreed during the debate on the Gracious Speech that we are going through a serious recession. What is not agreed are the steps needed to see us through and out of the recession.

One point which should be crystal clear is that, to the extent that society imposes burdens in consequence of the recession, those burdens should fall on those best able to bear them and not on the weakest in our society. The ignoring of this principle by the Government has been apparent in a number of areas and in the statement made yesterday by the Chancellor of the Exchequer, but it is no more clearly apparent than in housing, which features prominently in today's debate. Looking at the scene, one sees that there is a total absence of Government policy and a loading of the burden on the weakest in our community.

Council house rents in Dewsbury are at the national average level. Nevertheless, those who know that part of West Yorkshire will be aware that wages are well below the national average. That fact and the growth of unemployment among women workers mean that the rent increases that the Secretary of State is predicating across the board are bound to be most severely felt in areas such as the one that I represent.

Dewsbury is an area in which there are many old houses in both the private and public sectors. There is a total freeze on new local authority building, there is the recent moratorium on the modernisation of local authority buildings, and there is no local authority finance for loans for the improvement of private houses. The moratorium is especially severe because it bears on people living in housing action areas. It bears on the disabled and on those living in British Iron and Steel Federation houses, which are still all too apparent in my constituency.

The Kirklees housing authority, which covers my constituency and five other constituencies in West Yorkshire, has issued a statement about the consequences of the moratorium on the area. I did not detect any gleam of hope from what the Secretary of State said. I may have misunderstood him. I propose to write to the Secretary of State after the debate and to enclose the local authority's view on the moratorium. I hope that he will let me know how he sees the future.

The gloom in the public sector is not offset by any favourable developments in the private sector which the Government would no doubt like to see. Private house building is still depressed. High interest rates and inflationary house prices make house purchase a heavy burden. As has been said, there is only limited tax relief. Funds for the maintenance and redecoration of private and public properties are in short supply. The nation's stock of accommodation will not only decline but deteriorate in the years ahead.

The Government's reply will be that we are in a recession and that we must accept the consequences in housing as elsewhere. They deny that there is a better way of managing things.

Two points need to be made. First, there are great doubts in the House and in the country about the Government's economic strategy. Some say that the medicine is too harsh. Others say that the medicine is not harsh enough.

I notice that the Prime Minister's guru—Professor Hayek, not Professor Milton Friedman—has criticised both the teacher, Professor Friedman, and the pupil, the Prime Minister, for being infirm of purpose—in other words, too wet. According to the interview with Professor Hayek, published in The Times last week, he said that inflation can only be seen out with 20 per cent. unemployment and with massive bankruptcies. Otherwise—he says this of the Government's measures—we go back on to the inflationary treadmill. One must devoutly hope that Professor Hayek is wrong.

The second observation arises directly from reflationary measures to cure unemployment, whether those measures are advocated by the Government or the Opposition. Such measures can be introduced without the risk of hyperinflation only if pay settlements are moderated.

Professors Meade and Cairncross, who were, respectively, advisers to the Attlee and Churchill Governments, in their letter to The Times, which was published on Thursday 20 November, say: We are in a cleft stick. Either we suffer our present misery and control inflation or we restore employment and inflation. In fact we can achieve full employment without inflation only if we can suitably modify our present pay-fixing arrangements. I believe that the truth of this fact is being accepted on both sides of the House.

My right hon. Friend the Leader of the Opposition has, as a Minister, seen the abyss and come round to recognise some of the inherent verities in pay policy. The Prime Minister with her 6 per cent., which my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) has criticised, is, I suspect, equally beginning to recognise the truth. But the Prime Minister must also accept that pay policy cannot be imposed from on high. Pay policy must be founded on the understanding and consent of those to whom it applies. There is a challenge here to our democratic institutions, to the Government and to the trade unions. If agreement is not worked out, we shall face a depressed economy for a very long time. If pay policy is to be part of our arrangements, equity is an essential prerequisite. It was so during the pay pauses of post-war years—the years of our fastest economic growth—and during the pay pauses of my right hon. Friends the Members for Huyton (Sir H. Wilson) and Cardiff, South-East (Mr. Callaghan) and the right hon. Member for Sidcup (Mr. Heath).

If the Prime Minister wants expansion with a sharp fall in inflation, there will have to be supreme effort to secure a greater social and economic equity. I stress the need for this sense of fairness not merely in relation to the 6 per cent. policy in local government employment and more generally in home affairs but also in our overseas relations. We live in a dangerous world with a darkening international scene. Defence is a priority. I believe that the British people know that and will accept the price and financial sacrifice involved. That 1-ealisation applies as much in the Labour movement as in any other part of society. However, the facing of external danger requires far greater national unity, and the Government have a role to play in their social policies in building up national unity and eschewing divisive policies.

In conclusion, I wish to refer to a legislative matter of some importance. It is not mentioned in the Queen's Speech and I suspect that it is one of the "other measures" that will be laid before Parliament. I am concerned about the patriation of the Canadian constitution. I have gained some familiarity with the subject through my knowledge of French and broadcasts to French Canada.

I accept that this Parliament has a duty to respond to the federal Canadian Parliament and to act with speed and good grace, but I trust that the Canadian Prime Minister realises that this is a sovereign Parliament. His external affairs department was tactless, to say the least, when it said in its briefing that the United Kingdom Parliament "may not look behind" any request. Perhaps it would have been better to say that we "should not look behind." I repeat that we are a sovereign Parliament and we have a duty to perform.

I hope that the Government will get together with the Canadian Government to ensure that what is ultimately placed before us deals with the minimum necessary for patriation of the Canadian constitution and an amendment formula but that we are not presented, as it looks as though we will be, with the job of revising the constitution. Such a proposal would place us in great difficulty, and many hon. Members would not let it go through on the nod.

8.3 pm

Mr. Tony Durant (Reading, North)

The hon. Member for Dewsbury (Mr. Ginsburg) made an interesting speech, which was different from others made today in that it touched on the general economic situation. It was a courageous speech, and I agree with a great deal of it. I was interested in the hon. Member's reference to the Canadian constitution.

I revert to the debate on housing. I wish to discuss the four important aspects of housing—land availability, my right hon. Friend the construction industry, the availability of finance and the best use of existing accommodation.

On land availability, my right hon. Friend the Secretary of State ought to consult the Chancellor of the Exchequer, because the development land tax rate is still too high. All the opinions that I sought before the election about the level of the tax confirmed that 50 per cent. would be a fair and just rate, which would bring sufficient land on to the market. A reduction in the tax should be considered.

There is no doubt that planning is a great deterrent to development. I recently visited a large development in a neighbouring constituency. It has just started. It involves 2,000 houses, but it has taken 10 years to get to the point when the first six houses can be built. It is a terrible indictment of our planning system that it can take 10 years from the time that a person has the land and the finance and wishes to develop to the development getting under way.

There are various reasons for delays, but they are still an indictment of the planning system and they occur far too often. Planning officers always say that developers make more money out of a deal because land values rise and they benefit from delays. That may be comforting to big investors, but it is no comfort to small builders who have borrowed money at high interest rates and cannot wait for the development. We must keep pressing for improvements in our planning procedures.

All Governments have tended to use the construction industry as an economic barometer. That has been a mistake. The industry wants a stable amount of construction and development. It does not want great surges of construction, which are as damaging as slumps. It wants a steady development programme. I hope that the Government will bear that in mind, because the construction industry is in difficulty and under great pressure.

We must look towards cutting expenditure. We are too prone to cut capital expenditure time and again. All Governments do it, and I appreciate that it is easier than cutting current expenditure, but cuts in current expenditure are the ones that we should aim for when cuts are necessary.

The reduction in the MLR will have some effect on the availability of finance. It will take time, but more money may become available in the housing market. I am delighted that banks are beginning to give home loans. It is a tentative beginning, and they are up-market, but they have put their toe in the water and I hope that they will go further and come down-market to the ordinary householders who wish to raise mortgages.

If more local authorities had shown some thrust on council house sales and got on with them faster, there would have been more money available for developing properties. That would have helped the situation. My hon. Friend the Member for Ilford, South (Mr. Thorne) mentioned investment by unions, which have vast sums of money available. I once worked in an office block in Regent Street that was owned by the NUM. It was a damned tough landlord. It would have been better if the union had put its money into more socially desirable developments, but it has tended to invest in office blocks.

I am concerned that we have reached the stage at which the housing allocation in the national Budget is at about the lowest point that we can accept. Housing has taken most of the brunt. I have to put that on record.

I hope to see the growth of the housing association movement. It is the best development since the war and has made a tremendous difference in housing. Housing associations are better at managing their affairs and running their estates, and they build accommodation to suit people's requirements.

It is slightly disturbing that the movement has become almost party political. It has started waving its arms about as though it is being unjustly treated. In fact, it has not had too bad a deal this year. One can argue about future years, but the finance available this year has not been too bad. The movement has not had a cut in its allocation for the current year. There is an argument about future years, but I consider that misunderstanding about this matter has been unjust. We must do all that we can to foster the housing association movement.

