HC Deb 21 January 1981 vol 997 cc371-96 11.58 pm
The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind)

I beg to move, That the draft Housing Support Grant (Scotland) Order 1981, which was laid before this House on 12 January, be approved. It may be for the convenience of the House if I also speak at this time to the two variation orders.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

Is that for the convenience of the House? The three orders will be taken together.

Mr. Rifkind

Before I say more about the orders, I should like to acknowledge the very helpful and constructive way in which the Convention of Scottish Local Authorities took part in the annual discussions that the convention has with the Secretary of State. While it is undoubtedly the case that there was disagreement on the expenditure and income implications of the grant, it is equally the case that in all other matters, including the very important distribution area, there was total accord between the Secretary of State and the convention, and we were happy to be able to accept a signficant number of requests and recommendations that the convention put to the Secretary of State.

I shall deal first with the second variation order for the year 1979–80. Hon. Members will recall that at about this time last year the House approved a substantial variation order for the 1979–80 settlement, to compensate for changes which had occurred in interest rates, costs and prices. The year being complete, it is now possible to consider whether a further variation order is justified to take account of increased expenditure almost entirely as a consequence of the level of interest rates. My right hon. Friend has considered this matter and, in accordance with the normal rules that are applied, has concluded that a further increase in grant of £14.7 million would be justified for the 1979–80 year.

I turn now to the variation order for 1980–81. In the light of the most recent information on the level of interest rates, remuneration, costs and prices, we have decided to increase the estimate of eligible expenditure, and hence the aggregate of housing support grants, by a total of £43.4 million. This is a very substantial sum, representing as it does about 23 per cent. over the main order, and it fulfils the pledge given by the Government tolocal authorities last January that authorities would not suffer from increases in expenditure as a result of changes in the general economy over which they had no control.

I turn to the main order for the year 1981–82 and I begin by dealing with the question of how the total housing support grant will be shared among local authorities. With the full agreement of the Convention of Scottish Local Authorities, the order prescribes a method which is simpler and, I believe, fairer than that used for past years.

Hostels will continue to be supported fully in respect of their assessed operational deficits, and this will absorb £1.3 million. The rest of the grant will be distributed by a method in accordance with the factors shown in the schedule to the order. For the first time, the distribution of housing support grant is entirely unaffected by historic levels of subsidies under earlier systems. That has the support of the convention.

The most important item is loan charges. Grant distribution this year will proceed from an estimate of authorities' loan charges for 1980–81 rather than—as would have been the effect under the formula in previous years—by reference to the actual loan charges returned by authorities for 1979–80. This request was put to the Government by the convention last year. We promised to consider the matter. We have done so, and we have agreed to accede to the approach that the convention desired.

The rest of the expenditure side of the formula relates to management and maintenance expenditure. As in past years, this expenditure is expressed as a standard amount per house subject to weightings to meet the needs of authorities with high-rise housing stock and areas that are sparsely populated. In the first two years of housing support grant, the formula incorporated a special factor to protect the entitlements of authorities with small proportions of council houses per head of population. This arrangement has been dropped, with the agreement of the convention.

There is one aspect of distribution which is somewhat technical, but I must endeavour to explain it. The formula introduced by our predecessors in office provided for a distribution which was not directly proportional to the calculated local deficit. The result was that authorities with above-average expenditure were obliged to find more money out of their own resources. We followed this method last year, but discussions with the convention led us to conclude that the device operates harshly for some authorities, particularly those with active building programmes or high unit costs of building.

It was not an easy matter to decide, because a change in the distribution pattern means losers as well as gainers. But we decided that the device had outlived its usefulness, and it is accordingly being phased out. Hitherto, grant has been proportionate to 85 per cent. of net assessed expenditure. With the agreement of the convention, it will be 90 per cent. for 1981–82, and within two years thereafter distribution will be directly proportional.

I have said that formula changes bring gains and losses. So that the impact of losses should not be too severe, the formula includes a cushioning mechanism, which will ensure that no authority will suffer a loss of grant in excess of £145 per house compared with 1980–81.

The amounts of housing support grant to be received by authorities in 1981–82 are listed in annex C to the report. The sums have been calculated to the nearest thousand pounds but, before payment, will be calculated to the nearest pound.

I turn to eligible expenditure and income as regards the main order. Eligible expenditure has been estimated at £600.1 million, relevant income at £459.4 million and housing support garant—being the difference—has been set at £140.7 million. I shall explain how those estimates have been made.

On the expenditure side, loan charges account for just under 70 per cent. of the total. The estimates of capital expenditure included in this calculation accord with the government's public expenditure estimates. Authorities have, of course, been advised that their capital allocations for 1981–82 may be reduced if their levels of rateborne expenditure on the housing revenue account exceed planned limits. Nevertheless, the estimate of housing debt for 1981–82 reflects the full total of allocations which authorities may receive if they respond constructively to the Government's guidelines on rate fund contribution levels.

The other main area of current expenditure is on management and maintenance. In the current financial climate, we cannot afford to increase spending under these heads. Accordingly, the level of expenditure assumed for 1981–82 will he the level allowed for in the 1980–81 settlement, adjusted to take account of the increase in the housing stock and uprated by a factor of 9 per cent. This factor reflects the Government's view that local authority pay settlements next year should not on average exceed 6 per cent. As regards supervision and management, the factor incorporates a modest allowance in recognition of the extra costs which authorities may have to incur under the provisions of the Tenants' Rights, Etc. (Scotland) Act 1980.

Apart from Government subsidies, local authority revenue expenditure on housing is financed mainly out of rents and rates. Local authorities have been asked to hold their rate fund contribution to the housing revenue account in real terms at the figure which I recommended last year and to increase rents on average by about £2.33 per week, bringing the average Scottish rent to about £8.20 per house per week.

The rent increases reflect our judgment of what is reasonable. They would have been lower but for the failure of authorities generally to achieve the guideline rent increase figure for 1980–81, which was £1.40. Had authorities met this target, public expenditure targets for next year could have been met with rent increases of less than £2 per week.

I am well aware that some Opposition Members may not agree that £8 or so is a reasonable rent. I will give them a reasoned argument. First, the increases will not be borne by 25 per cent. of local authority tenants in Scotland who pay no rent and who will continue to pay no rent because of their low incomes. Secondly, there is a further 25 per cent. of local authority tenants who receive rent rebates. They will continue to be rebated. They will not pay a rent increase, on average, of more than £1 a week.

Mr. John Maxton (Glasgow, Cathcart)

I am following the hon. Gentleman's argument, which I appreciate. All that the Minister is doing, surely, is to cut local authority expenditure and to put up public expenditure elsewhere. That seems totally against the concept of what he is trying to do.

Mr. Rifkind

If the hon. Gentleman was really following the argument, he would appreciate that the Government are protecting those on low incomes from rent increases that those with larger incomes can reasonably afford. The Government have emphasised that they have not the slightest desire to penalise people who would genuinely suffer hardship through unreasonable rent increases. Fifty per cent. of Scotland's council tenants will not have to pay the average rent increase that is proposed. One-quarter will pay no increase at all. One-quarter will pay, on average, a rent increase of no more than £1 a week.

Half of the remaining 50 per cent. of Scotland's council tenants have a household income of more than £8,000 a year. It is not unreasonable to suggest that an average rent of £8 a week is a meaningful and responsible contribution to make towards housing costs. I do not think that any Opposition Member could seriously put an argument to the contrary.

Mr. Robin F. Cook (Edinburgh, Central)

I am following the argument with care. Will the hon. Gentleman extend his argument to tax relief extended to owner-occupiers, who, on average, have a higher income than those to whom he has just referred? The tax relief for owner-occupiers has the same effect on public expenditure and the PSBR as a reduction in subsidy for which he makes his case.

Mr. Rifkind

The hon. Gentleman may not agree. I believe, however, that most reasonable people would draw a distinction between what one pays to the Government out of one's income and what one receives from other members of the public to subsidise one's expenditure. That is a reasonable distinction to draw. The hon. Gentleman should also appreciate that many owner-occupiers have, incomes of considerably less than £8,000 a year, which is the income of one-quarter of the households in public sector housing. It is wrong to suggest that council tenants are overwhelmingly the poorer members of the community and that those in the private sector are overwhelmingly wealthy. It is a meaningless comparison, as the hon. Gentleman knows.

If Opposition Members consider that the amount traditionally paid in Scotland for rent is at a reasonable level and that any increase can only bring about hardship, they might like to consider some comparisons. In 1979, the latest year for which we have figures, the average Scottish rent was £4.46 a week. In the same year, the average amount spent by a household per week on alcoholic drink was £4.73. On tobacco it was £3.61. I do not criticise anyone for the amount he spends on these items. I am sure that the hon. Member for West Stirlingshire (Mr. Canavan) would not wish to criticise people for the amount they spend on these items. It is an absurd proposition to suggest that while £4.70 on alcohol is a reasonable amount of expenditure, the sum of £4.46 spent on one's home is a gross imposition on the average member of the public.

