HC Deb 23 March 1981 vol 1 cc715-24

`In section 1 of the Housing (Financial Provisions) (Scotland) Act 1978, the following subsection is inserted after subsection (3)— (3A) The aggregate amount of relevant income for the purposes of paragraph (b) of subsection (2) above for any year shall not be estimated by the Secretary of State at an amount greater than the relevant income estimated for the previous year adjusted to take account of the information available to him as to changes in the general level of earnings for the year".'. [Mr. Millan.]

Brought up, and read the First time.

Mr. Millan

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

This is an important new clause whose passing would have considerable consequences. That is why we are attempting to insert it in the Bill. It is necessary for me briefly to explain a little of the background.

The Housing (Financial Provisions) (Scotland) Act 1978 introduced a new system of housing subsidies in Scotland. The housing support grant is a deficit subsidy. The Secretary of State, in determining housing support grant, makes an estimate of what might be the reasonable income of a local authority in terms of rent and rate funds contributions. He then sets against that the estimates of what the expenditure might be by the local authorities on a reasonable standard basis. [Interruption.] I hope that my hon. Friends will allow me to explain. In addition, I hope that the hon. Member for Argyll (Mr. MacKay) will support the new clause, as he is obviously keenly interested in it.

The housing support grant is the difference between estimated income and estimated expenditure. It follows that the level of grant and its fairness largely depends on what the Secretary of State considers to be a reasonable income. To a considerable extent, reasonable expenditure is geared to the actual expenditure of local authorities on loan charges, maintenance and so on.

9.30 pm

In determining the overall level of housing support grant and the amount of housing support grant to be given to any authority, the key factor is the estimate of the income of local authorities, both in general and in particular, in any one year. When the 1978 Bill was enacted, the system had the full agreement of local authorities on the basis that Secretaries of State would behave reasonably. Section 1(3) of the 1978 Act stated that in calculating estimated income for the year the Government would take account of the latest information available to the Secretary of State as to changes in the general level of earnings which would affect the amount of relevant income which could reasonably be expected for that year. That provision was an indication of the sensible way in which it was anticipated that Secretaries of State would behave. In simple language, it means that the Secretary of State would assume that rent and rate fund contributions towards housing, taken together, would increase roughly in line with the general rate of inflation or, more accurately, with the general increase in the level of earnings.

When I was Secretary of State I gave those assurances to local authorities. In assuming the income for a forthcoming year, I said that I would take account of the likely rise in earnings in that year and that the rent and rate fund income would rise accordingly. I accepted that it would not necessarily work out accurately, but that it would be roughly in line with expectations for earnings. That was done in the one year for which the Labour Government were responsible for the housing support grant. We assumed that, taken together, the rent and rates would increase by only about 5 per cent. A most generous housing support grant was paid to local authorities.

It was only on the basis of those assurances that local authorities agreed to the new system. Under this Government the system has been utterly abused. The Government assume that rents will increase by between 30 and 40 per cent. a year. In 1980–81 the Government assumed that rents would rise by over 30 per cent. In 1981–82 they assumed a rent increase of about 40 per cent. Give those assumptions the amount of housing support grant has been savagely reduced. In 1981–82, the housing support grant in Scotland was reduced to £140 million. In 1980–81 it amounted to £229 million. That means a reduction of about £100 for every local authority house in Scotland.

If hon. Members want to know why there have been large rate increases in many Scottish districts, they need look no further than the savage reduction in the housing support grant. Many authorities have refused to increase rents. In my view, authorities have considerable justification for taking that decision. They have refused to put up rents by 40 per cent. Of course, if they do not increase rents, given the reductions in the housing support grant which affect different authorities in different ways, there will be a considerable increase in the rate burden.

The system has been abused by the Government, despite the undertakings given to the local authorities by my hon. Friend the Member for Glasgow, Provan (Mr. Brown) and I. It has been used in a thoroughly dishonest way to reduce the housing support grant and to force up rents and rates in Scotland.