I now turn to the question of the best use of accommodation. If local authorities are not building as much housing as previously, and if there is a decline in the building section, providing more time for those authorities to examine their general stock of housing, they should become more efficient on lets. There are far too many empty council properties. If I write to my local authority about a property, it is amazing to me that within a week someone is occupying that property. Whether the authority says "My God, the MP has spotted it" or whether it was to be occupied in any case, I do not know. It is always odd that if I find a property that has been empty for three months it can be filled at a minute's notice. The question of empty properties should be examined by local government.

There has been mention of the shorthold tenancy. It is a pity that the Opposition took the view that they did on shorthold. I was keen on it. I believed in it. During the last general election I came across accommodation that was ready and available. Now landlords, and especially landladies, are very concerned whether they should go ahead and let. The attitude of the Opposition has been a tragedy. It was unnecessary. The Opposition could have reserved their position and stated that they would wait to see what happened and review the matter in a couple of years. That would have been a reasonable stance instead of taking the almost dogmatic attitude of stamping on it from the beginning.

I hope that improvement grants will be fostered as much as possible. All that can be done to improve existing property will bring more into circulation. There are enough units, but some are in bad condition. The homesteading experiment by the Greater London Council was a worthy one. More of these experiments should be carried out in housing. I agree about the lack of courage in dealing with the Rent Acts. All Governments have looked at the Rent Acts and run away from them. The Opposition produced a Green Paper on the Rent Acts. It was a good document. I considered it a worthwhile consideration of the whole Rent Act structure. The Opposition did nothing about it. We must have the courage to tackle the Rent Acts, which are a deterrent to letting accommodation. A Select Committee of the House might be the avenue to examine this matter.

Mr. Winnick

We are looking at it.

Mr. Durant

I am delighted to hear that the Select Committee is looking at the matter. That may be the place to start. It will be an interesting document. I look forward to receiving it. I hope that there can be a debate when the report is received.

That is the type of problem that has to be tackled if we are to get more housing on stream. There is housing available. There are opportunities available. If we have the will and the belief, we can improve our stock and increase the amount of housing.

8.15 pm

Mr. Allan Roberts (Bootle)

It is something of an honour to follow the hon. Member for Reading, North (Mr. Durant), whose views on housing in Conservative Party politics are considerably Left-wing. Yet the hon. Gentleman misrepresents the truth when he claims that the housing association movement has not been badly treated. Housing association after housing association on Merseyside has shown me houses that it had acquired and intended to improve but which will now stand unimproved as a result of the Government's cuts and the moratorium.

Mr. Durant

It is important that the hon. Gentleman should realise that the Housing Corporation went ahead and allowed too many schemes against the budget finance available. As it went ahead, unwisely for those poor people affected—sympathise with them—t was caught out. The Housing Corporation has something to answer for. The allocation of money in the current year was not cut.

Mr. Roberts

That is the argument used by the Secretary of State to justify the moratorium on the public sector as a whole. The argument does not hold water for either local authority housing or housing associations. For the housing association movement, considered in the past to be the Conservative Party's social conscience, to attack this Conservative Government is as amazing as the Government's achievement in getting the CBI to attack them. The housing association movement is justified in criticising the Government for the cuts and the moratorium, which have resulted in much hardship.

I have listened with some interest to the statements of Conservative Members on rent increases. They have proved that they do not understand how housing finance works. Alternatively, they are purposely misrepresenting how it works in order to justify vicious rent increases. The hon. Member for Folkestone and Hythe (Sir A. Costain) said that if council houses are sold at half the market value a profit is made. It was also stated from the Conservative Benches that it cost £60,000 to build a council house, and this was used as an argument to justify rent increases. One cannot have it both ways.

Ministers have justified the increase by saying that a bigger direct contribution is needed from people living in council houses towards the cost of housing. That argument does not stand up. It is unfair to try to justify rent increases by arguing that three in every 100 people in council houses have an income of £8,000. Those earning £8,000 are paying for their subsidies through their taxes and also helping to pay other people's subsidies. If there is universal benefit for owner-occupiers in the form of income tax relief on interest paid on mortgages, the same should apply to council tenants. To push up council rents by massive amounts and to legislate as this Government have done to allow local authorities to make a profit on their housing revenue account is a big mistake at a time when people are having to accept cuts in living standards.

The justification given by Conservative Members for the shorthold provision is curious. It is part of the total package, not to support people who are homeless or the tenants of private landlords but to give a new lease of life to the private landlord and to provide a landlords' charter. There is not only the shorthold provision. About 200,000 houses that were controlled in the private rented sector have been taken out of rent control. There are reviews of fair rents which mean increases in fair rents every two years instead of every three or four years. Assured tenancies are being introduced. We also have legislation to allow back-to-back houses to be built by private speculators.

It is claimed that getting rid of Rent Act control and allowing people to invest money in property and get a fair return on the capital they invest by charging what rents they want will lead to an increase in accommodation for rent in the private rented sector. This misrepresents the situation. If a house was built costing £15,000 and the money to build it was borrowed at a 17 per cent. rate of interest, it would cost £2,500 a year in interest to fund the loan. The economic rent that the private landlord would have to charge for that house is £50 a week. That is not on when it comes to meeting the housing needs of people.

Unless subsidies are given to owner-occupiers or to tenants through local authorities or housing associations, there is no way in which the needs of the vast bulk of the population can be met. To suggest that the private rented sector can meet those needs by such tricks as shorthold, which is really a means of destroying security of tenure, is to mislead people.

I want especially to mention empty houses. Much play is made by Conservative Members of this matter. They suggest that the Opposition, by opposing the shorthold provisions, are encouraging houses to be kept empty. I would argue that by their cuts, by their economies and by abandoning local authority programmes to give home loans and improvement grants and to provide money to improve houses that are now standing empty—houses acquired from the private rented sector—the Government are doing more to keep houses standing empty, despite the needs of homeless families, than any Government in the history of housing in this country.

I should like to give two examples of how the Government are administratively causing houses to be kept empty. The first is the way in which the subsidy system for local authority housing subsidies will be worked. A consultative paper is being issued to local authorities telling them that the subsidy will be deducted on any properties that are kept empty above a certain percentage of their housing stock. Many houses owned by local authorities are let on a licence for short-life housing schemes, and no rent is collected. Under the subsidy regulation arrangements that the Government are introducing, local authorities will lose subsidy on such properties. It will be more economical under the subsidy arrangements for the authorities to keep the properties empty, to write them out of stock and not to have the subsidy deducted as a result of keeping them on a licence without collecting any rent income.

Housing associations have available through the Housing Corporation mini-grants to spend on houses with a relatively short life, but they cannot take advantage of the grants, which in theory are still available, because the Government, through the Housing Corporation, have frozen the housing associations' overdraft guarantee provisions. The associations cannot borrow the money to do the work on which they would receive the grants after the work had been done. Houses are therefore being kept empty as a result of the Government's actions.

In addition, a circular from the corporation was to go out to housing associations and local authorities telling them to make full use of short-life housing and not to charge excessive licence fees for it. As I said in an earlier intervention, that was stopped by the Department of the Environment on the ground that local authorities and housing associations should maximise their income. As a result, local authorities such as Islington are charging licence fees so excessive that the release of empty properties which are unimproved but which could be improved for short-life housing schemes has been brought to a halt.

I turn finally to the racket that is now developing as a result of the right-to-buy provisions in Government legislation. Estate agents, so-called house buyers' associations and other people are jumping on the bandwagon, setting up organisations to advise council tenants, charging them to help then fill in the 22-page forms produced by the Department of the Environment and, taking fees to help speed up the processing of the applications to local authorities. Already, the private sector is exploiting the public sector for profit in the buying of council houses.

If the Government do not end their moratorium and the cuts, if they do not carefully examine some of the administrative decisions they are now taking in panic to try to cope with a crisis of their own making, more and more houses will stand empty, waiting lists will grow longer than they have been for many years, and within 12 months we shall face a housing crisis as bad as the one that we faced in 1945. That will be the next Labour Government's inheritance from the present Government.

8.23 pm

Mr. Don Dixon (Jarrow)

I sometimes wonder whether people who go into Tory Members' surgeries are different from those that come into Labour Members' surgeries. I have been amazed by some of the comments from the Conservative Benches.

I do not know whether the hon. Member for Lichfield and Tamworth (Mr. Heddle) was serious when he suggested that waiting lists should be done away with. I have never heard such nonsense. It would be like doing away with the Highway Code, with everyone driving on whichever side of the road he wished.

The hon. Member for Ilford, South (Mr. Thorne) suggested that council house rents should go up, so that ratepayers would have some return on their rates. I do not know whether he realises that council tenants are ratepayers and taxpayers and that they pay a considerable amount of rates and taxes.

The Government have embarked on a policy of reducing the money supply. All their policies are directed towards that end. They now claim in the Gracious Speech that it is essential further to reduce public expenditure. It seems strange to want to continue a monetary policy that has already led to massive unemployment. The figures announced today are disgraceful. In my constituency the male unemployment rate is above 18 per cent., and half of those have been unemployed for six months or more. That percentage has come about because of the Government's policy.