Mr. Donald Dewar (Glasgow, Garscadden)

Will the hon. Gentleman say whether he believes that it is an unfortunate financial necessity that rents have to rise or, as he now seems to argue, that he wants them to rise as an act of social justice?

Mr. Rifkind

No. If the hon. Gentleman has read the housing support order and the comments that have been made, he will be aware that the figure of rent increase proposed is the minimum figure that would be required to ensure that the rate fund contribution—that is, the contribution made by other members of the public—is maintained in real terms. That is the basis of the rent decision that has been reached, and it is on that basis alone that the figure is required. That is the figure that has been used.

But we are perfectly entitled to go on from that, when we are examining the figure of rent that will arise as a result of that calculation, if it is being suggested by Opposition Members that that is an unreasonable amount, and compare that sum with the sums traditionally used on what most people would consider to be luxuries, such as drink and tobacco. If we find that the sum spent on both of these items is almost identical to the sum traditionally spent on housing, I think that most reasonable people would conclude that that was a somewhat disproportionate situation.

Dr. M. S. Miller (East Kilbride)

The hon. Gentleman talks about averages, but when it suits him he picks out certain specific instances which are not averages; they are aberrations or anomalies in the situation. Secondly, the hon. Gentleman cannot specifically pick out housing as one item for which people have to find an increase. Added to all the other matters which the Government have piled on to people, this is an iniquitous increase which people ought not to have to bear.

Mr. Rifkind

The hon. Gentleman simply fails to understand the situation. If local authorities do not implement rent increases of that kind, they will be demanding an equivalant amount from the ratepayers. Some members of the public will be paying for these services. The question is whether the people who are receiving the services should make a slightly higher contribution towards the cost or whether an unreasonable burden should be put on the general ratepayers.

This is a short debate. I do not intend to detain the House any longer. I simply commend the order to the House on the basis that is fair to the tenant, to the ratepayer and to the responsible local authority. All those who come within those categories cannot, in any fairness or in any sense of an objective judgment on the matter, do other than recognise that the order is acceptable from any reasonable standpoint.

Mr. Deputy Speaker

I remind the House that we are also debating the two subsequent variation orders.

12.12 am
Mr. Donald Dewar (Glasgow, Garscadden)

I always admire the practised ease with which the Under-Secretary works hard to mask the stark and unpalatable facts which lie behind his Government's policy. He has become very practised at denying what evidently is. We had a splendid example at the beginning of his speech when he said, almost casually, that perfect harmony had reigned between the Government and the Convention of Scottish Local Authorities; they had agreed on almost everything, except what was relevant income and what was eligible expenditure. If they could not agree on that—the foundations of the whole system—the hon. Gentleman's definition of "agreement" is very strange indeed.

I want fairly briefly to try to explain to the House why we regard this housing support grant as such thoroughly bad news for the whole of Scotland. The first reason is the very simple one that resources that are being made available to housing authorities in Scotland are being very sharply reduced in this support grant. It was £228 million last year. It is £140 million this year. That is a drop of 34 per cent. Putting it another way, the loss equals a reduction in subsidy per house of about £100. That is a very substantial amount on every local authority house in Scotland. Indeed, in 11 authorities it is above £145 per house, although they have been stabilised at that quite scandalous figure at the expense of other authorities.

What we are saying, very simply, is that to decrease in this dramatic way the real resources that are available for housing need in Scotland, at a time when the housing crisis is deepening and when authorities are struggling to maintain properties and standards, is a criminal misuse of priorities by the present Government.

We are entitled to ask what the future holds, because the White Paper on public expenditure shows that housing expenditure will be reduced by 42 per cent. by 1984, and that this year it runs at £603 million and by 1984 it will be down to £410 million. That kind of drop would easily accommodate the virtual abolition of the housing support grant by 1984.

If that is what is happening, if that is the road which we are to be taken down right to the end, the consequences for housing in Scotland will be very serious. Perhaps we could hear something of this in the wind-up speech.

Our objection is that the whole housing support system is artificial and contrived. I suspect that we start with the result that the Minister has a figure in his mind and he slots in the figures which allow him artificially to arrive at the conclusion he wants. I cannot go into it but we all know—it was referred to in the last debate—the appalling artificiality of the 6 per cent. expectation on wages and 11 per cent. on general cost inflation. No one believes in those figures, which show just what a totally artificial system we are now trying to operate.

But apart from the cut in the HSG itself, to appreciate the full impact, one must also consider what the Government are doing on the rate fund contribution in the individual authorities. The aggregate for the rate fund contribution for the whole of Scotland, the Government suggest, is £62 million. Last year it was £88 million. If that were updated for inflation, it would be about £102 million or £103 million. So the £62 million is very low. It cannot be achieved and I do not believe that any hon. Member believes that it can be achieved. It is a determined disregard for reality by the Government and they put it forward for a reason which is good to them but sinister to us.

It is a superbly simple strategy. One cuts the housing support grant, because that is within the Government's control; then one restricts the rate fund contribution, and one has a yawning gap between those totals and the income needed to meet expenditure. One is then forced either to massive redundancies and cuts in services or to what I suspect the Government really want—massive increases in rents. That is achieved by shamelessly manipulating the artificial formula for designating the individual rate fund contributions of local authorities.

The Government have taken a straight population multiplier of £8. Let me illustrate the idiocy and artificiality of that approach. It means that areas with the same population get the same notional rate fund contribution. One example which has been used often in the debate is that of Eastwood and Clydebank. They are on a par because each has a population of just over 50,000. But Eastwood has 2,000 public sector houses and Clydebank has 11,000. The rate fund contribution, as a contribution or subsidy per house, comes to a figure of £308 in Eastwood and only £52 in Clydebank.

So the system at the end of the day militates strongly and shamelessly against authorities with big public sector housing inputs. That is a distortion which cannot be defended by any sane or reasonable person. If there is to be this kind of allocation of RFC, the formula should at least take some account of historic fact or of the housing needs of individual authorities.

This may sound very dry and academic, but the result is totally devastating. In my own local authority, Glasgow, last year the RFC was just over £27 million. This year, the Secretary of State has said, "It must be restricted to £9 million, and by the way we are docking £7½ million of your housing support grant as well". As a result, when Glasgow considers its expenditure and its reduced HSG and the ludicrous RFC, it finds a shortfall of £42 million, which has to be made up by increases in rents, if it is done as the Secretary of State implies, of almost 70 per cent.

Even if we take the Shelter figures that have been circulated to all hon. Members, which make a simpler calculation and leave out expenditure variations, and merely take the HSG plus the RFC for 1980–81 and subtract the similar figures for 1981–82, it is clear that there was a startling assumed rent increase in the mind of the Secretary of State when he fixed his figures.

It is not only the big, wicked Socialist authorities which are penalised. Caithness, Skye and Lochalsh, Nithsdale and similar authorities will be expected to find 50 per cent. increases if the figures are to be taken seriously, as the Secretary of State apparently intends. I listened with care to the Under-Secretary. He started by implying that the rent increases were unfortunate. He said that if we had held to certain financial targets in the previous year they would not have been necessary. I thought that he was bringing forward an argument of financial expediency—no one likes it, but it is necessary unpleasant medicine and for the good of the country we must swallow it. The cliches flow easily.

But the hon. Gentleman appeared to argue that rents in Scotland are too low when set against certain social criteria—we spend more on drink and tobacco and so on. The overwhelming impression left by the Under-Secretary—and we want to know whether it is a correct impression—is that he wants rents to go up because he feels that that is socially desirable. If that is the Government position, and I suspect that it is—not just because of what the Under-Secretary said, but because it is the logic of the fraudulent system that the Government are operating—the people of Scotland are entitled to know that.

The point made by my hon. Friend for Glasgow, Cathcart (Mr. Maxton) is valid. There will be some offsetting increases in other sectors of public expenditure. If the 50 per cent. or 55 per cent. of council tenants who are already eligible for rent rebates, though many may not take up their entitlement, is to be increased, the cost of the rebates will largely be borne by the Exchequer and there is bound to be an offsetting advantage.

The morality of the Government's saying that they want average rent increases in Scotland of 40 per cent. while the wage rises of those who will be paying the increases should be held down to about 6 per cent. is wrong. But not only is the morality wrong. The sanity and the political philosophy from a Tory point of view are wrong, because we shall be drawing thousands of families into the poverty trap with these ill-conceived measures.