The new clause seeks to put into the 1978 Act the intention that we then had, but to do it in an explicit way and to discharge the promises made by the Labour Government. In effect, it would provide that in estimating the amount of relevant income for the purposes of the housing support grant the Secretary of State would not assume rent and rate increases any greater than changes in the general level of earnings for the year. If earnings were assumed or estimated to go up by 10 per cent., rents and rate fund contributions would be assumed to go up by no more than 10 per cent. Therefore, the Government would continue to make their fair and equitable contribution towards housing in local authorities in Scotland.

As the hour is late, I do not wish to add much more to what I have said. I repeat that the Government have distorted and abused the system. They have gone back on the undertakings given by the Labour Government when the 1978 Act was put into operation. The Act cannot remain as it is. I give notice that the next Labour Government will amend this legislation to prevent it being abused in this way.

The attempted forcing of massive rent and rate increases is accompanied by the biggest reductions that we have seen in expenditure on housing compared with any other public service in Scotland. The reductions in housing expenditure projected over the next few years in the public expenditure White Paper published on the day of the Budget are on a scale unmatched even by education and certainly not by any local authority or other service for which the Government are responsible.

Housing is bearing the most savage burden of all the cuts imposed by the Government on capital expenditure and on the level of subsidies to local authorities. There is a general attack on housing in Scotland. It will have disastrous consequences for future housing in Scotland and for the prospects of hundreds of thousands of people. Part of that attack is based on abuses of the housing support grant system. The purpose of the clause is to remedy the abuse perpetrated by the Government.

Mr. Rifkind

I listened with interest to the remarks of the right hon. Member for Glasgow, Craigton (Mr. Milian). He indicated the priority that he wished to give to linking any increase in relevant income to the general rise in earnings. The Government believe that there is a strong case for not increasing the rate fund contribution. Therefore, we are, in effect, talking about the extent to which that part of the relevant income of a local authority met by rents from tenants should or should not increase in line with the rise in earnings.

The right hon. Gentleman referred to the Housing (Financial Provisions) (Scotland) Act 1978, which was passed when he was Secretary of State for Scotland. He will remember that that followed from the Labour Government's Green Paper on housing. It is relevant to consider one passage in that Green Paper regarding any increases in rents. In the Green Paper the right hon. Gentleman stated: While in the long run rents must stand in reasonable relation to costs the Government consider that local contributions to these costs should keep broadly in line over a period of years with the rise in earnings generally. That was an interesting observation, because it indicated that there were really two considerations that the previous Government had in mind: first, the proportion that rents and relevant income generally should bear to costs; and, secondly, the linkage which, I acknowledge, the then Government wished to make with the general rise in earnings.

Relevant income now represents about 50 per cent. of costs, and as a result of the changes in the current year that will go up to about 56 per cent. There may be a perfectly legitimate debate on whether 50 per cent., 56 per cent. or some other particular percentage is appropriate, but I do not see any obvious or automatic reason why the ratio that existed two or three years ago of relevant income to costs must be considered static for all time, or somehow unchangeable, irrespective of other circumstances.

The right hon. Gentleman's Green Paper indicated that in the long run rents must stand in reasonable relation to costs. That must, in some circumstances, mean that an increase, for example in rents, may be greater than would otherwise be appropriate. In any event, the support that any Government give to housing through the housing support grant must take into account the general totality and aggregate of public expenditure by the Government and the relative priority that housing should find within that sum.

As the income of the population increases, and as people's standards of living rise, it is not unreasonable that their rent should contribute a much greater proportion to the cost of the housing that they occupy, as long as those who are unable to make a reasonable contribution are protected by the system. The right hon. Gentleman will be aware that under the existing system about 50 per cent. of Scottish tenants either pay no rent at all or have any rent increase largely met by increases in benefit. Therefore, by definition, we are talking about those who have a substantial income.

Mr. Jim Craigen (Glasgow, Maryhill)

How do the Government justify increases of 30 to 40 per cent.?