It is not only strange that the Government carry out that policy, but it is immoral to pursue it at the expense of the poorest and weakest in our society and further to cut public expenditure. It seems that the Government are more interested in the pound than in the people.

I remind Conservative Members of what effect a further reduction in public expenditure will have on the ordinary people of South Tyneside, where my constituency and that of my hon. Friend the Member for South Shields (Dr. Clark) are situated. In particular, I should like to point out the effects of the disastrous housing policy that is being forced on local authorities, a policy, determined by central Government totally divorced from the needs of the people, that denies people the right to a decent home and makes it impossible for responsible local authorities even to maintain and repair their housing stock.

In the area that I represent there are 7,353 people on the council waiting list. For the benefit of those Conservative Members who would not recognise a council waiting list if they saw one, I explain that that means 7,353 households, not 7,353 individuals. Those households are looking in desperation to the local authority to help them, but the authorities are being prevented from helping because of an American economist's theories. Far from offering assistance to housing authorities, the Government have already reduced the finance available to them. The Government claim "We cannot afford to build houses. People will have to wait until the current financial crisis is over and inflation is down to a figure acceptable to us." That is just short of criminal in view of the number of young people who are waiting for houses and the number of construction workers who are signing the book. How long do the Government expect them to wait?

My authority has built only 112 houses this year. If the Secretary of State for the Environment lifts his ill-advised and totally unnecessary moratorium, it will be possible to build 200 houses this year. Even the Chancellor of the Exchequer should be able to work out that at the rate of 200 dwellings each year it will take more than 35 years to provide new homes for those on the present list.

Of course, the Government will claim that the councils' waiting lists are not static. They express the fond hope that in future years those lists will decline as everyone becomes an owner-occupier. For the Minister's information, let me tell him that the waiting list in my area has risen more than 600 in the past year alone, so 200 new dwellings each year—the limit imposed by the Government—are not enough to deal with the increases, let alone with the 7,353 households already waiting for a house.

The other topic on which I wish to touch is that of the difficult-to-let properties which we and, no doubt, other local authorities have. The Government not only prevent housing authorities from building new houses, but their fanatical adherence to financial controls makes it impossible for those authorities to improve existing dwellings that are unsuitable for family life.

During the 1950s the Government virtually forced authorities to build high-rise flats and deck access maisonettes, with all the problems that they created. Instead of recognising this mistake, the present Government are refusing local authorities the finance to rectify those design faults. There is one estate in my constituency, in Queen's Road, Jarrow, where four-storey maisonettes with deck access and an external staircase must be improved or demolished. However, the Government, especially the Secretary of State, first tried to dictate how they should be improved, then threatened to withdraw subsidy for any dwellings that were demolished and finally reduced expenditure, thus putting the whole improvement scheme in jeopardy.

That is interference of the worst kind by the Government in local housing matters and shows how little respect one can have for a Secretary of State who promises to increase local autonomy. Instead of allowing local authorities the right to determine their own local policies and giving them the means to resolve local problems, the Government issue blanket restrictions of the most autocratic kind. Because "Tarzan" knows best, the tenants of Queen's Road, Jarrow, will have to push prams up ramps and carry buckets of coal up two flights of steps in the open air.

Even the authority's attempts to use existing stocks to the best advantage is being hindered. South Tyneside authority has 3,506 properties in council stock that are unusable for its needs. Elderly tenants occupy three-bedroom houses. Often they are frail and cannot manage to climb stairs. With mass unemployment forcing younger householders to leave the borough, the elderly form an increasing proportion of our community. Obviously, these frail elderly people require smaller houses and preferably warden-controlled sheltered schemes, but the Government's cutback and moratorium prevent the authority from building them. Two sets of households suffer: the single person who occupies a family house because there is no suitable smaller house available, and the overcrowded family who could occupy the larger house. That is the kind of absurdity to which the Government's action leads, denying the elderly comfort and independence and forcing families to a life in flats.

Even more tragic is the plight of those unfortunate people who happen to live in slum clearance dwellings. The South Tyneside authority pursued a vigorous policy of clearance and was well on the way to removing this cancer from our area. After years of effort, only 600 dwellings are left in the clearance areas, most of them in the South Shields part of the district. But they will remain a lot longer because of the cutback. The Government are sentencing people to live in dwellings that were condemned as being unfit for human habitation even by the standards of the Housing Act 1957, which was passed a good number of years ago.

The Government claimed to be committed to a policy of rehabilitation rather than to one of building new dwellings. They maintain that the preservation of communities in improved dwellings is infinitely more desirable than bulldozing older properties to build new houses. With much publicity and self-congratulation, the Secretary of State announced increased grant amounts and a reduction in administrative procedures. However, the biggest reduction is the reduction in the finance given to authorities to enable them to make grants in the first place, allowing the South Tyneside authority this year to approve only 200 grants instead of the normal 400.

My authority has more than 4,500 private tenants who still fill their baths with kettles of water. There are more than 5,000 occupiers of private dwellings without WCs. This is only a small part of the 1 million dwellings that lack amenities, and it is an even smaller part of the 3 million that are known to be in a state of gross disrepair. The tenants of these properties also look to the Government and the local authority for help. They receive none.

Like most other authorities, South Tyneside has to restrict the number of grants that it clan make. Instead of giving older dwellings in the borough the basic amenities by 1984–85, which was our objective when reorganization took place in 1974, they will not be improved until we get a change in Government thinking or, better still, a change in Government.

The stupidity of it all is that, apart from the human misery, it does not even make economic sense to stop making grants. Many properties in older areas can make good family houses. Many have already been improved with grant aid. The potential for further improvement and the finance already invested are being put at risk by the Government's shortsighted policies.

Those authorities that believed the Government's claim to be committed to house improvement and to the need to improve our declining inner city areas have been misled. The Government encouraged authorities to embark on improvement programmes and have now apparently changed their mind.

Previously, the local authority could help tenants when a private landlord failed to accept responsibility for substandard houses. As a last resort, the council could purchase houses by agreement or by compulsion and then improve them. By Government decree local authorities are forbidden to purchase by agreement. Even if they could do so the finances are not available.

Mortgages are closely related to the improvement aid previously given to provide basic amenities. The phenomenon of Tyneside Flats exists in my area. It consists of two-storey terraces with separate flats on each floor. Traditionally, they are sold in pairs. The owner becomes the occupier of one flat and the landlord of the other. Many of the flats have been handed down through the generations, and many are owned by elderly people. The local authority has assisted many elderly owners to repair and improve their properties by means of council mortgages, because building societies prefer to lend their millions to better-off clients on better-quality housing. Since finance has been reduced, sales are limited and such mortgages cannot be continued.

I deal next with the sale of council houses. I have no doubt that the Minister knows about the case that I wish to mention. He will not defend what has taken place. In 1978, a constituent of mine applied to buy a council house after a programme encouraging the sale of council houses was forced through by the Conservatives and Liberals on South Tyneside council. It was such a dismal failure that when Labour took control the policy was not changed. Over two and a half years, only about 300 of the 34,000 council houses were sold.

When my constituent applied to buy the house, there was a problem about the cost of land and ministerial approval was necessary. That approval was given only in June this year. The council decided, in fairness to the tenant, to offer him the house at the price that applied when he made his original application to buy. That experience makes a mockery of the Government's argument in favour of the right to buy.

The individual purchased the house at 11 am last Monday for £11,000—the price that applied in 1978. Within minutes, he put it on the market for £18,000 and earned a profit of £7,000. In fairness to the Minister, it should be said that that could not happen under the Housing Act, but under the two years' £100 option system a similar problem could arise.

The Government's policy is determined by money supply. Under their education policy they are depriving youngsters at comprehensive schools of school books, while they are providing grants for private schools. The Government have no regional policy for industry. Areas such as the North-East are being turned into industrial deserts.

The Government are robbing the old, the disabled, the sick and the unemployed of social services provision. Their tax concessions line the pockets of people at the top of the wages league. They are denying young couples housing and sentencing others to live in flats for the rest of their lives. The Government's policy represents Robin Hood in reverse. They are robbing the poor to give to the rich.

8.38 pm

Mr. Jack Straw (Blackburn)

The debate has been illuminating in two respects. First, the majority of Conservative Members are voting with their feet. Despite the activities of Government Whips, few Conservatives have taken part in the debate. Secondly, the debate is interesting in terms of what Conservatives have let out of the bag. The hon. Member for Lichfield and Tamworth (Mr. Heddle) spoke seriously about the abolition of waiting lists. The hon. Member for Folkestone and Hythe (Sir A. Costain) let the cat out of the bag by admitting that shorthold tenure exists to get round security of tenure for private tenants. The hon. Member for Hornchurch (Mr. Squire) admitted that the country faces years of national misery.