All that is depressing enough, but there is a final refinement which I find the most objectionable feature of the housing scene. It is the Government's intention to link housing capital allowances to the level of rents. That is a monstrous proposition—I use those words advisedly—and essentially objectionable. People's expectations and perhaps their real needs will always outrun what we can supply in the short term, but at least there ought to be an equitable principle of distribution—which must be the need of the local authorities that are putting in bids for the available resources.

The Government have said that there is £267 million to be distributed in housing capital allowances this year, presumably according to need, and every local authority will be given its dollop. But the Government added that the £267 million may become £200 million, because they may dock up to £67 million, not because the needs disappear and not even because of financial necessity, but because authorities have not forced up rents artificially to the levels pre-determined by the Secretary of State.

Let us take Glasgow as an example. In its third housing plan, the council reckoned that its capital requirements for 1981–82 would be £79 million. It was allotted £66 million and I do not complain about that. The council probably did not expect to get everything that it asked for. Presumably the Scottish Development Department and the Minister thought that Glasgow ought to get £66 million on merit and on need. The council has now been told that that will be cut to £55 million—a drop of £11 million—unless it forces up its council house rents by at least 50 per cent., and that it will not receive the whole £66 million unless council house rents rise by something approaching 70 per cent. That is an offensive and monstrous sanction of the most crude and immoral sort. I do not want to give any encouragement to such a proposition. To break the concept of need in the housing capital allowance, and tie it artificially to an arbitrary rent policy—an unjust and inequitable policy to boot—is something that no Ministry worth its salt should contemplate.

On Monday evening the Minister drew my attention to an item on the Press Association tape, for which I was grateful. I thought it worth sharing with the House. It stated: Britain could he heading for a disastrous housing shortage, a leading builder has warned…house building had dropped to the lowest level since 1053 I do not know in detail the housing policy that existed in 1053, but at that the equivalent of the Secretary of State was Macbeth. I do not think that he was noted for his housing management record. If I remember rightly he laid waste to the land with pillage and pestilence. I am considering tabling a parliamentary question to discover any other similarities between his housing record and that of the Government.

We are facing a desperate prospect. Rents and rates will soar, and at the same time the Government's prescription is "You will pay more, but you will receive less". We shall see new building grinding to a halt. We shall see rehabilitation and modernisation programmes and the building of sheltered and special purpose housing, almost disappearing. To be fair to the Minister, I am sure that he has the same problems in his constituency as I have in mine. It is difficult to talk sympathetically and hold out much hope to someone living in a house that was built long before the war, and who is genuinely worried not only about inadequate, but about positively dangerous wiring when our message must be "Your rent and rates will rise massively, but the re-wiring work that you have been waiting for for so many years must be postponed indefinitely because of the capital allowance cuts introduced by the Minister". We have to say that the cash which our constituents had hoped for to modernise their homes has been filched by the Govenment as a sanction measure because their councillors have not been beastly enough to their tenants. That is a cock-eyed and ludicrous position for any councillor or housing Minister to be in.

We are facing a real crisis. I have been around in Western Scotland and involved in Scottish politics for a considerable number of years. For the first time I am now meeting responsible and reasonable councillors who are asking "What is the point of continuing? If we are to be tied, as a sort of mute, executive arm, to policies that we abhor and cannot influence, there is a limit to how far and how long we can go". I am trying to argue that we have not yet reached that stage. But when I look at this sort of housing support grant, and at clause 13 of the Local Government (Miscellaneous Provisions) (Scotland) Bill which is in Committee—it allows the Secretary of State to deem to be excessive and unreasonable any estimated expenditure of a local authority, on grounds so wide and ill-defined as to provide no significant check against prejudiced, arbitrary and insensitive administrations of the sort that I begin to fear we are now facing—I have some genuine sympathy with the worries and the anxieties of those councillors. It is a bad, bad thing for the whole of the local government system when such a mood of defeatism and resigned anger is abroad.

My local authority has been agonising over the apportionment of the massive increase beween rates and rents. In a sense, although it is theoretically important, for many of my constituents—and no doubt those of other hon. Members—in the outturn it does not really matter very much. Whether it is 31 per cent. on rents and 31 per cent. on rates, or 15 per cent. on rents and 47 on rates, if one lives in a three-apartment flat in my constituency at the end of the day the difference between the two is only a few pennies. Because of this housing support grant, no matter how ingenious the councillors, no matter how they may turn and twist, that family will have to find about £12 or £13 a month at a time of economic distress and high unemployment.

I say to the Minister in all seriousness—

Mr. Rifkind

Will the hon. Gentleman give way?

Mr. Dewar

I am just finishing—this is seriously flawed in principle and wretched in result. I hope that we shall all register our protest in the Lobby at the end of the debate.

12.30 am
Mr. John MacKay (Argyll)

The two variation orders basically reflect the changes in both outturn prices and interest charges over the past two years. These orders are a feature of the way that the central Government help to finance local authority housing, and I am sure that that will continue to be so.

This year's main order will be subject to variation orders if that proves justified in the light of inflation and interest rates during the year. I am sure that my hon. Friend will be happy to give me and the Convention of Scottish Local Authorities an assurance that that will continue to be so, as it always has been.

I turn from those two orders to the order for this year. There is a relationship between the orders. The Government's 1980–81 calculations were based on average rents in Scottish local authorities of £6.25—an increase of £1.40 over the 1979–80 figure. However, rent increases were 95p per house. This shortfall has had to be made up by taking £21 million extra out of the rate fund contribution. The failure to raise the average by another 45p per week in the last financial year not only results in an added rate fund contribution—indeed, I suspect that in some cases it results in an even larger housing revenue account deficit—but distorts this year's figure.

It is not an artificial figure on which my hon. Friend is working. It is the actual figure, and it is in the order. It is the cost of local authority housing compounded by interest charges and maintenance, repairs and factoring fees. That is a real, not an artificial, figure that has to be covered. The formula as to how it is covered from rates, rents or central Government support may be artificial, but the total that has to be raised from those three sources is in no way artificial. It is realistic, it exists, and it has to be paid by somebody.

Because last year the local authorities did not put up rents as high as they were asked to put them up by the Government, this year's rents will have to be that much more on average. In fact, this year's rents will on average have to be £2.33 more than last year. If the local authorities had been responsible and realistic last year, the figure for this year would have needed to be only £1.92.

Listening to Labour Members, one would think that there had been no rent increases during the Labour Government's administration, that they took the view that rents should be frozen at some existing totally artificial level, that any new money that needed to be found for the housing revenue account could come from either ratepayers or taxpayers and that, frankly, rates could be kept at a constant level. That was not the situation under the Labour Government. They put up rents. If they had put them up a little more and put more into the housing revenue account by way of income, they might have been able to devote more to the expenditure side, thereby preventing many council houses from needing dramatic modernisation. If there had been a proper maintenance programme, perhaps we would not have so many council houses needing modernisation.

Mr. Cook

The hon. Gentleman may be willing to mislead himself, but I am sure that he does not want to mislead the House. Modernisation expenditure in the majority of housing authorities is met out of the capital allocation. But the Government are slashing the capital allocation to local authorities at the same time as they are cutting the subsidy on the housing revenue account. The hon. Gentleman cannot argue that there is a trade-off here. The Government are having it both ways.

Mr. MacKay

The hon. Member assumes that I am talking only about the current situation. I am talking historically. I accept that some of the present modernisation has to be of a capital nature, but I suggest that if a proper maintenance programme had operated over the years, using money in the housing revenue account, not as many council houses would need drastic and expensive modernisation to make up for years of neglect, to window paintwork, for example.

The argument is not that a person who spends a certain amount on drink and tobacco should pay a comparable rent. The figures are not arrived at in that way. The housing revenue account and expenditure must be met. Levels of rent were suggested by the previous Government, as they are by this Government, to help cover the housing revenue account. The levels are said to be similar to the expenditure by the average household on drink or tobacco, but that is simply because an attempt has been made to put housing expenditure in context. To hear some hon. Members, one would think that a council house rent is so exorbitant that people cannot afford it. If that was so, the average expenditure on other items would not be at their present levels. If people can afford to spend that amount on drink and tobacco, it is reasonable to assume that they are prepared to spend as much, if not more, on providing housing for their families. Of course, people who cannot genuinely afford to pay the rent because of a variety of circumstances are protected by rent rebates and supplementary benefit. That is right.

I draw the Minister's attention to a major anomaly which gives rise to much argument between the Government and local authorities. The two sectors of housing are financed in different ways. The private sector is financed by the Chancellor of the Exchequer through taxation allowances and mortages. The public sector is helped by housing support grants. In addition, local authorities can take money from the rates in the form of the rate fund contribution and put that into the housing revenue account. Local contributions include both rent and rates. The 1979–80 figure is £301.5 million. How much of that was rent and how much rates? The Minister might like to examine the estimated figure for 1981–82. How much of that will be rent and how much rates? The Minister is realistic. He might like to hazard a guess at the reality, given the policies that some local authorities favour.