Mr. Rifkind

It depends entirely on the base from which one starts. The hon. Gentleman will be the first to appreciate that if one starts from £1 and makes an increase to £2 that is an increase of 100 per cent. That will riot necessarily be unreasonable, but an increase of £50 may be only a 5 per cent. increase if one is starting from a very high base. Percentages by themselves do not take the matter very much further. I think that the hon. Gentleman recognizes that The local authorities that have been obliged to impose a relatively high rent increase to meet the Government's capital allocation requirements are those which, almost invariably, are starting from a very low rent or a very high rate fund contribution. It is because there has been inequity in the balance up to now that they have had that problem.

The new clause would introduce a rigidity which, while it might coincide with the right hon. Gentleman's present views on what the priorities ought to be, would be undesirable. It would be unacceptable to any Government that the Secretary of State's discretion—under whichever Government, and whoever was the Secretary of State—should be hampered in this way. In the 1978 Act the right hon. Gentleman did not—although he had the power—limit his own discretion in the way that he now seeks to do. He would argue, of course, that he had no intention of using the Act in the way that it has been used. But the fact remains that if it were such a simple, straightforward matter, that would have been the time rigidly to limit the Secretary of State's discretion. The right hon. Gentleman did not think it appropriate to do that then. We do not think that it is appropriate to do that now.

Mr. Milan

The Minister has not answered the points raised. He has not justified rent increases in successive years of more than 30 per cent., and some of about 40 per cent. There has been no justification for that.

It is not just a question of redressing the balance between rents and rates. In Glasgow, for example, the reduction in housing support grant was such that the local authority felt itself obliged to impose a 31 per cent. rent increase, and at the same time it is imposing a 37½ per cent. rate increase. That is happening simply because of the reduction in grant by the Government. It is not a question of making just minor adjustments here and there and redressing the balance.

If the ratepayers felt that the big rent increases were absolving them from big rate increases, they might be rather happier about the situation. Many tenants will be getting a 6 per cent. wage increase—all that the Government allowed in the RSG for local authority workers, and basically all that they want to allow for civil servants, although perhaps that is 7 per cent. or whatever. If one tells such a person that percentages are irrelevant and that it is all right to have 7 per cent. on his salary and 30 per cent. or 40 per cent. on his rent, one will get a fairly dusty answer.

9.44 pm

Yet that is what the Government are doing. The effect of that is to drive down the standard of living of ordinary people, particularly those with low wages. They are suffering most from the cuts. The poverty trap is now operating with a vengeance. Unfortunately, there are millions of people still at work who would be better off under the Government's policy if they were not at work but on supplementary benefit. They would then receive the benefit of the rent and rate rebates which the Under-Secretary is so fond of quoting to us.

However, those at work are being asked to take a 6 per cent. or 7 per cent. wage increase—if they are in private industry, perhaps no increase. At the same time they are faced with massive rates increases of an average of 34 per cent. and rent increases of 30 per cent. in Scotland next year. That is the triumph of the Government. That is grossly unfair and is an abuse of the system introduced by the 1978 Act. It is not justified at present in Scotland. The Government are ignoring the provisions of the 1978 Act, they are taking no account of the general level of earnings and are imposing savage rent increases.

The Minister may try to obscure the issue but the problem is well understood by those living in local authority houses in Scotland. I never imagined that I would see the day when there would be serious talk of rent strikes in Scotland. But that is happening in Glasgow and elsewhere. Large numbers of tenants are now deciding that they will not pay their increased rents. Not all of them seem to appreciate that the reason for the increased rents is the miserliness of Government, the mean housing support grant and the abuse of the 1978 system. Because the Government are determined to abuse the system, we shall press the new clause to a Division.

9.45 pm
Mr. Maclennan

I support the new clause, though I regret that it should be necessary to table such a proposal. It was clear when the Housing (Financial Provisions) (Scotland) Act 1978 was passing through the House what was the intention with regard to the calculation of the housing support grant.

The Secretary of State at that time reached the conclusions that he put before the House after full consultation and with the agreement of the local authorities. It is unacceptable for the present Government to seek to operate a housing policy in the teeth of the opposition of the local authorities in Scotland and to pretend that the Secretary of State of that day should have foreseen that a policy would be pursued which was utterly opposed to the interests of the local authorities.