Part of that national misery is being secured by the Secretary of State for the Environment, because he is presiding over what will become the worst housing crisis that many of us will have seen in our lifetime. When the Secretary of State is challenged on that, instead of accepting blame for the crisis he suggests that his policies are a continuation of policies that were followed over five years by the previous Labour Government. In seeking to justify his record, he utters three sets of falsehoods about Labour's programme: about the level of Labour's construction programme—the level of cash put into the housing programme over those five years—about our record on projections and starts, and about our record on projections of future demand. I shall deal with those three points in turn.

First, with regard to the level of the Labour Government's house building programme between 1974 and 1979, the Secretary of State has said time and time again that the programme that he is following is merely a continuation of the trend set under the Labour Government. He said again today that Labour's programme was in rapid decline and that all that he has done is to follow that through. I know that the encounters of the Secretary of State with truth are always brief and accidental, but even he should address himself to the facts before uttering such falsehoods. The truth is that during the five years of the Labour Government from 1974 to 1979, an average of 135,000 dwellings were built each year—11,000 more than were built in each of the years of the previous Conservative Government from 1970 to 1974. Even in 1978—the last complete year of the previous Labour Government—we achieved 107,000 starts, which compares very well with the 55,000 starts that are likely to be achieved this year and the probable 40,000 or next year.

If the Secretary of State believes that all that he is doing is following a trend, he should see what is happening locally. The worst year for my constituency of Blackburn under the previous Labour Government was that of 1978–79, when there were 129 starts. As I said earlier, this year there have been only four starts, and it is not likely that there will be any more. I do not believe that that is a continuation of a trend.

What is true in terms of starts is also true in terms of expenditure. Between 1974 and 1979, Labour's housing expenditure averaged more than £6 billion—£2 billion, or 50 per cent., more than the average between 1970 and 1974. Labour's worst year between 1974 and 1979 was better than the Conservative's best year between 1970 and 1974.

The Secretary of State said that the amount of expenditure fell consistently between 1975 and 1979. That is true, but what he always fails to point out is that it fell because it reached an all-time post-war peak in 1974–75—an increase in that year alone of £2 billion, as a result of the Labour Government's counter-inflation policies of freezing rents and pumping more subsidies, rightly, into the coffers of the councils and their housing revenue accounts.

The second falsehood that the Secretary of State utters is on the extent to which Labour's projections on the starts have matched the outturn. Only two weeks ago, the Secretary of State said: the Labour Party's performance never met—or did not usually do so—the figures that it put forward. I have never expected the Labour Party's performance to live up to its promises."—[Official Report, 12 November 1980; Vol 991, c.465.] The truth is that in three of the five years of the Labour Government we exceeded our promises in terms of starts. The Secretary of State should remember that. Only in two years did we produce an outturn less than the total starts.

I should like to give the Secretary of State the figures. In 1974 we were 21,000 starts ahead of the forecast, in 1975 we were 14,000 starts ahead of the forecast and in 1976 we were 5,000 starts ahead of the forecast. In 1977 we were 13,000 below it. In 1978, the last complete year, we were 18,000 below it. A total of 720,000 dwellings was forecast for the five complete calendar years, and we built 730,000. If we include 1979, when the Secretary of State was responsible for most of the year and the construction industry faced its worst winter for 30 years, we had 830,000 starts and the outturn was 810,000.

Let us have no more falsehoods from the Secretary of State that suggest that he cannot bring forward projections of the level of starts because Labour's record was so bad. The Labour Government's record was excellent, as was the record of his predecessors between 1970 and 1974. The cumulative error was no more than 2.5 per cent. The standard that statisticians use, the absolute mean error, resulted in no more than a 10 per cent. error. If the right hon. Gentleman consults his statisticians, they will confirm what I have said.

The third falsehood that the right hon. Gentleman utters concerns forecasts of housing demand. Whenever we have asked him to declare what his forecasts for housing demand will be in the next five years, he has replied "We cannot do that because the Labour Government considered that and in their Green Paper it was stated that those forecasts of demand were highly speculative." I invite the right hon. Gentleman to address himself to the contents of the Green Paper. Nowhere in the Green Paper are the words "highly speculative" used about projections of demand. Those words are used in page 135 in terms of whether the public sector would meet the demand and whether the supply of dwellings between 1980–85 would be sufficient to meet the demand that was then clear. It was reasonable of the writers of that document to state that the figures were highly speculative. They had to look into the crystal ball and predict what a Conservative Government or a change of Government would mean for the council house building sector.

The figures for the level of housing demand are based on demographic information. That is available within the right hon. Gentleman's Department. It concerns the level of household formation over the next five years. The right hon. Gentleman knows that on the best figures available we shall be 500,000 houses short.

We have long believed that the right hon. Gentleman had the information in his Department. I genuinely commend him for his managerial efforts to improve Ministers' information systems and his publication of those systems. This is an important development in the control of Ministers over their civil servants and the control of the House over Ministers. I unreservedly congratulate the right hon. Gentleman on that development.

However, if we consider one of the 17 documents that the right hon. Gentleman placed in the library, we see that housing directorate A is running an assessment of past and current trends and future prospects for housing. Assessments of global trends in housing have already been carried out. Therefore, the right hon. Gentleman can no longer hide behind suggestions that the information is not available or that his Department is not preparing it. It is on record that information is available in his Department about the level of demand. We want to see that information published. Failure to publish it will merely confirm our worst suspicions—namely, that the right hon. Gentleman is suppressing information about Britain's mounting housing crisis.

It was announced this afternoon that more than 2,100,000 are unemployed. That is the highest total since the war. It is the highest total since February 1933, when 2,411,358 were unemployed. The fact that the Government have increased unemployment to levels never seen since the late 1930s or before the early 1930s is significant. Ministers have only 200,000 to go before they exceed the highest total throughout the 1930's. There will be only two months more of unemployment before the levels under this Government are the highest ever recorded this century.

The fact that we are plumbing the depths of unemployment that were reached in the 1930s has led to suggestions that the Government are following the economic policies of the 1930s. I wholly reject that. They are not. They are following the policies of the 1870s, when we were plunged into the greatest depression that the country has seen since industrialisation. Even the National Government in the 1930s realised that housing construction could be an engine of economic recovery. Alan Taylor, in "English History 1914–1945", records that the building boom was the outstanding cause for the recovery of the thirties when the recovery came the building boom accounted for 30% of the increase in employment between 1932 and 1935. That is why unemployment started to go down after 1934. The reason why it is starting to go up and will far exceed the levels of the 1930s is, above all, that the Government have flown in the face not only of the Keynesian post-war experience but of the experience of the 1930s. They have failed to understand that massive cuts in public spending hit not only the public sector but the private construction industry and that that leads to a massive increase in unemployment.

The Government's policies are those of the blind Victorians, who believed that the market should be allowed to operate without intervention. The Prime Minister clearly does not understand. But unless there is a significant change in policy and the Government start to put money into housing instead of taking it out the national misery of which the hon. Member for Hornchurch spoke will last not for only two or three years but for the 28 years of the depression that started in 1870.

8.52 pm

Mr. Selwyn Gummer (Eye)

The debate appears to suggest that we are fighting the battle for housing on so party political a ground that we are unable to look at the real issue, which is that Britain has been unsuccessful in meeting its housing needs under Governments of both parties for a long time. It would be more sensible to look at the basic reasons instead of bandying statistics across the Floor of the House.

Although we have more people in State-provided housing than almost any other country in the free world, we still have the kind of housing lists that the hon. Member for Jarrow (Mr. Dixon) mentioned. That should lead us to conclude that there may be other and much more fundamental reasons for our housing problems than those put forward by the hon. Member for Blackburn (Mr. Straw).

The hon. Member for Blackburn suggested, in effect, that if only we increased to a large extent the construction of public housing we should meet our needs. However, the major problem is that the only provision of housing in the circumstances outlined by the hon. Member for Jarrow is public housing. That is one reason why we are in such a mess after so many different Governments have attempted to spend large sums on housing. The provision of housing in large areas of the country now lies wholly on the shoulders of local authorities, because we have made it impossible for anyone else to provide it. It is on that aspect of the Government's policy that I wish to concentrate. Until we get into the housing market a much wider provision from many more sources, we shall not do as well in providing homes for our people as do our neighbours in the rest of Europe.

In my constituency, which is different from that of the hon. Member for Jarrow but contains large numbers of people who are deprived, although perhaps rather more prettily than in Tyneside, many people live in poor housing because there is no private provision for letting. Extending the provision of properties to let is absolutely vital if we are to have a sensible housing policy. The guilty man on this matter is quite clearly the right hon. Member for Manchester, Ardwick (Mr. Kaufman). Many families in rural areas are homeless today because the Government's shorthold policy has been torpedoed in the long term by the refusal of the Opposition to support so sensible a policy.

I say that with considerable feeling because week after week in my surgeries in the towns and villages of my constituency I meet many people who are desperate for housing which is there but which is not available to them because, unlike all the other countries within the European Community, we have an attitude towards the private landlord which so discourages, corrals and inhibits him that he does not bring it on to the market.