I believe that local authorities have an option which they should not have. I accept that the Government would have to pay more in housing support grant if they were the only source of help to the public sector, as they are the only source of help to the private sector. However, if local authorities did not have the option, the amazing position in Glasgow and elsewhere would be prevented. In every council there is an argument about whether rents or rates should be increased.

I accept that if rates are increased, people living in council houses have to pay a little as well. But they have to shoulder a good deal less if the rates are increased than the people who do not live in council houses but are in the private rented sector or paying mortgages, because such people shoulder part of the housing burden of others.

Even this week we have seen in the city of Glasgow the sort of fight that I am mentioning. The elected council leaders on the district council decided to go for a bit on both; they decided to put up both the rents and the rates, with a 31 per cent. increase in the rents. Along came another body, called the general management committee of the city of Glasgow Labour Party—not elected by anyone in the city, and not responsible to the electorate or anyone else—which told the elected councillors "You cannot do that. You will put only 15 per cent. on the rents." At a guess, that means 45 per cent. on the rates.

That is an example of the sort of gerrymandering that can go on because local authorities can take the option of loading some of their contribution on to the ratepayers, not the payers of rent. [Interruption.] Before Labour hon. Members take leave of their senses too much—

Mr. Bill Walker (Perth and East Perthshire)

Too late.

Mr. MacKay

Far too late. I remind the Opposition that I said that the Government might well have to increase the rate support grant provided by the taxpayer, but at least we should get out of one part of this annual squabble if public sector housing were supported entirely by the Exchequer, in the same way as private sector housing bought on mortgages is, so that the ratepayer makes no contribution towards local authority housing.

12.42 pm
Mr. Ernie Ross (Dundee, West)

The figures announced in the grants to Scottish councils, particularly in the housing support grant, are woefully inadequate. They reflect the views not of the Secretary of State or the Under-Secretary but of their master—or, rather, their mistress. in her obsessive attacks upon public expenditure.

As with many other Labour-controlled councils, Dundee district council is having its housing support grant cut by the Secretary of State, who is telling it to make up the deficit on its housing revenue account by an increase in rents or rates, or a combination of both. Whether a district council increases rents, rates or both, the blame for these increases lies firmly with the Tory Governent and not with the council. I hope that every Labour-controlled authority in Scotland will make that point perfectly clear to its electorate. Certainly, Dundee district council will.

Mr. Rifkind

The hon. Gentleman is suggesting that the Government are requiring Dundee to make an intolerable increase in its rents. Is he aware that, as a result of the very sensible policies of Dundee while it was under Conservative administration, the rent increase that it will be required to make now amounts to no more than 99p?

Mr. Ross

I am glad of that intervention, and I shall come to it a little later,

The message that I bring from the people of Dundee to the Tory Government in 1981 is that they will not allow them to turn Dundee into an industrial ghost town. With 13,000 people already unemployed, and with the city reeling from blow alter blow in an unemployment crisis without equal since the 1930s, what help does the Secretary of State offer Dundee? He slashes its district council's housing support grant by half and tells it to regain that money from the pockets of the people of Dundee. He is holding a gun to the district council's head and saying "If you do not cut your throat, I shall blow your head off."

The hon. Members for Perth and East Perthshire (Mr. Walker) and for South Angus (Mr. Fraser) have been busy spreading dark, wild tales about the evil doings of the wicked Labour-controlled Dundee district council, which will be doubling its rates next year. The culprits in their eyes, of course, and in the eyes of the hon. Member for Argyll (Mr. MacKay) are the Labour Party. However, if they have read the letter in the Dundee Courier and Advertiser from the council's non-political director of finance on 12 January, they will have discovered who the real villains are. The director of finance said: as I explained in my annual report on the 1979–80 financial accounts, a fairly substantial increase in the district rate for 1981–82 is unavoidable because of the use of reserve balances to balance the current year's budget and to offset the amounts lost to the district council in government grants. These factors alone could double the district rate without altering in any way the current year's level of expenditure or taking any account of the alleged rate of inflation."

I certainly hope that hon. Members will use these reasons when explaining to their consituents why it is necessary for the rates to be increased. The previous minority Tory administration of Dundee district council plundered £3½ million from the reserve balances in a desperate election gimmick to cut the rate to its present level of 14p in the pound. However, that gimmick failed and the Tory Party was incapable, despite that cut, of winning power in the city of Dundee. It managed to cobble together only a ragged minority administration, with the support of three Tory councillors from the constituencies of the hon. Members for South Angus and for Perth and East Perthshire.

To restore the reserve balances will require an increase in the rates of at least 7p in the pound. Thus, 50 per cent. of any rate increase in Dundee district is due entirely to the actions of Tory councillors. I am sure that Tory Members will take great delight in telling their constituents exactly who is responsible for at least half of any rate increase.

The other accomplices in all of this, hand in hand with the "dynamic duo", were the Tory Government, with their ruthless pruning of housing expenditure. If my colleagues on Dundee district council agree not to raise the rents, I shall certainly support them in the House and outside. At a time when the Prime Minister is demanding that workers settle for 6 per cent., when unemployment in Dundee is above the disastrous level in Scotland generally and when rents in Dundee are above the Scottish average, there is clearly a good case for freezing the rents in Dundee.

I am sure that the hon. Members for South Angus and for Perth and East Perthshire will drag out the ancient tales about the ratepayers featherbedding council house tenants. The Tory Party consistently forgets that council house tenants are ratepayers. I have some figures which I hope Government Members will take back to their constituents. The average contribution towards rates from rents collected by Scottish district councils is around £98 a year. In Dundee district council it is only £18 a year. There is a clear case for a more equitable contribution. It is a case which we shall certainly use to ensure that rents in Dundee are frozen, following a review of council rents. I emphasise that the increases that Dundee district council and other local authorities are forced to apply, in either rents or rates, are a result of the Government's policy

I come now to a point which will interest the hon. Members for Perth and East Perthshire and for South Angus. They have made their position clear over Dundee district council's rents and rates in the coming year, as I have. The same cannot be said of the hon. Member for Dundee, East (Mr. Wilson)—the silent man of Dundee politics. I am afraid that "the greatest member of Parliament Dundee has ever had", as he loves to hear himself described by the remains of his local party, still cannot understand why he received such a humiliating vote of no confidence in the Dundee district council elections last year, along with the rest of his party.

The answer is simple. The hon. Gentleman voted with the Tories to bring down the Labour Government. After a little over one year of this Tory Government, whom he helped to bring into office, and after the awful consequences that that has had for Dundee, the working-class electorate in Dundee, East have given the hon. Member his just rewards. I am prepared to give way to the hon. Member so that he can make crystal clear his position over the support grants and how they affect Dundee. Does he favour a rent increase? Does he favour a rates increase? I realise that he is in some difficulty. He has at the back of his mind the thousands of Tory voters who supported him, and he cannot afford to offend them too much. Let the hon. Gentleman come clean on this issue without referring to oil, independence or any of the other tired language that he uses in his press releases. Let him tell us now whether he wants rent increases or rate increases.

Mr. Dennis Canavan (West Stirlingshire)

Will my hon. Friend remind the House and the hon. Member for Dundee, East (Mr. Wilson) that it was not a Tory council that took the initiative in the lifetime of this Parliament in implementing a 40 per cent. rent increase? The initiative was taken by the SNP-controlled council in Cumbernauld and Kilsyth, which covers part of my constituency. The Tories aided and abetted the SNP to increase rents by 40 per cent.

Mr. Ross

Even the comments of my hon. Friend fail to draw the hon. Member for Dundee, East to his feet, despite the fact that he is the chairman of the party to which my hon. Friend referred.

There have been many comments about what local authorities that behave themselves might do. I refer to a comment made by Ian Mackie, the leader of the Tory-controlled Tayside regional council. No one in Dundee is fooled by the squeaks of protest from Tayside Tories that they are not being given enough money to provide and run services in the region. They brought the situation upon themselves by persistent spending. They underspent by a massive £2½ million below the level that even Margaret-the-milk-snatcher Thatcher was prepared to give them last year.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

This has been a good natured debate. I understand that it follows a party earlier in the evening. We cannot have phrases of that sort.

Mr. Ross

I did not attend the party, Mr. Deputy Speaker. It is important to tell the House that the electorate in Dundee elected a Labour-controlled council to ensure that rents and rates would be kept to minimum levels within what it believed was necessary to ensure the provision of services to the people of Dundee. I am certain that when my colleagues on the local authority carry out the review, as is their responsibility, they will decide that rents in Dundee should not be increased this year. I shall support them if they come to that decision.