As the provisions are being operated, the housing subsidy is being savagely cut and housing programmes are being slashed throughout Scotland. We are seeing inequitable provisions on rents introduced as a means of trying to increase housing programmes. That is wholly inequitable and unacceptable. The notion proposed in the new clause seems to me to attempt to redress the balance. It is not desirable that inflexibility should be introduced into the calculation of the housing subsidy. It is far better to seek to achieve the objective which the right hon. Member for Glasgow, Craigton (Mr. Millan) proposes—spelt out in the Green Paper to which the Under-Secretary has referred—a balancing between the approximation of rents in relation to costs and to the increases in inflation. All attempt at balance has gone and the Government are allowing rents to play a major part in a regressive development which hits hard at those least able to afford it. It also hits the less-well-off members of the community through the cuts in housing subsidy. The policy is utterly deplorable and is supported by virtually no local authority.

In my constituency, the Caithness district council has not built a single house in the current financial year and it will not be able to build any next year. Housing programmes are being cut to the bone and places that have had no waiting lists are seeing them grow. Young people are particularly adversely affected. The Government's attitude is deplorably inflexible and doctrinaire. It will be opposed tooth and nail by all those who do not subscribe to the partisan views of the Conservative Party.

Mr. Hugh D. Brown

The Minister was at his worst when replying to the new clause. He used a quotation from the Green Paper which does not justify the Government's housing policy. In a sense, the Green Paper is like the Bible. If one wants a quotation to support a case, one can probably find it somewhere. However, the Minister should have quoted it in context.

No one can look at the problems of housing and rents without relating them to the cost of providing the services. That is a statement of the obvious. It has nothing to do with the determination of rent levels, and the Minister misled the House by making a quotation out of context.

We regret the need to move such new clauses. The basis of the 1978 Act was one of being reasonable and taking local authorities along with us. My hon. Friend the Member for Central Ayrshire (Mr. Lambie) never voted for anything that I proposed on housing, but it was not the principle of the Act that was wrong. Now it is the lack of support from the Government that is at fault. The attack is on the Government, not on the legislation that they are trying to use. The Government have reduced the level of support to such an extent that they no longer have a housing policy.

The Minister was also grossly unfair in his references to Glasgow and to Dundee district council, which are held up as rascals in Scotland. In fact, neither has cheap rents or anything but below-average rate contributions.

Mr. Rifkind


Mr. Brown

Where do those councils stand in the league tables of rent levels and rate contributions?

Mr. Rifkind

The hon. Gentleman must be aware that Glasgow has by far the highest rate fund contributions of any local authority in Scotland.

Mr. Ernie Ross

What about Dundee?

Mr. Brown

By the Government's standards, those councils are by no means the worst authorities. Is the Minister saying that their local contributions—rents and rates—are the worst in Scotland from the Government's point of view?

Mr. Ross

My hon. Friend may be interested to know that Dundee is sixteenth in the league table.

Mr. Brown

That shows that once again the Minister has been selective in his use of figures.

If the new clause is rigid, it is only because the Government are attempting to dismantle some sound legislation in order that they may cut the support to local authorities. They seem to have an obsession about attacking council tenants. I wish that Conservative Members would come to my constituency to see some of the problems in the big housing estates. Even in Glasgow there are unsatisfactory houses that are known to have problems of dampness and, in some cases, dangerous wiring. There is talk that work on remedying these problems cannot be completed until the next century. That shows the acuteness of the housing problem facing some authorities. Not all of them are spendthrift and profligate.

The Government have no housing policy. They are vindictive against council tenants. They are trying to do everything possible to make it a more attractive proposition financially to buy council houses. I wish that they would be more honest in stating their case.

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

The House divided, Ayes 116, Noes 160.