We must face this issue not as a party political issue but as a humanitarian one. I cannot go on telling young couples "You cannot have a home" when I know that places are available for them which are not let because of the false arguments of the Marxist-oriented Opposition Front Bench spokesmen. Once again, I ask that they give this matter serious consideration. [Interruption.] I hope that the right hon. Member for Ardwick will listen for a moment. He should remember that there are places in the country that are not entirely like Manchester. They are different. They have different problems.

People who are homeless could be provided with a home if the right hon. Gentleman would help us. All that we ask is that he accepts that there must be a system of tenure which enables people who may not always wish to let and who may wish to recover possession to do so. For example, they may wish to let their property for only a short period because they will need it for a relative. Whatever the reason, there should be the security of a sensible contract for the people who live there. If there is not, those houses, flats and former tied cottages will remain vacant.

I know that this is painful for the right hon. Member for Ardwick, which is why he is talking to his right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley), but the fact remains that, there are people in my constituency who with a word from him, could be housed. It is a powerful position for the right hon. Gentleman to be in, and I hope that he will give that word this evening. The word is simply that a future Labour Government, in 20 years or whatever, when Labour Members sort out a leader who will manage to win the election, will honour the shorthold proposals in order that people shall have houses. I am willing for the right hon. Gentleman to say "I am opposed to shorthold, it is contrary to my beliefs, but because I believe that it will help the homeless I will go against my own party view in order to help them."

I do not mind how the right hon. Gentleman says it. He can cover it up as much as he likes. But I ask him to accept the plea of those of us who represent people in the countryside to do something about it, because it matters to us—[Interruption.] It is all very well to shout from a seated position, but hon. Members who represent urban constituencies seem to find it difficult to understand that there are other places in the country with problems, and we ask for their help. There are 69 Members who represent rural constituencies, and we need the support of those in urban areas if we are to solve the problems of our constituents. We are unlikely to meet the housing needs of the nation if we reduce our options by saying that our concerns are only with the particular areas and the particular forms of housing which happen to fit our predilections.

I am one of those who would urge my right hon. Friend to urge his right hon. and learned Friend to look much more closely into the way in which we arrange tax relief on mortgages, because I believe that the balance of investment in private housing—and the way in which one of the few methods by which people may create capital for themselves is so concentrated upon the housing market—has damaging effects. We have to look at that. But, if we are to ask that it be looked at, with our long commitment to the encouragement of home ownership—a commitment that I would not like us to go back on in any sense—we have a right to ask the Labour Party to look at its attitude toward the landlord.

I remember well the comments of Dick Crossman when he was the housing Minister. He said that when the word "landlord" was mentioned it immediately put his hackles up. That is not a sensible way in which to approach our housing problems. There are many good landlords, and they ought to be encouraged. We want more of them and more homes to let. There would be fewer homeless if we were to encourage the good landlords.

If we on the Tory Benches are willing to look much more widely and imaginatively at the effects of tax relief on housing, we have a right to ask Labour Members to get off their ideological seats and start to face the fact that only by accepting a system of shorthold will the problems in the rural areas in particular be solved.

8.57 p.m.

Mr. Donald Anderson (Swansea, East)

The hon. Member for Eye (Mr. Gummer) made a passionate appeal for shorthold. Shorthold could make but a marginal contribution to dealing with the major housing stress in our areas of greater population. His appeal would have been better directed to his own Front Bench during the discussions on the Housing Bill, when it clearly overplayed its hand and refused to accept safeguards. Had those safeguards been inserted then, the view of the Labour Party might well have been coloured by them. The Government thought that their hand was stronger than it turned out to be. They have reaped what they deserved as a result of their own ideological stance at that time.

Yesterday in this House we had a unique parliamentary occasion. We had the interruption of a debate on the Queen's Speech for a "Budget Statement". That statement marked the breaking of a number of election pledges. The first related to the burden of taxation, with the increase in the national insurance contribution. The second related to social security benefits, with the breaking of the link between social security benefits and inflation. One cannot point to a similar election pledge on housing, but the electors could legitimately have imagined, prior to the last general election, that by voting Conservative they would share in the general prosperity in the housing area that would have been their lot under a Conservative Government.

One cannot envy the task of the Minister in having to defend the indefensible, in having to defend a Government who are presiding over an acute housing crisis. The reality is that, comparison of the third quarter of this year shows that with the third quarter of last year, total housing starts are down by 39 per cent., and starts in the public sector are down by 37 per cent. Council house waiting lists are now more realistic as a result of annual monitoring. Compared with 1979, the numbers of those on council house waiting lists increased by 150,000 in 1980. Clearly, the supply of housing is diminishing at a time when demand is increasing.

Under this Government, housing has taken a disproportionate share of the cuts. Of the total reduction planned, 75 per cent. will fall on housing. It is as if, in those long Cabinet meetings, the Secretary of State had volunteered the suggestion that his Department should suffer greater cuts. It is as if he did not fight his corner when the Secretary of State for Defence spoke about resignation and got off relatively unscathed. The Secretary of State for the Environment, an arch-monetarist, is putting his head on the chopping block and rejecting the interests of those whom he should represent.

The report of the Select Committee shows that the housing cuts are a result of the Government's failure to think through the social and economic implications of their policies. As the Under-Secretary of State for Wales intends to reply to the debate, I shall prove that the situation in Wales is even more dramatic. I refer him to Roof, the journal published by Shelter. The publication dated July-August 1980 show that 15.4 per cent. of housing stock in Wales was unfit compared with 9.6 per cent. in the relevant survey of English housing investment programmes.

Allocations fall far short of the bids. Rising unemployment and building costs in South Wales and in the areas of greatest stress will probably mean that fewer owners will be able to take up improvement grants. At the same time, the recession means that many of those in the public sector who might otherwise have looked to the private sector for housing are staying put and thus reducing the supply of housing for those in need.

Nearly one-quarter of all pensioners in Wales live in houses without indoor sanitation. About 75,000 houses in South Wales are unfit for habitation. Those houses represent a town larger than Swansea. I have given some indication of the severity of the housing crisis in Wales. There is a chronic housing problem and, in addition, under-investment. We face a cut of 40 per cent.

I refer the Minister to the October report of the South Wales chief housing officers' group. It is not a radical group, yet the report ends with the startling words: We fear that if increased finance is not made available very soon then the problem that will be created in the next 10 to 20 years will require drastic action such as extensive clearance programmes … We therefore urge the Government to reconsider its attitude towards housing and towards a philosophy which cannot and will not work in the current economic situation. Unless this reconsideration takes place we believe that the housing problems of South Wales will reach a point when they may be insoluble." Those housing officers see the situation every day. They point out that housing needs remain unmet and that there is a slide into increasing obsolescence. That is the legacy that the Government will leave their successors.

In my local authority, 46 per cent. of tenants require some form of assistance in order to pay their rent. Clearly, such people cannot enter the private housing market, nor can they buy their council houses. Of the remainder of the tenants, a substantial proportion are at an age at which they will be unable to obtain a mortgage. No one in his mid-forties would wish to purchase a property, given the problems of unemployment and the insecurity that it causes. The picture that the Welsh Office and the Government try to give of people moving from the shackles of the public sector into the freedom of the private sector does not accord with the realities of the present economic situation.

I wonder what picture the Welsh Office and the Government have of the role of the public sector. In a debate on 3 November, the Under-Secretary gave a picture of public housing in Wales being, in the Government's view, designed for special needs, such as welfare housing —something akin to the American picture. That is very far indeed from our needs. As I have tried to stress, given our present economic situation and the profile of housing, with 46 per cent. of our people receiving assistance with their rents, who is able to afford to move from the public to the private sector?

No doubt the Secretary of State saw the leader in The Times on 10 November—even The Times—which pointed out in the most glaring way the result of the disproportionate cuts that the housing sector is suffering under the Government. That leader asked what sort of legacy of housing stock the Government would leave to their successors. In particular, it asked what would be the impact on disadvantaged groups. It mentioned the need not to destroy the building industry and the need to protect the stock that we already have.

The truth is that, if we ask what the Government's housing policy is, we find that they do not have a housing policy as such, because all is subordinated to their monetarist policies, which are manifestly failing. Who now believes the technical view of the purists that by limiting money supply there will inevitably be a fall in inflation?

Mr. Nick Budgen (Wolverhampton South-West)

There has been such a fall.

Mr. Anderson

The Government have failed to control the money supply either because of some conspiracy on the part of Keynesian moles in the Treasury or the Bank of England or because the whole basis of their philosophy is thoroughly discredited by economists. There are very few people, save on the Government Front Bench, who can think that this policy is working. Surely, we in this country are now the guinea pigs of an experiment. As the Bank for International Settlements has said, this is a laboratory experiment.

In his speech over the weekend the Secretary of State for Industry said, in his simple and disarmingly innocent and refreshing way, that we have lost one year. It is not the Government who have lost one year. It is the unemployed, the homeless and those who had prospects of better living accommodation who have lost it.