12.53 am
Mr. Peter Fraser (South Angus)

The hon. Member for Dundee, West (Mr. Ross) has referred to my hon. Friend the Member for Perth and East Perthshire (Mr. Walker) and myself as the dynamic duo. He has kept me sitting on the edge of my seat wondering which of us he considers to be Batman and which of us is Robin.

As for the level of rates in Dundee, it will not need a 40 per cent. rule—this might attract the hon. Member for Dundee, East (Mr. Wilson)—to take Monifieth or Invergowrie out of Dundee district, in view of the way in which the Labour administration has acted, and to take them back into Angus and Perthshire.

If the hon. Gentleman is so concerned for the citizens of Dundee district council and if he feels that the financial burden that they will have to tolerate will be too great, he should urge the district council to tell my right hon. Friend the Secretary of State that he is to be relieved of the cost of imposing upon them a public inquiry to ascertain what they are to do about the sales of council houses. At the end of the day, the ratepayers will have to face the cost of litigation and the public inquiry if there is no change of attitude.

Those of us who have argued that the Government should constantly be asserting a distinction between revenue expenditure and capital expenditure might be expected to resist the approach that the Government have taken to link local authority housing expenditure on both the capital and revenue sides. I said on an earlier occasion, in our proceedings on the Local Government, Planning and Land Bill, that I sometimes have a sense of despair that we are not achieving that. But, having looked into the matter in relation to housing support grant at present, I have no doubt that my right hon. Friend and my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind), who has responsibility in this context, have no opportunity to do anything other than make this regrettable link between the capital side and the revenue side of housing expenditure.

The reason is that, for the crudest of electoral reasons, with total disregard for the burden that both industry and commerce will have to pay in supporting housing in Scotland, any attempt to move council rents upwards will be resisted. If the hon. Member for Glasgow, Garscadden (Mr. Dewar), who is speaking for the Opposition Front Bench now on this aspect of local government, were to act with any constructive honesty, he would at least tell us what he would have done in his approach to the matter.

The hon. Gentleman told us in moving terms of a sum of about £12 per month as the expected increase which, as he put it, council tenants in his constituency would have to pay. The first small inaccuracy there is that, on average, only one in two of his council tenant constituents will be paying anything like that. But what he failed totally to tell us is what he would regard as anything like a reasonable increase in council rents.

Mr. Canavan

No more than 6 per cent.

Mr. Fraser

All the hon. Member for Garscadden did was to say that it is objectionable and leave it at that.

We know that earlier in the day representatives of the Labour Party met representatives of COSLA. While this matter of the link between the capital side of housing expenditure and the revenue side was discussed by them, what came out clearly to us was that it did not matter what my hon. Friend the Member for Pentlands did—any technique which he deployed in an attempt to persuade local authorities to move rents upwards would have been resisted as objectionable. That is, I suppose, what one would expect, but I regret that the hon. Member for Garscadden has not addressed himself to this question. Although he regards as objectionable—even in a moral sense, he seemed to suggest—the technique which the Government have adopted over the link between the capital and revenue side, he has given no indication of the alternative technique that he suggests should be deployed. I listened carefully to the hon. Gentleman, and he made no proposals whatever for an alternative line.

Mr. Dewar

It is difficult for me in my position to pick a rent figure which I think reasonable, but as a general principle I believe that it is not wrong to suggest that rents should keep pace with earnings but should not eat into people's living standards by exceeding the average earnings level.

On the other point, I think that it is a perfectly reasonable proposition, which was clearly expressed in my speech, that housing capital allowances should be decided upon need and only upon need. On that I would stand.

Mr. Fraser

I am afraid that the hon. Gentleman is still not taking the point that I am putting to him. It is not about the extent to which there is an appropriate level. We could argue about that, and possibly disagree, all night. What he has failed to present is what technique ought to be deployed to achieve an increase of any sort whatever. Frankly, that is a regrettable omission.

I come finally to a technical point on which I hope to be given some illumination by my hon. Friend. As I understand the order, it proceeds upon a number of assumptions, and one of the assumptions in the calculation is a figure of about £55 per house included for 1981–82 in respect of supervision and management alone. I understand that the figure per house allowed for repairs and maintenance so £160. Can my hon. Friend comment on the £55 per house to be allowed in 1981–82? It seems to me to be an extraordinarily large amount. If we are now moving into an era in which, we are told, there are tremendously improved techniques of management in local government, that figure should not be increasing year by year, as it appears to be from the information that I have. If the techniques of rent collection and so on are improving, far from increasing year by year, the figure should be decreasing. I hope that the Under-Secretary of State will be able to provide some information on that.

1 am

Mr. Dennis Canavan (West Stirlingshire)

I wish to confine my remarks to the Housing Support Grant (Scotland) Order 1981. It is a recipe for increased rents, a reduction in housing standards and a reduction in the living standards of the thousands of council house tenants throughout Scotland, which many hon. Members—supposedly on both sides of the House—represent.

In the financial year 1981–82, the Government propose a cut in the housing support grant amounting to £72.5 million. Compared with last year, that is a reduction of 34 per cent. Combined with the alteration in the rate fund contribution and the Government issuing new guidelines on the rate fund contribution that represents a cut of £39.2 million, or about 39 per cent., compared with last year's arrangements for the rate fund contribution.

The Government seem to expect an average rent increase of £2.33, or 40 per cent. Many local authorities will face extreme pressures from the Government to increase rents by even more than 40 per cent. If they are to meet the Government guidelines, 17 of the councils in Scotland will have to increase rents by over 50 per cent. and eight will have to increase rents by over 60 per cent. I do not know whether I am unique—[HON. MEMBERS: "Yes."]—but I have within my constituency six different housing authorities, including the Scottich Special Housing Association. I say that there are six, but there is also the Milngavie and Bearsden district council but it does not have any council houses in my constituency that I know of, so I shall stick to the four district councils.

The rent increase assumptions used by the Government in their calculation of the rate fund contribution guidelines and the housing support grant reductions amount to an increase in Falkirk of 54 per cent., in Stirling an increase of 54 per cent; in Cumbernauld and Kilsyth district an increase of 40 per cent., but as I said earlier, that is over and above a 40 per cent. increase that the previous SNP-controlled district council levied. Almost the moment that this Tory Government took power it got permission from the Secretary of State to do so. Strathkelvin district council will have a rent increase of 45 per cent.

I am sure that all those local authorities—they are all Labour-controlled because the people in my constituency are sick to the teeth of this Tory Government and they all voted for Labour-controlled councils at the last elections in May 1979—will do their utmost to keep rent increases far below the figures that I have suggested.

Mr. Ian Lang (Galloway)


Mr. Canavan

It is incumbent upon the Minister to give some indication to those councils as to the alternatives.

Mr. Lang

I thank the hon. Gentleman for his courtesy. He gave some interesting figures in relation to some district councils. Does he agree that the House should have the full picture, and would he not like to add that the Wigtown district council in my constituency would have to increase rents by only 11 per cent., the Stewartry district council would have to increase rents by only 2 per cent., and East Kilbride district council would have an assumed nil increase?

Mr. Canavan

I do not think that the hon. Member for Galloway (Mr. Lang) can compare the proportion of council houses in his constituency with the proportion of council houses in my constituency. I have four different housing authorities in my constituency and I am probably the only hon. Member who can say that. I have given the figures from my own constituency, which is typical, bearing in mind that in Scotland more than 50 per cent. of the people live in council housing. If there is anything untypical, it may be the proportion of council housing in the hon. Member's constituency, which certainly is not anywhere near the Scottish average.

Several Conservative Members have asked what would be a reasonable rent increase. If the Government are so centralised and so dictatorial that they are telling local authorities that the cash limit on wages should be only 6 per cent., why do they not at least give the local authorities the money so that they can limit the rent increases to 6 per cent? Surely that would be logical.

Combined with the Government's policy of a massive rent increase, we have the effects which are now beginning to be felt of the Tenants' Rights, Etc. (Scotland) Act 1980. That is the biggest possible misnomer, because it gives no extra rights to tenants. It is forcing local authorities to sell off their housing stock at a time when thousands of families are on the waiting list. It is a typical piece of doctrinaire Tory asset-stripping policy that is doing absolutely nothing either to build an additional house in Scotland or to see that the allocation of housing is done on a fair basis.

Now, as well as exerting pressure on the housing authorities, the Government are exerting pressure on the tenants. By means of their high rent policy, the Government are trying to force the tenants into a position in which they feel pressurised to buy their own house and go for a mortgage rather than continuing to pay excessively high rent.

As well as the new legislation, there is the massive reduction in capital allocation for new building programmes and improvements and modernisation programmes. Probably for the first time in the history of public sector housing in Scotland we are seeing a danger of a reduction taking place in the amount of public sector housing stock. As well as this reduction in capital expenditure—which means a virtual standstill for the house building programme—the Government are forcing local authorities to sell off the housing stock which already exists. This policy will have devastating effects not just on people in council houses but also on the people on the waiting list. It will have devastating effects on employment prospects in the construction industry, particularly in Scotland, where the industry is very dependnt on public sector housing contracts.