Division No. 115] [9.55pm
Adams, Allen Lamond, James
Alton, David Leadbitter, Ted
Archer, Rt Hon Peter Lewis, Ron (Carlisle)
Ashton, Joe Litherland, Robert
Beith, A, J. Lofthouse, Geoffrey
Booth, Rt Hon Albert McCartney, Hugh
Boothroyd, Miss Betty McDonald, DrOonagh
Bray, Dr Jeremy McGuire, Michael(Ince)
Brown, Hugh D. (Provan) McKelvey, William
Brown, Ron (E'burgh, Leith) MacKenzie, Rt Hon Gregor
Callaghan, Jim (Midd't'n &P) Maclennan, Robert
Campbell, Ian McNamara, Kevin
Campbell-Savours, Dale McTaggart, Robert
Canavan, Dennis McWilliam, John
Carmichael, Neil Marshall, D (G'gowS'ton)
Clark, Dr David (S Shields) Mason, Rt Hon Roy
Cocks, Rt Hon M. (B'stol S) Maxton, John
Coleman, Donald Maynard, Miss Joan
Concannon, Rt Hon J. D. Millan, Rt Hon Bruce
Cook, Robin F. Mitchell, R. C. (Soton Itchen)
Cowans, Harry Morris, Rt Hon A. (W'shawe)
Craigen, J. M. Morris, Rt Hon C. (O'shaw)
Crawshaw, Richard Morton, George
Cryer, Bob O'Neill, Martin
Dalyell, Tam Palmer, Arthur
Davidson, Arthur Pavitt, Laurie
Davis, T. (B'ham, Stechf'd) Powell, Raymond(Ogmore)
Dean, Joseph (Leeds West) Prescott, John
Dempsey, James Roberts, Albert (Normanton)
Dewar, Donald Roper, John
Dixon, Donald Ross, Ernest (Dundee West)
Dobson, Frank Ross, Stephen (Isle of Wight)
Dormand, Jack Sever, John
Douglas, Dick Short, Mrs Renée
Duffy, A. E. P. Skinner, Dennis
Eadie, Alex Snape, Peter
Eastham, Ken Soley, Clive
Evans, Ioan (Aberdare) Spearing, Nigel
Fletcher, Ted (Darlington) Stallard, A. W.
Ford, Ben Steel, Rt Hon David
Foster, Derek Stewart, Rt Hon D. (W Isles)
Foulkes, George Stoddart, David
Grant, George (Morpeth) Stott, Roger
Grimond, Rt Hon J. Strang, Gavin
Hamilton, James (Bothwell) Thomas, Dafydd(Merioneth)
Hamilton, W, W. (C'tral Fife) Tinn, James
Hardy, Peter Wainwright, E. (DearneV)
Harrison, Rt Hon Walter Wainwright, R.(ColneV)
Haynes, Frank Weetch, Ken
Hogg, N. (EDunb't'nshire) Welsh, Michael
HomeRobert son, John White, J. (G'gowPollok)
Hooley, Frank Wigley, Dafydd
Howell, Rt Hon D. Wilson, Gordon (Dundee E)
Hughes, Robert (Aberdeen N) Winnick, David
Janner, Hon Greville Woolmer, Kenneth
John, Brynmor
Johnston, Russell (Inverness) Tellers for the Ayes:
Jones, Barry (East Flint) Mr. Frank R. White and
Kilfedder, James A. Mr. Allen McKay.
Lambie, David
Alexander, Richard Bright, Graham
Ancram, Michael Brinton, Tim
Atkins, Robert (PrestonN) Brooke, Hon Peter
Baker, Nicholas (N Dorset) Brotherton, Michael
Beaumont-Dark, Anthony Budgen, Nick
Bendall, Vivian Cadbury, Jocelyn
Benyon, Thomas (A'don) Carlisle, John (Luton West)
Berry, Hon Anthony Carlisle, Kenneth (Lincoln)
Best, Keith Chalker, Mrs. Lynda
Bevan, DavidGilroy Chapman, Sydney
Biggs-Davison, John Clark, Hon A. (Plym'th, S'n)