9.13 pm

Mr. Gerald Kaufman (Manchester, Ardwick)

It is now almost universally agreed that this country is facing its gravest peacetime housing crisis for more than half a century. My hon. Friend the Member for Blackburn (Mr. Straw) illustrated that very fully in his speech. Houses for rent and for sale are scarcer and dearer than ever before. The Government's policies are increasing the scope for usury in the private market for sale and for harassment and Rachmanism in the private market for rent. In the public sector, fewer houses are being built than for generations and rents are being forced up to record levels. All this is now accepted by most observers, despite the sedulous efforts by the Government to suppress the facts when they can and to fiddle the facts when suppression is impossible.

The Secretary of State has led the way in this distortion of the facts. Never has he given an honest, straightforward answer when a dishonest, distorted alternative has been available. Yet this is the Minister who has lately been flooding the press with propaganda about his latest exercise in self-glorification—an exercise which he claims is in the interests of open government. This is what he calls his MINIS project. Hon. Members may ask "What are MINIS?" The Secretary of State certainly regards them as very important. He spoke about his MINIS recently in a solemn address to the assembled staff of the Department of the Environment. He said: I should like to describe some of my personal reactions to MINIS. I have now had 19 meetings—as my office have told me, the MINIS exercise has made greater demands on my time than almost any other aspect of work over the last four months. Before hon. Members jump to hasty conclusions, I should explain that MINIS is an acronym for management information system for Ministers.

Fifteen volumes full of MINIS have helpfully been placed in the Library by the Secretary of State. They are a veritable gold mine of information about the workings of the Department of the Environment. For example, part 4A deals with housing, construction, and finance. Set out in these volumes of MINIS are details of tasks set by the Secretary of State for his civil servants and assessments of performance. Under reference C5 we have: Advice supplied in answer to PQs, PSOs"— whatever they may be— and for ministerial speaking engagements and for parliamentary debates. Then we have an assessment of the performance of the task: As efficient and cost effective as could be expected. The task set under reference D1 is: Material prepared, and co-ordinated … for briefing for ministerial engagements and parliamentary debates and questions. The assessment of the carrying out of that task is: Efficient in the circumstances. The task set under reference D3 is: Guidance given both internally, (e.g. briefing for PAC and Environment Committee, and to other divisions on accounting practicalities arising out of the Housing Bill—sale of houses, subsidy system, capital controls) and externally". This time we have not a performance assessment but a forecast of planned performance. The forecast is: These deal with activities in a manner which will help Ministers and officials to present the strongest case for the Government for parliamentary and other public occasions. No doubt, industrious officials have been toiling indefatigably over the weekend to fulfil that remit, but all to no avail. The MINIS enable the Secretary of State to know in great detail what his officials are doing, but it is exceedingly difficult for his officials or anybody else to find out what the Secretary of State is doing, because time and again the right hon. Gentleman refuses to provide the necessary information, or, when he cannot avoid giving some kind of answer, he distorts it.

In February, when the Secretary of State announced the housing investment programme allocations, he pretended that the cut in the HIP compared with last year was 21 per cent. When he was asked to give the reduction in real terms, he refused to do so, in these words: I should like to help the right hon. Gentleman. The difficulty is that many figures are involved in this exercise. I am not prepared to give them across the Dispatch Box".—[Official Report, 21 February 1980; Vol. 979, c. 682.] When the Secretary of State was forced to reply by a precise parliamentary question, he had to admit that the HIP cut was not 21 per cent. but 33 per cent.

When the Select Committee on the Environment requested information from the Secretary of State, he wriggled time and again, as the report of the Select Committee makes clear. Paragraph 7 of chapter 1 states: In only one respect would the Secretary of State disclose information relating to the overall expenditure figures for 1981–84". Paragraph 8 of chapter 2 states: Your Committee does not, however, consider that this, or the argument that publication would lead to misinterpretation, justifies a refusal by the Secretary of State to indicate the likely consequences of such decisions as he will have to make". It added: The Committee notes that the Secretary of State was not prepared to estimate the effects of such action. It is not only in the House that the Secretary of State refuses to provide information. Last month he was interviewed on the BBC radio programme "File on Four" and was asked for details of the cuts in housing expenditure compared with the Government's expenditure cuts as a whole. The right hon. Gentleman replied: I know, but it doesn't come out at that you see, and quite a lot of programmes have taken reductions, of which housing has taken no reduction. Other programmes have had increases of the sort that I have mentioned, and so you have to look at the overall situation, you just can't take the assumption that housing has borne virtually the whole lot, because that simply isn't the case. The interviewer, Mr. Henshaw, understandably baffled by that reply, said: What's your figure then, Minister? The transcript of the programme, which has been supplied to me by my hon. Friend the Member for Leeds, West (Mr. Dean), goes on: Heseltine: Well you don't—I don't have a figure for the, in that sense I could find out what it was for you. Henshaw: But you can't give me a real figure? Heseltine: Well if you want my Department to work one out for you I'll get one for you, but I haven't got it available in front of me now. In the end, the Department of the Environment admitted, as my hon. Friend the Member for Swansea, East (Mr. Anderson) has pointed out, that housing alone was having to bear 75 per cent. of all the Government spending cuts. Even that may turn out to be an underestimate and it does not take into account yesterday's further £323 million cut in Department of the Environment and local government spending.

It is a measure of the shattering blows that the Government have struck at housing. For owner-occupiers the cost of borrowing has been, for nearly a year, higher than ever before, and that record high rate has been held longer than any previous top rate of recent years. For existing borrowers, that amounts to an annual tax of £1 billion. For would-be borrowers it means in many cases losing the chance of a house that they have set their hearts on. The latest figure announced at the weekend shows that new orders for homes for sale are down 41 per cent. On a year ago.

The last full year of the Labour Government saw an all-time record of 802,000 home loans. This year the total may not reach 650,000—a cut of 19 per cent., and that from what the Prime Minister has claimed to be the "owner-occupiers' party". For tenants of private landlords, this coming Friday marks the implementation of the threefold attack on private tenants embodied in the Housing Act 1980. First, there is the complete end of protection for the 200,000 tenants still safeguarded by rent control. Those tenants are often old, often poor, often living in rundown property.

Mr. Tim Sainsbury (Hove)

What about the landlords?

Mr. Kaufman

I am glad to hear the cry on behalf of the landlords of these 200,000 most under-privileged tenants whose rents are to go up by large amounts. That is the only concern of the hon. Member for Hove (Mr. Sainsbury).

There is the end of the three-year interval between rent increases for regulated tenants and its replacement by a two-year gap. That means faster and higher rent increases for all private tenants.

There is also the introduction of the new and infamous shorthold tenancies, which mark the beginning of the end of rent protection and security of tenure for tenants of private landlords. They are tenancies which hand over a licence to revive Rachmanism to the many unscrupulous landlords who still prowl the back streets of our great cities. I readily repeat this party's commitment to repeal the shorthold tenancies.

The Secretary of State's attacks on owner-occupiers and private tenants are disgraceful enough, but the right hon. Gentleman has reserved his main offensive for public sector tenants. My hon. Friend the Member for Lambeth, Central (Mr. Tilley) has illustrated vividly the effect on the co-operative movement. My hon. Friend has raised extremely important questions. We look to the Under-Secretary of State, in his reply, to answer them in detail.

Housing associations, once the apple of the Secretary of State's eye, are having their programmes cut by 60 per cent. My hon. Friend the Member for Bootle (Mr. Roberts) has dealt with that matter. The housing associations are voicing fears that next year they will not be in a position to start a single new home compared with the 42,000 starts last year. Even this is as nothing compared with the assault on local authority programmes. When the previous Labour Government's housing drive reached its peak in 1974–75, housing accounted for over 10 per cent. of public expenditure. By 1983–84, housing—this is what Conservative Members laugh at—as a proportion of public expenditure, will have fallen from 10 per cent. to 4 per cent. That calculation was made before yesterday's additional cuts.

The Secretary of State constantly draws attention to the decline in Labour's housing programme from our peak years in the mid-1970s. That is true. It is regrettable. As pointed out by my hon. Friend the Member for Blackburn, even more regrettable is the fact that our worst year is liable to be seen retrospectively as a miracle of achievement compared with the best that this Government can do. Our trough will be higher than their peak.

In 1975, 119,000 council houses were started in England and Wales. It would be interesting to have a promise from the Secretary of State that all the local authority starts added together for all five years of this Parliament, if it lasts that long, will add up to as many as that 119,000 in 1975. If the Secretary of State will give me the promise that all the starts in the five-year Parliament added together will be as many as the Labour starts in 1975, I will gladly give way to him now. We will not get a guarantee that a whole Tory Parliament's starts will be as many as in one Labour Government year.