I should like to pick up a point that was made by the hon. Member for Argyll (Mr. MacKay). He seemed to be denigrating the record of certain Labour-controlled local authorities such as Glasgow. He did not seem to realise that Glasgow historically has had to implement housing policies under tremendous inherited difficulties and also difficulties imposed upon it by Tory Governments such as the present one.

I should like to point out to the hon. Member some statistics which his hon. Friend the Under-Secretary of State, the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), gave in answer to my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen). These statistics are very relevant to the whole business of capital allocations and the need to encourage local authorities to improve their existing stock and to replace it by better housing stock. I do not think that the hon. Member for Argyll can hold his head up high when he looks at these statistics about the numbers and percentages of houses falling below the minimum tolerable standards. In Argyll, the figure is 17.6 per cent. That is an absolute disgrace. With the exception of Skye and Lochalsh district council, it is the worst in Scotland.

The hon. Member for Argyll was a member of that Argyll council.

Mr. John MacKay

Does not the hon. Gentleman agree that given a choice and despite the statistics, people prefer to live in Argyll than in Glasgow?

Mr. Canavan

Given a choice, people do not want to live in sub-standard houses in Argyll, or anywhere else. The hon. Gentleman should be ashamed of himself, and ashamed to represent a constituency with the second worst record in Scotland. I repeat, 17.6 per cent. of houses are sub-standard. In Labour-controlled Glasgow, which inherited terrible social difficulties, the figure is only 10.4 per cent. In Aberdeen, which is also Labour-controlled, the figure is as small as 6.4 per cent. The hon. Gentleman should bear that in mind.

Mr. David Lambie (Central Ayrshire)

My hon. Friend has been very unfair to the hon. Member for Argyll (Mr. MacKay). Does not my hon. Friend realise that for the greater part of his life the hon. Gentleman has been a member of the Liberal Party and has stood as a Liberal candidate. He fought the Tories in Argyll as well as Tory landlords.

Several Hon. Members


Mr. Deputy Speaker

Order. The debate is about the housing support grant. It is not about who is a member of the Liberal Party.

Mr. Canavan

Given the hon. Gentleman's chequered political career, I should not be surprised if he joined Roy Jenkins next week. The order is a savage attack on the living standards of thousands of council tenants in Scotland. I hope that district councils, particularly Labour-controlled district councils, will use every means at their disposal to fight the Government's high rents policy. I hope that they will fight this policy to reduce living and housing standards. In addition, I hope that all my right hon. and hon. Friends—even some enlightened Tories—will vote against the order.

1.13 am
Mr. Russell Johnston (Inverness)

I shall not be as generous as the hon. Member for West Stirlingshire (Mr. Canavan) about giving way. The Government's policy, in terms of the cut in the housing grant and the guidelines for the rate fund contribution means that there will be arbitrary rent increases throughout Scotland. In Skye and Lochalsh rents will increase by 64 per cent. Skye is not well off. Those who live there do not generally earn high incomes. Again, in Lochaber, where the pulp mill has just been closed, there will be a 64 per cent. increase in the rent levels. Other areas in the Highlands will fare even worse.

In Western Isles the increase will be 66 per cent. and in Caithness it will be 74 per cent. ft is not enough for the Minister to say that there will be rent rebates. That does not take account of a generally low level of incomes. Nor does it take account of the fact that the increases occur arbitrarily. In all the districts of my constituency, including Inverness and Badenoch, the housing construction programme will be cut savagely. I have never had so many people coming to my clinic saying that they need a house but knowing that they will not get one. The SSHA programme of modernisation is being cut back and put off into the far distant future.

These late hour debates are seldom reflective, but they often throw into relief especially bad consequences of formulas devised by Governments. I hope that following the vote—the Whip system will ensure that there is a majority for the Government whatever arguments have been deployed—the Minister will go back and think about the consequences and the bad effects and take some action.

1.16 am
Mr. Rifkind

The hon. Member for Inverness (Mr. Johnston) suggested that the rent increases proposed by individual authorities were arbitrary and had no rational basis. The hon. Gentleman is incorrect in that assumption. The particular figure determined for each local authority is based on the minimum rent increase that would be required to ensure that there was no increase in real terms in the rate fund contribution compared with the figure used for the rate fund contribution last year. It is not an arbitrary figure. It is for that reason that there are significant differences between authorities.

The hon. Member for Dundee, West (Mr. Ross) made a passionate plea for a rent freeze in Dundee and implied that any increase of the type that the Government propose would be an intolerable burden on the people of Dundee. The hon. Gentleman should have pointed out—it should not be for me to point out to him—that, although the Scottish average of £2.32 exists, it is the case that in Dundee, because of the sensible policies of the previous Conservative Administration, a rent increase of only 99p is required to ensure a reasonable response.

Mr. Ernie Ross

The hon. Gentleman seeks to mislead the House. I suggested that even with a rent freeze in Dundee the rate fund contribution to the housing account would, at the end of the day, be only, the average of what the Secretary of State for Scotland proposes for rents in Scotland.

Mr. Rifkind

The hon. Gentleman has not checked his facts. There was no rent increase in Dundee last year under the Conservative administration because the authority was dealt with in such a responsible and sensible fashion that the resources and finances of the local authority enabled it not to make a rent increase at all. It is a meaningless proposition for the hon. Gentleman to suggest that following no rent increase last year a rent increase of 99p in the current year is excessive.

The hon. Member for West Stirlingshire (Mr. Canavan) put forward a similar passionate plea on behalf of his local authorities. He pointed out, without emphasising the point, that in the case of Cumbernauld and Kilsyth, because of the sensible rent increases imposed some time ago, the increase now required is only 96p, a relatively small amount. The hon. Gentleman chose to ignore that factor.

My hon. Friend the Member for Argyll (Mr. MacKay) asked for an assurance that if a further variation order is required the sum involved will be based on procedure applied in the past and that any changes due to interest rates and normal factors included in these matters will be taken into account. I am happy to give the assurance that this will be the policy we shall pursue. My hon. Friend also asked what was the rate fund contribution in various years to which he referred. In the current year, 1980–81, the figures budgeted by local authorities, significantly higher than the Government requested, amounted to £88 million. The figure for next year, based on the figure that is required to maintain, in real teens, the rate fund contribution compared with the sum proposed a year ago, is £62 million.

A number of basic inaccuracies were reflected in the observations of the hon. Member for Glasgow, Garscadden (Mr. Dewar). The hon. Gentleman started by saying that to use a single figure as an average per capita rate fund contribution around the various authorities in Scotland was an illogical formula and an illogical procedure. If the hon. Gentleman thought that it was illogical, he might have pointed out that it was exactly the approach introduced by the previous Government when they introduced the housing support grant system. They used a per capita basis. They had decided, sensibly, that the contribution to the rate fund contribution should vary from local authority to local authority depending on the number of ratepayers and, therefore, their ability to contribute towards this matter.

Mr. Bruce Milan (Glasgow, Craigton)

That is absolute rubbish. Under the Labour Government there was never any question of applying a particular rate fund contribution without any discrimination at all to every local authority in Scotland. That simply did not happen. This is a completely new element which has been introduced by the Government this year. What is more, the Labour Government never at any time tried to force rent increases by saying that unless rents rose by figures which were laid down arbitrarily by the Government there would be a reduction in local authorities' housing capital allocations. That, too, is completely new. The Minister knows it, but, even more important, the local authorities know it, and they complained bitterly to us today about it.

Mr. Rifkind

I am not questioning that the link with capital allocations is a completely new policy. I am about to turn to that. But the right hon. Gentleman is quite wrong, because, if he had listened to his hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), he would know that the point made by his hon. Friend was that it was illogical to talk in terms of a per capita figure for establishing a rate fund contribution. As the right hon. Gentleman disagrees with that, he had better check his own practice when he was in Government.

The hon. Member for Garscadden spent most of his time attacking the linkage we have made between rent levels and capital allocation. We have made this linkage for a very simple reason. We were anxious to maintain the capital allocations that might be available to local authorities at the highest possible level. There is a maximum sum available for public expenditure on housing. In so far as local authorities failed last year to make reasonable rent increases and put the burden on the ratepayer, that has absorbed part of the funds available for housing expenditure in Scotland.

We could have responded in a crude and indiscriminate fashion. We could simply have made a reduction in the capital allocation for local authorities next year compared with this year in order to ensure that the total public expenditure on housing was maintained at the level that the Government felt appropriate. [Interruption.] I must ask the right hon. Member for Glasgow, Craigton (Mr. Millan) to stop muttering from a sedentary position—which is his normal contribution to these debates.