Blackburn, John Clark, Sir W. (Croydon S)
Bonsor, Sir Nicholas Clarke, Kenneth (Rushclirfe)
Braine, Sir Bernard Cockeram, Eric
Colvin, Michael Knox, David
Cope, John Lang, Ian
Corrie, John Lawrence, Ivan
Cranborne, Viscount LeMarchant, Spencer
Crouch, David Lennox-Boyd, Hon Mark
Douglas-Hamilton, LordJ. Lester Jim (Beeston)
Dover, Denshore Lloyd, Peter (Fareham)
Dunn, Robert (Dartford) Lyell, Nicholas
Dykes, Hugh Macfarlane, Neil
Fairbairn, Nicholas MacGregor, John
Fairgrieve, Russell MacKay, John (Argyll)
Fenner, Mrs Peggy McNair-Wilson, M. (N'bury)
Fisher, Sir Nigel McQuarrie, Albert
Fletcher, A. (Ed'nb'gh N) Major, John
Fletcher-Cooke, Sir Charles Marlow, Tony
Fookes, Miss Janet Mather, Carol
Fowler, Rt Hon Norman Maude, Rt Hon Sir Angus
Fraser, Peter (South Angus) Mawby, Ray
Garel-Jones, Tristan Mawhinney, Dr Brian
Gorst, John Maxwell-Hyslop, Robin
Gray, Hamish Meyer, Sir Anthony
Greenway, Harry Miller, Hal(B'grove)
Griffiths, PeterPortsm 'thN) Mills, Iain (Meriden)
Grist, Ian Moate, Roger
Grylls, Michael Monro, Hector
Gummer, JohnSelwyn Morgan, Geraint
Hamilton, Michael (Salisbury) Morrison, Hon C. (Devizes)
Hannam, John Mudd, David
Haselhurst, Alan Murphy, Christopher
Hawkins, Paul Myles, David
Hawksley, Warren Neale, Gerrard
Hayhoe, Barney Needham, Richard
Heddle, John Nelson, Anthony
Henderson, Barry Neubert, Michael
Hill, James Newton, Tony
Hogg, Hon Douglas(Gr'th'm) Normanton, Tom
Hordern, Peter Page, Rt Hon Sir G. (Crosby)
Hunt, John(Ravensbourne) Page, Richard (SW Herts)
Hurd, Hon Douglas Parris, Matthew
Jopling, Rt Hon Michael Pattie, Geoffrey
Kaberry, Sir Donald Percival, Sir Ian
King, Rt Hon Tom Peyton, Rt Hon John
Knight, MrsJill Pollock, Alexander
Prentice, Rt Hon Reg Taylor, Teddy (S'end E)
Proctor, K. Harvey Temple-Morris, Peter
Raison, Timothy Thomas, Rt Hon Peter
Rathbone, Tim Thompson, Donald
Renton, Tim Thorne, Neil (IlfordSouth)
Rhodes James, Robert Thornton, Malcolm
Rhys Williams, Sir Brandon Townend, John (Bridlilngton)
Rifkind, Malcolm Trippier, David
Roberts, M. (Cardiff NW) Viggers, Peter
Rossi, Hugh Waddington, David
Rost, Peter Wakeham, John
Sainsbury, Hon Timothy Walker, B. (Perth)
Scott, Nicholas Waller, Gary
Sever, John Ward, John
Shepherd, Colin (Hereford) Watson, John
Skeet, T. H. H. Wells, John(Maidstone)
Speller, Tony Wheeler, John
Spence, John Wickenden, Keith
Spicer, Jim (West Dorset) Williams, D. (Montgomery)
Spicer, Michael (S Worcs) Wolfson, Mark
Sproat, Iain Younger, Rt Hon George
Squire, Robin
Stainton, Keith Tellers for the Noes:
Stanbrook, Ivor Mr. Robert Boscawen and
Stewart, A. (ERenfrewshire) Mr. Alastair Goodlad.
StradlingThomas, J.

Question accordingly negatived.

It being after Ten o'clock, further consideration of the Bill stood adjourned.