As the Opposition have been warning, the policies of this Secretary of State will mean intolerably high rents for 5.25 million council housing tenants in England and Wales. In the final moments of the last Session, the Secretary of State's now notorious paper on council house rents was dragged kicking and screaming into the light of of day. The Secretary of State says in his document that he has in mind making a determination prescribing a flat rate increase figure within the range of £2.50 to £3 per dwelling per week But, in that squirming, wriggling statement that he made when he temporarily withdrew the document on the last night of the last Session, he claimed: in the course of the legislative arrangements under the Housing Act 1980, we have arranged for Ministers not to announce their views without consultation on the level of council house rents."—[Official Report,13 November 1980; Vol. 992, c. 768.] That seems terrifically democratic. What could be fairer than consulting the local authorities on the level of their rents? But what sounded splendid at the end of an eventful evening looks somewhat different when we reexamine it in an action replay. The nature of the consultation is described in the right hon. Gentleman's document. It states that the Secretary of State wishes to know the views of the associations on the point at which the flat rate would be fixed within the range quoted. So all that the Secretary of State is consulting about is what sum between £2.50 and £3 the rent rises shall be fixed at. It is as though a judge tells a condemned man that he is consulting him about his sentence by offering him a choice between garrotting and the guillotine.

It is about time the right hon. Gentleman abandoned his consistently deceitful attempt to distort the Labour Government's rent policy. He claims that it was the Labour Government's policy to put up rents in line with earnings, and he quotes in evidence our Green Paper. At page 37 the Green Paper says: The Government consider that over a run of years rents should keep broadly in line with changes in money incomes. In June 1977 the right hon. Gentleman, from the Opposition Dispatch Box, asked my right hon. Friend the Member for Stepney and Poplar (Mr. Shore): would he agree that, as rents are to rise in line with money incomes, this will represent a significantly higher rate of rent increases than those in recent years and certainly a faster rate than that laid down in the Housing Finance Act 1972? My right hon. Friend replied: I do not envisage that increases in rents will be higher under the future formula than they have been in the past two or three years."—[Official Report, 28 June 1977; Vol. 934, c. 251–2.] In fact, in the following two years, that was borne out by an average rise in rents under the Labour Government of only 7 per cent. a year. Therefore, the right hon. Gentleman had better abandon his distortion of the Labour Government's policy, which has been disproved by his own words.

Mr. Heseltine

The right hon. Gentleman is flinging around some fairly wild words, such as "deceitful". I should be grateful if he would comment on a matter of which he has had very full notice and to which I thought he would refer. This afternoon his right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) told the House that he had notified the Government that he intended to widen the debate today, so justifying his devoting a large part of his speech to a subject that was not on the Order Paper. I shall be most grateful if the right hon. Gentleman will inform the House in what way his right hon. Friend had notified the Government.

Mr. Hattersley

Why not ask me?

Mr. Heseltine

I am asking the right hon. Gentleman's right hon. Friend because he is addressing the House. The right hon. Member for Sparkbrook made extremely serious allegations about me this afternoon. We have been waiting for his right hon. Friend to comment on the matter and to explain why it was assumed that I should have known that the right hon. Gentleman was to debate this afternoon a subject that was not on the Order Paper and of which I could not possibly have had reasonable notice in any ordinary parliamentary sense. I should be grateful if the right hon. Gentleman, who is making such wild and trivial charges, would care to deal with that.

Mr. Kaufman

This is not a debate about the Secretary of State's ruffled feelings. It is about the important subject of housing.

Mr. Heseltine

On a point of order, Mr. Deputy Speaker. I am merely seeking to clarify how it was that this afternoon the spokesman for the Opposition should have told the House that he had notified the Government—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

The right hon. Gentleman is well aware that the Chair has no power to arrange the contents of a speech.

Mr. Heseltine

Further to that point of order, Mr. Deputy Speaker. I understand the limitations of the powers of the Chair in this matter, but is it not appropriate that, when the Opposition are fully aware that statements have been made in the House this afternoon which demand an explanation, there should be an explanation in the winding-up speech?

Mr. Deputy Speaker

I have no doubt that that matter has been heard by members of the Opposition Front Bench and will be given whatever consideration they feel it deserves.

Mr. Kaufman

This is a debate about housing, and I intend to speak about housing.

Mr. Heseltine

On a point of order, Mr. Deputy Speaker. The whole point of what the right hon. Member for Sparkbrook told the House this afternoon was that he wanted to widen the debate away from housing, and he devoted half his speech to doing precisely that, saying that I should have done the same.

Mr. Deputy Speaker

It is quite clear that a speech is made on the responsibility of the right hon. or hon. Member making it.

Mr. Hattersley

Further to that point of order, Mr. Deputy Speaker, if it was a point of order. I said that I had given that message to the Government for no better reason than that it was true.

Mr. Heseltine

Further to that point of order, Mr. Deputy Speaker. I heard the right hon. Member for Sparkbrook say that this afternoon. I am now waiting for an explanation of precisely how he did it.

Mr. Kaufman rose—

Mr. Deputy Speaker

As we are not on a point of order, I call the right hon. Member for Manchester, Ardwick (Mr. Kaufman).

Mr. Kaufman rose—

Mr. Heseltine

On a point of order, Mr. Deputy Speaker. The right hon. Gentleman—

Mr. Deputy Speaker

May I ask the Secretary of State whether, at the end of the day, he is coming to a point of order?

Mr. Heseltine

The right hon. Member for Sparkbrook has now said that what he said this afternoon was true. It must be realistic to ask him to amplify that statement, in view of the charges—

Mr. Deputy Speaker

That can only be an intervention.

Mr. Kaufman rose—

Mr. Heseltine

Further to that point of order—

Several Hon. Members

Watch the Mace!

Mr. Deputy Speaker

Unless the Opposition spokesman gives way, the Secretary of State must resume his seat.

Mr. Kaufman

This episode will be noted outside the House by many millions of people who regard the housing crisis as much more important than the Heseltine crisis. As I was saying, I intend, Mr. Deputy Speaker, with your agreement, to proceed with the speech which you called me to make.

I want now to speak about rent increases. It is obvious that Conservative Members do not want to hear about rent increases. The huge rent increases which have been imposed by this Government will be an intolerable burden on tenants whose average household income is 24 per cent. below the national level and whose rents will almost have doubled since this Government came to office. What is more, they are rent increases which amount to a massive additional tax totalling between £700 million and £840 million. As my hon. Friend the Member for Jarrow (Mr. Dixon) pointed out, this is Robin Hood in reverse.

But at least each of those families will have a home and, very likely, a home built to acceptable standards. Meanwhile, the Government's unprecedented withdrawal of finance from the housing programme will be inflicting a catastrophe on the nation's stock of dwellings. The money evaporates. It is down 32 per cent. this year and will be down 48 per cent. by 1983–84. Subsidies are being wiped out completely and the problem will take on almost uncontrollable dimensions. The quality of the nation's housing stock is deteriorating fast.

The Secretary of State does not care about any of this. He is concerned about his own personality, not about what he is doing to the housing needs of the country. The quality of the nation's housing stock is deteriorating so fast that the cost of installing basic amenities and making good arrears of maintenance probably totals £14½ billion.

The collapse of the house-building programme under the Government is likely by 1986 to mean that the nation will have 400,000 dwellings fewer than it needs. The cost of providing such dwellings at today's prices is at least £7½ billion. The price of the Secretary of State is mounting rapidly beyond £20 billion.

Mr. Major

Will the right hon. Gentleman give way?

Mr. Kaufman

Not at this stage.

This housing tragedy is brought about by the Secretary of State and the Tory Government.

Mr. Major

Give way.

Mr. Kaufman

No.

This housing tragedy will impose a burden of human deprivation. That is what matters, not the Secretary of State. The housing tragedy brought about by the Secretary of State will impose a burden that the nation will have to carry for decades. The right hon. Gentleman's policies are ensuring that Britain's housing crisis will endure well into the twenty-first century. He has been in office only a brief time, although he seems to carry it heavily. For the homeless and the ill housed, he has already been in office far too long.

9.41 pm

The Under-Secretary of State for Wales (Mr. Wyn Roberts)

I should like to make two introductory points. First, the subject of the debate today, as announced by Mr. Speaker at the opening of the debate on the Queen's Speech, is housing. The majority of speakers in today's debate have recognised that, apart from Opposition Front Bench Members. The right hon. Member for Manchester, Ardwick (Mr. Kaufman) has wriggled.

Mr. Frank Allaun

On a point of order, Mr. Deputy Speaker. This is a debate on the Queen's Speech. If I or any other hon. Member had wanted to speak about defence, or about who shot J.R., that would have been permissible. Therefore, the Under-Secretary's remarks should be ruled out of order.

Mr. Deputy Speaker

Subjects mentioned in the Queen's Speech are in order. There was an example in the House yesterday of an hon. Member talking about a matter that was not strictly the subject of the debate.

Mr. Wyn Roberts

Further to that point of order, Mr. Deputy Speaker—

Mr. Straw

Further to that point of order, Mr. Deputy Speaker—

Mr. Deputy Speaker

Order.

Mr. Roberts

On a point of order, Mr. Deputy Speaker. It is clear that in order to reply properly to the debate one should know the subject of the debate. I have said that the subject chosen for debate by the Chair was housing, and that is the subject recognised by the majority of hon. Members who have participated, apart from right hon. Members on the Opposition Front Bench. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), in reply to my right hon. Friend the Secretary of State, said that he had approached the Government in order to extend the subject. He said that that was true. I give him the opportunity now to say how he approached the Government.