Mr. Millan

The present Government have brought the whole of housing in Scotland to ruination.

Mr. Rifkind

That was a particularly original contribution from the right hon. Gentleman.

I should like to continue explaining the system that we have applied. If we had not linked it with capital allocation, the total sum available for capital expenditure would have had to be reduced accordingly. That would have been a crude and indiscriminate system, which would have made no difference between the local authorities that had responded sensibly and those that had failed to do so. Instead, we have chosen, quite rightly and without any apology whatsoever, to introduce a system that will enable a local authority ultimately to decide whether it wishes to give greater priority to its decision on rent, knowing that it will thereby lose its capital allocation, or, alternatively, whether it will make a reasonable decision on rents in order to preserve the capital allocation to which it would be entitled.

I say to the hon. Member for Garscadden that, if local authorities respond reasonably on rents, the capital sums available on their housing revenue accounts for the forthcoming year will be exactly the same in real terms as for the current year. That was the Government's objective. It will be entirely a matter for local authorities to decide whether that objective can be realised.

Mr. Dewar

The hon. Member said that the purpose was to encourage reasonable rent increases. Presumably, the carrot was that an authority would save something which otherwise would be cut off its housing capital allowance. To take Glasgow as an example, in order to save a penny over the lower figure, to get into the tapering tranche of the housing capital allowance at all, the rent increase would have to be above 50 per cent. Is that reasonable in Tory terms?

Mr. Rifkind

If we had not recognised Glasgow's special needs and applied an exact arithmetical formula, the provisional allocation to Glasgow would have been considerably less than the figure it has been given. Therefore, the hon. Gentleman cannot suggest that our attitude towards the city of Glasgow has been anything but eminently reasonable.

Opposition Members must come to terms with the fact that, if they wish to see capital expenditure on housing maintained in Scotland, the only way in which that can be done is by a responsible attitude on the part of local authorities towards rent decisions.

When the hon. Member for Garscadden concluded his oration with a passionate plea on behalf of the unemployed and the poor, he could at least have pointed out that the unemployed and the poor will not be paying these rent increases. He and his hon. Friends know that. They know, because it has been said numerous times, that one-quarter of tenants pay no rent and that another quarter pay a highly subsidised rent through the rent rebate system and will continue to do so.

If the hon. Gentleman is concerned with those people, he should realise when he refers to the unemployed that that is totally irrelevant to a rent system, because the vast majority of the unemployed will benefit from the rent rebate system and pay either no rent at all or a minimal rent. He is intelligent enough to know that. To introduce the subject into the debate can be considered only a deliberate desire to deceive the House into misunderstanding the effects of the order.

The Government are in no way ashamed of, and feel no need to apologise for, the order. It is a responsible order. It will enable local authorities to make a reasonable contribution to their capital spending and at the same time will impose no intolerable burden upon the tenants whom they represent. We are proud of the order and commend it to the House.

Question put:

The House divided: Ayes 269, Noes 219.

Division No. 50] [00.00
Adley, Robert Fell, Anthony
Aitken, Jonathan Fenner, Mrs Peggy
Alexander, Richard Fisher, Sir Nigel
Ancram, Michael Fletcher, A (Ed'nb'gh N)
Arnold, Tom Fletcher-Cooke, Charles
Atkins, Robert (Preston N) Fowler, Rt Hon Norman
Atkinson, David (B'm'th, E) Fox, Marcus
Baker, Kenneth (St. M'bone) Fraser, Peter (South Angus)
Baker, Nicholas (N Dorset) Fry, Peter
Banks, Robert Gardiner, George (Reigate
Beaumont-Dark, Anthony Gardner, Edward (S Fylde)
Bendall, Vivian Garel-Jones, Tristan
Bennett, Sir Frederic (T'bay) Glyn, Dr Alan
Benyon, Thomas (A'don) Goodhart, Philip
Benyon, W. (Buckingham) Goodlad, Alastair
Bevan, David Gilroy Gow, Ian
Biggs-Davison, John Gray, Hamish
Blackburn, John Greenway, Harry
Blaker, Peter Grieve, Percy
Body, Richard Griffiths, E. (B'ySt. Edm'ds)
Bonsor, Sir Nicholas Griffiths, Peter Portsm'th N)
Boscawen, Hon Robert Grist, Ian
Bottomley, peter (W'wich W) Grylls, Michael
Bowden, Andrew Gummer, John Selwyn
Boyson, Dr Rhodes Hamilton, Hon A.
Braine, sir Bernard Hamilton, Michael (Salisbury)
Bright, Graham Hampson, Dr Keith
Brinton, Leon Hannam, John
Brittan, Leon Haselhurst, Alan
Brooke, Hon Peter Havers, Rt Hon Sir Michael
Brotherton, Michael Hawkins, Paul
Brown, M. (Brigg and Scun) Hawksley, Warren
Browne, John (Winchester) Hayhoe, Barney
Bruce-Gardyne, John Heddle, John
Bryan, Sir Paul Henderson, Barry
Buck, Antony Heseltine, Rt Hon Michael
Bulmer, Esmond Hicks, Robert
Burden, Sir Frederick Higgins, Rt Hon Terence L.
Butcher, John Hill, James
Carlisle, John (Luton West) Hogg, Hon Douglas (Gr'th'm)
Carlisle, Kenneth (Lincoln) Holland, Philip (Carlton)
Carlisle, Rt Hon M. (R'c'n) Hooson, Tom
Channon, Rt Hon. Paul Hordern, peter
Chapman, Sydney Howell, Ralph (N Norfolk)
Churchill, W. S. Hunt, David (Wirral,)
Clark, Hon A. (Plym'th, S'n) Hunt, John (Revensbourne)
Clark, Sir W. (Croydon S) Hurd, Hon Douglas
Clarke, Kenneth (Rushcliffe) Jenkin, Rt Hon Patrick
Clegg, Sir Walter Jessel, Toby
Cockeram, Eric Johnson Smith, Geoffrey
Colvin, Michael Jopling, Rt Hon Michael
Cope, John Kaberry, Sir Donald
Corrie, John Kellett-Bowman, Mrs Elaine
Costain, Sir Albert Kershaw, Anthony
Cranborne, Viscount King, Rt Hon Tom
Critchley, Julian Kitson, Sir Timothy
Crouch, David Knight, Mrs Jill
Dean, Paul (North Somerset) Knox, David
Dickens, Geoffrey Lamont, Norman
Dorrell, Stephen Lang, Ian
Dover, Denshore Langford-Holt, Sir John
Dunn, Robert (Dartford) Latham, Michael
Durant, Tony Lawson, Nigel
Dykes, Hugh Lee, John
Edwards, Rt Hon N. (P'broke) Lennox-Boyd, Hon Mark
Eggar, Tim Lester Jim (Beeston)
Elliott, Sir William Lewis, Kenneth (Rutland)
Emery, Peter Lloyd, Peter (Fareham)
Eyre, Reginald Loveridge, John
Fairgrieve, Russell Luce, Richard
Faith, Mrs Sheila Lyell, Nicholas
Farr, John McCrindle, Robert
Macfarlane, Neil Rossi, Hugh
MacGregor, John Rost, Peter
MacKay, John (Argyll) Royle, Sir Anthony
McNair-Wilson, M. (N bury) Sainsbury, Hon Timothy
McNair-Wilson, P. (New F'st) Scott, Nicholas
McQuarrie, Albert Shaw, Giles (Pudsey)
Madel, David Shaw, Michael (Scarborough)
Major, John Shelton, William (Streatham)
Marland, Paul Shepherd, Colin (Hereford)
Marlow, Tony Shersby, Michael
Marshall Michael (Arundel) Silvester, Fred
Mather, Carol Sims, Roger
Maude, Rt Hon Angus Skeet, T. H. H.
Mawby, Ray Smith, Dudley
Mawhinney, Dr Brian Spence, John
Maxwell-Hyslop, Robin Spicer, Jim (West Dorset)
Meyer, Sir Anthony Spicer, Michael (S Worcs)
Miller, Hal (B'grove) Sproat, Ian
Mills, Iain (Meriden) Squire, Robin
Mills, Peter (West Devon) Stanbrook, Ivor
Miscampbell, Norman Stanley, John
Mitchell, David (Basingstoke) Steen, Anthony
Moate, Roger Stevens, Martin
Monro, Hector Stewart, Ian (Hitchin)
Montgomery, Fergus Stewart, A. (E Renfrewshire)
Moore, John Stokes, John
Morris, M. (N'hampton S) Stradling Thomas, J.
Morrison, Hon C. (Devizes) Taylor, Teddy (S'end E)
Mudd, David Temple-Morris, Peter
Murphy, Christopher Thatcher, Rt Hon Mrs M.
Myles, David Thomas, Rt Hon Peter
Neale, Gerrard Thomas, Donald
Needham, Richard Thorne, Neil (Ilford South)
Nelson, Anthony Thornton, Malcolm
Neubert, Michael Townend, John (Bridlington)
Newton, Tony Townsend, Cyril D, (B'heath)
Nott, Rt Hon John Trippier, David
Onslow, Cranley Trotter, Neville
Oppenheim, Rt Hon Mrs S. van Straubenzee, W. R.
Osborn, John Vaughan, Peter
Page, John (Harrow, West) Viggers, Peter
Page, Rt Hon Sir G. (Crosby) Waddington, David
Page, Richard (SW Herts) Wakeham, John
Parris, Matthew Waldegrave, Hon William
Patten, Christopher (Bath) Walker, Rt Hon P. (W'cester)
Patten, John (Oxford) Walker, B. (Perth)
Pattie, Geoffrey Waller, Gary
Pawsey, James Ward, John
Pink, R. Bonner Warren, Kenneth
Pollock, Alexander Watson, John
Porter, Barry Wells, John (Maidstone)
Prentice, Rt Hon Reg Wells, Bowen
Price, Sir David (Eastleigh) Wheeler, John
Prior, Rt Hon James Whitney, Raymond
Proctor, K Harvey Wickenden, Keith
Raison, Timothy Wiggin, Jerry
Rathbone, Tim Wilkinson, John
Rees, Peter (Dover and Deal) Williams, D. (Montgomery)
Renton, Tim Wolfson, Mark
Rhodes James, Robert Young, Sir George (Acton)
Rhys Williams, Sir Brandon Younger, Rt Hon George
Rifkind, Malcolm Tellers for the Ayes:
Roberts, M. (Cardiff NW) Mr. Spencer Le Marchant
Roberts, Wyn (Conway) and Mr. Anthony Berry
Abse, Leo Bray, Dr Jeremy
Adams, Allen Brown, Hugh D. (Provan)
Allaun, Frank Brown, Ron (E'burugh, Leith)
Alton, David Brown, Ronald W. (H'ckn'y S)
Anderson, Donald Buchan, Norman
Archer, Rt Hon Peter Callaghan, Jim (Midd't n & P)
Armstrong, Rt Hon Ernest Campbell, Ian
Atkinson, N. (H'gey,) Canavan, Dennis
Barnett, Guy (Greenwich) Cant, R. B.
Beith, A. J. Carmichael, Neil
Bennett, Andrew (St'kp't N) Carter-Jones, Lewis
Booth, Rt Hon Albert Cartwright, John
Boothroyd, Miss Betty Clark, Dr David (S Shields)
Bradley, Tom Cocks, Rt Hon M (B'stol S
Cohen, Stanley Lambie, David
Coleman, Donald Lamborn, Harry
Conlan, Bernard Lamond, James
Cook, Robin F. Leadbitter, Ted
Cowans, Harry Leighton, Ronald
Craigen, J. M. Lewis, Arthur (N'ham NW)
Crowther, J. S. Lewis, Ron (Carlisle)
Cryer, Bob Litherland, Robert
Cunliffe, Lawrence Lofthouse, Geoffrey
Cunningham, G. (Islington S) McDonald, Dr Oonagh
Cunningham, Dr J. (W'h'n) McElhone, Frank
Dalyell, Tam McGuire, Michael (Ince)
Davies, Rt Hon Denzil (L'Ili) McKay, Allen (Penistone)
Davis, Clinton (Hackney C) McKelvey, William
Davis, T. (B'ham, Stechf'd) Maclennan, Robert
Deakins, Eric McNally, Thomas
Dewar, Donald McNamara, Kevin
Dixon, Donald McTaggart, Robert
Dobson, Frank McWilliam, John
Dormand, Jack Magee, Bryan
Douglas, Dick Marks, Kenneth
Douglas-Mann, Bruce Marshall, Dr Edmund (Goole)
Dubs, Alfred Marshall, Jim (Leicester S)
Dunnett, Jack Martin, M (G'gow S'burn)
Dunwoody, Hon Mrs G. Mason, Rt Hon Roy
Eadie, Alex Maxton, John
Eastham, Ken Meacher, Michael
Ellis, R. (NE D'bysh're) Mikardo, Ian
Ellis, Tom (Wrexham) Millan, At Hon Bruce
English, Michael Miller, Dr M. S. (E Kilbride)
Evans, Ioan (Aberdare) Mitchell, Austin (Grimsby)
Evans, John (Newton) Morris, Rt Hon C. (O'shaw)
Ewing, Harry Morris, Rt Hon J. (Aberavon)
Faulds, Andrew Moyle, Rt Hon Roland
Field, Frank Newens, Stanley
Flannery, Martin Oakes, Rt Hon Gordon
Fletcher, Ted (Darlington) Ogden, Eric
Ford, Ben O'Halloran, Michael
Forrester, John O'Neill, Martin
Foster, Derek Orme, Rt Hon Stanley
Foulkes, George Palmer, Arthur
Fraser, J. (Lamb'th, N'w'd) Park, George
Freeson, Rt Hon Reginald Parker, John
Garrett, John (Norwich S) Parry, Robert
Garrett, W. E. (Wallsend) Pavitt, Laurie
George, Bruce Penhaligon, David
Gilbert, Rt Hon Dr John Powell, Raymond (Ogmore)
Graham, Ted Prescott, John
Grant, George (Morpeth) Price, C. (Lewisham W)
Grant, John (Islington C) Race, Reg
Hamilton, James (Bothwell) Radice, Giles
Hamilton, W. W. (C'tral Fife) Rees, Rt Hon M (Leeds S)
Hardy, Peter Richardson, Jo
Harrison, Rt Hon Walter Roberts, Allan (Bootle)
Hart, Rt Hon Dame Judith Roberts, Ernest (Hackney N)
Hattersley, Rt Hon Roy Roberts, Gwilym (Cannock)
Haynes, Frank Robertson, George
Healey, Rt Hon Denis Robinson, G. (Coventry NW)
Heffer, Eric S. Rooker, J. W.
Hogg, N. (E Dunb't'nshire) Roper, John
Holland, S. (L'b'th, Vauxh'll) Ross, Ernest (Dundee West)
Home Robertson, John Ross, Stephen (Isle of Wight)
Homewood, William Rowlands, Ted
Hooley, Frank Sever, John
Horam, John Sheerman, Barry
Howell, Rt Hon D. Sheldon, Rt Hon R.
Howells, Geraint Shore, Rt Hon Peter
Hudson Davies, Gwilym E. Silkin, Rt Hon J. (Deptford)
Hughes, Mark (Durham) Silkin, Rt Hon S. C. (Dulwich)
Hughes, Robert (Aberdeen N) Silverman, Julius
Hughes, Roy (Newport) Skinner, Dennis
John, Brynmor Smith, Rt Hon J. (N Lanark)
Johnson, James (Hull West) Soley, Clive
Johnston, Russell (Inverness) Spearing, Nigel
Jones, Rt Hon Alec (Rh'dda) Spriggs, Leslie
Jones, Barry (East Flint) Stallard, A. W.
Jones, Dan (Burnley) Steel, Rt Hon David
Kaufman, Rt Hon Gerald Stewart, Rt Hon D. (W Isles)
Kerr, Russell Stoddart, David
Kilroy-Silk, Robert Stott, Roger
Strang, Gavin White, Frank R.
Straw, Jack White, J. (G'gow Pollok)
Summerskill, Hon Dr Shirley Whitehead, Phillip
Taylor, Mrs Ann (Bolton W) Whitlock, William
Thomas, Jeffrey (Abertillery) Williams, Rt. Hon A. (S'sea W)
Thomas, Mike (Newcastle E) Wilson, Gordon (Dundee E)
Thomas, Dr R. (Carmarthen) Wilson, Rt Hon Sir H. (H'ton)
Thorne, Stan (Preston South) Wilson, William (C'try SE)
Tilley, John Winnick, David
Tinn, James Woodall, Kenneth
Torney, Tom Woolmer, Kenneth
Urwin, Rt Hon Tom Wrigglesworth, Ian
Varley, Rt Hon Eric G. Young, David (Bolton E)
Wainwright, E. (Dearne V) Tellers for the Noes:
Walker, Rt Hon H. (D'caster) Mr. Hugh McCartney and
Watkins, David Mr. George Morton
Welsh, Michael

Question accordingly agreed to.

Resolved, That the draft Housing Support Grant (Scotland) Order 1981, which was laid before this House on 12 January, be approved.

Resolved, That the draft Housing Support Grant (Scotland) Variation Order 1981, which was laid before this House on 12 January, be approved. That the draft Housing Support Grant (Scotland) Variation (No. 2) Order 1981, which was laid before this House on 12 January, be approved.—[Mr. Rifkind.]