Mr. Straw

On a point of order, Mr. Deputy Speaker. I understood the Minister to be raising a point of order. [Interruption.]

Mr. Deputy Speaker

Order. The hon. Member for Blackburn (Mr. Straw) wishes to raise a point of order.

Mr. Straw

On a point of order, Mr. Deputy Speaker. First, I understood the Minister to have been called not to continue with his speech but to raise a point of order, which, as I understand, should be addressed to you, Mr. Deputy Speaker, not to the Opposition Front Bench.

Secondly, is it not within the knowledge of the House that this evening, during this debate on housing, my hon. Friend the Member for Dewsbury (Mr. Ginsburg) made a speech about amendments to the Canadian constitution? Because this is a debate on the Queen's Speech, he was not ruled out of order.

Mr. Roberts

I have given an opportunity, and I still extend the opportunity, to the right hon. Member for Sparkbrook to give the House an answer to a question that has arisen during the course of the debate. How does he justify his statement that he had approached the Government?

Mr. Anderson

On a point of order, Mr. Deputy Speaker. Is it appropriate for the Minister to spend this amount of time on an incestuous matter between the two Front Benches a matter that is of no interest whatsoever—

Mr. Deputy Speaker

Order. The content of the speeches made from the Front or Back Benches has nothing to do with the Chair.

Mr. Roberts

I think that the House will reach its own conclusions.

Mr. Major

On a point of order, Mr. Deputy Speaker, which I hope is genuine. It is a matter of concern to the House, first, that my right hon. Friend the Secretary of State was assailed for not dealing with matters of which he was not aware would be raised and, secondly, that Conservative Back Benchers were assailed on matters that had nothing to do with the rate support grant and other matters that were not expected to be the subject of discussion today.

Mr. Deputy Speaker

Order. Unless the hon. Gentleman can do better than that, there is no point of order.

Mr. Roberts

I was also going to say that my presence at the Dispatch Box symbolises the Welsh dimension in housing. Of course, I have taken note of the points made by hon. Members from England, too, but the fact remains that the consultation papers that were issued to local authority associations today are in the names of my right hon. Friends the Secretaries of State for the Environment and for Wales.

I have noted the presence in the Chamber from time to time today of a few right hon. and hon. Members representing Welsh constituencies, but the majority of Welsh Members appear to have missed their opportunity—apart from my hon. Friend the Member for Anglesey (Mr. Best) and the hon. Member for Swansea, East (Mr. Anderson).

Several right hon. and hon. Members referred to the decline in new building, which, incidentally, started under the previous Labour Government, and they criticised the imposition of the moratorium in England. To hear those hon. Members, one would imagine that they knew nothing of the serious financial and economic position resulting from the present world recession. With regard to the moratorium, it is clear that the halt on the housing improvement programme expenditure in England has been misunderstood and misinterpreted.

The right hon. Member for Sparkbrook asked what was the point of the moratorium. He was ably answered by my hon. Friend the Member for Huntingdonshire (Mr. Major). The purpose of the action in England, was simply to prevent overspending on the amount allocated.

The cash limit of £2,186 million has not been reduced. The value of housing work that may be undertaken this year by the building industry has not been reduced below the level originally planned. In seeking to exercise a proper control over public expenditure in this way, the Government are not introducing any new principle. This is what any responsible Government would have done.

Indeed, the previous Government themselves introduced a moratorium on new house building in July 1976 specifically to avoid overspending.

Mr. Alec Jones (Rhonnda)

How long?

Mr. Roberts

It applied in Wales as well.

Mr. Alec Jones

How long?

Mr. Roberts

It is not a question of for how long we introduce a moratorium. It is the principle of the moratorium—

Mr. Straw rose—

Mr. Alec Jones rose—

Mr. Deputy Speaker

Order. It is bad enough to have the Minister and a right hon. Member on their feet at the same time, let alone Back Benchers as well.

Mr. Roberts

I am sure that the right hon. Member for Rhondda (Mr. Jones) will understand that there is only a short time remaining for the debate and that I am unable to give way to him. I have a great deal of territory to cover.

I emphasise that the moratorium does not cover expenditure contractually committed by the time that the circular of the Department of the Environment was received. That includes schemes for which tenders had been formally accepted in terms that might make an authority liable if it did not then sign a contract. It does not cover expenditure that is not yet committed but which the authority is statutorily obliged to incur—for instance, on intermediate and other mandatory grants or on acquisitions under confirmed CPOs when the authority has entered the property.

I should stress that home insulation grants are unaffected, as are essential adaptations to public sector property for the chronically sick and disabled, grants for such adaptations to private dwellings, and mortgages on council house sales.

It is recognised that the standstill bears hard upon those authorities that are not likely to overspend this year. They are having to suffer because of what others have done.

My view is that my colleagues have been right to act as they have. It is clear from the figures that action was necessary.

I go further. If the Opposition were in Government now, they would have done the same. We cannot allow cash limits to be breached. I remind the Opposition that the discipline of cash limits was introduced by them. We welcomed the introduction of cash limits. We expect support in their application now.

We have heard very little from the Opposition about the moratorium in 1976. That can have added only to the downturn in housing investment that was initiated by the previous Labour Government.

Mr. Straw rose—

Mr. Roberts

We have not yet had to impose a moratorium in Wales. That is cause for some relief to us but it is not a matter for boasting. We are closely watching the situation in Wales. My right hon. Friend the Secretary of State and I are able to maintain close and even intimate relationships with individual local authorities. Welsh local authorities are fully aware of our views and they know what is required of them.

We must rely on the good sense of local authorities in Wales to keep their spending under control. I appeal to all concerned to help us in avoiding consequences that they would greatly regret. Make no mistake, we would have to impose a moratorium if it appeared as if we in Wales were heading for overspending this year or to an over-commitment for next year.

We have heard today of the effects of stopping and starting housing programmes. There is a need for continuity in planning. Again, I can refer to experience in Wales. The previous Government's moratorium in 1976—which covered Wales—came not long after a tour of Welsh local authorities by one of my predecessors as Under-Secretary of State, the hon. Member for Merthyr Tydfil (Mr. Rowlands), who urged authorities to "spend, spend, spend" and "break the bank". Well, they did break the bank. That was the result of the drive referred to by the right hon. Member for Ardwick.

I turn briefly to another main element in the debate—subsidies for local authority housing and the rents charged by local authorities to their tenants. I make that distinction between rents and subsidies because some hon. Members have spoken as though the two issues are one and the same. It is the Government who take decisions on Exchequer subsidy, while it remains the statutory responsibility of local authorities to set their own rent levels. That is a real and significant difference.

We make no apology for the figure that my right hon. Friend quoted for the increase in the local contribution. It would have been considerably less if under the previous Labour Government rents had moved in line with earnings, in accordance with the policy that they proposed but did not carry out.

Mr. Alec Jones

Will the hon. Gentleman give way?

Mr. Roberts

We have heard—

Mr. Jones

Will the hon. Gentleman give way?

Mr. Deputy Speaker

Order. Both Front Bench Members must realise that only one hon. Member at a time can hold the Floor.

Mr. Jones

Will the hon. Gentleman give way?

Mr. Roberts

I am not giving way. The right hon. Gentleman has been absent for the greater part of the debate.

Had the previous Government followed the policy that they talked of, rents would be about £10 a week, instead of about £8.10 pence. We should not have witnessed the steady, uncorrected decline of rents as a proportion of earnings over the Labour years, from 8 per cent. in 1974–75 to the 6.4 per cent. that we inherited. What we are doing here, as elsewhere in our policies, is acting to restore realism in housing. Real costs must be faced. It does no credit to the previous Government that they hid their heads in the sand.

What we must not do is look at rents as if all increases stood to be paid in full by local authority tenants. Almost 45 per cent. of tenants in England and Wales receive rent assistance of one kind or another. For that sizable proportion of tenants, the extra rent that they will be called on to pay will be considerably less than the increase that we have discussed. Almost 20 per cent. of tenants receive assistance by means of rent rebates. For them, 60 per cent. of any increase will be met by their rebate, and in some high rent areas the figure will be even higher. For tenants on supplementary benefit almost 25 per cent. the increase will be met in full.

I should also like to remind the House that the Government raised the maximum rent rebate this year to £25 a week in London and £23 elsewhere. The previous maxima were £13 and £10 respectively.

Many tenants can well afford to pay higher rents than those now prevailing. Updating the data in the latest family expenditure survey, it is estimated that 1¼ million tenants 25 per cent. have household incomes of £8,000 a year or more, and average industrial earnings are now £125 a week, compared with the present average council rent of £8.10 pence a week. Even if rents were to rise an average of, say, £11 a week next year, they would still be below 10 per cent. of present average industrial earnings.

We must bear in mind, too, that excessive subsidies for council rents eat into resources which might otherwise be used for capital investment—

Debate adjourned.—[Mr. Wakeham.]

Debate to be resumed tomorrow.