HOUSING CAPITAL ALLOWANCE

HC Deb 23 March 1981 vol 1 cc725-43

In the Local Government (Scotland) Act 1973 after section 94(1) there shall be inserted the following subsection: '(1B) So far as consent to meet capital expenses in connection with housing is concerned the Secretary of State shall not make his consent under subsection (1) above dependent on any decision by a local authority relating to its housing revenue account.'."—[Mr. Dewar.]

Brought up, and read the First time.

Mr. Dewar

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

Mr. Deputy Speaker (Mr. Bernard Weatherill)

With this it will be convenient to take the following amendments:

No. 31, in page 10, line 14, clause 23, leave out paragraph (a).s

No. 32, in page 10, line 24, after "relates" insert— (1C) The Secretary of State shall reimburse a local authority for any financial loss including professional fees or other expenses arising directly from any withdrawal or variation of consent in terms of section (1B) above.".

No. 33, in page 10, leave out lines 29 and 30.

Mr. Dewar

I recognise that we have been a long time a' travelling during the evening. However, this is an issue of substance and principle, and I make no apology for detaining the House briefly.

Those of us who are survivors of the Bill's consideration in Committee are a little sad and weary. However, there are areas of the Government's housing policy that arouse real anger in every one of my right hon. and hon. Friends. The decision to link housing capital allowances with the level of rents is one such area. It is an extraordinary proposition that the allowance that is allocated to a local authority should be conditional upon the level of rents which is imposed on the authority's tenants.

I recognise that the Government are entitled to reach a judgment on how much in any one year can be spent on housing and what proportion of that sum will be in the housing capital allowance. All Governments are entitled to reach that judgment. To some extent it is bound to be an arbitrary judgment. We had an interesting and adequate explanation of the procedure and the approach to these problems in the evidence taken by the Select Committee on Scottish Affairs, which is chaired by my hon. Friend the Member for Aberdeen, North (Mr. Hughes), in January. I commend the evidence as an extremely rewarding read for anyone who is interested in the mechanics of the operation. I should declare an interest as an ex-chairman of the Committee. However, it is the operation of information-gathering that Select Committees can undertake admirably and usefully.

I accept that the housing capital allowance total is bound to be determined by a political decision, and to that extent it is arbitrary and conditioned by factors that may have little to do with the nation's housing needs. However, having reached that global total I think that every one of us would like to see it sliced. Everyone would like to see the amount allocated to each local authority being determined on the authority's needs.

I accept that there will never be enough money to go round. Expectations always rise to outstrip the money that is available. However, once the pot of gold is available, the Minister should distribute it on the basis of the needs of each authority and on no other principle. The complicated but necessary and important discipline of putting together housing plans has been altered by the Minister. However, he assured the Select Committee that he had no intention of abandoning it, although he was releasing many local authorities from the need to draw up a plan. He made it clear that the plans were still a vital part of the preparation for the Government's housing policy. I should have thought that that underlined the basis of need which should be at the root of housing capital allocation.

We are extremely angry and we have tabled the new clause because on this occasion and this year the Government have told local authorities what they think can be given to them on the basis of need and that that is their housing allocation. The local authorities are told that that is what the Government would like to give them if—the "if' is a monumental if. It is arbitrary and artificial. The "if' means that the local authorities will get what the Government have decided they are entitled to on the basis of need, only if they force up their rents to a figure predetermined by the Government. The Opposition maintain that that bears no relation to the social realities and the local authority tenants' ability to pay.

If the local authority does not meet that predetermined target or does not fall in line with the arbitrary whims of the Secretary of State on rent policy, it will receive, not what has been allocated on a basis of need, but a lesser figure. Earlier this evening, the hon. Member for Dundee, East (Mr. Wilson) quoted from an article in The Scotsman. The figures it reviewed are broadly correct. It was suggested that local authorities would lose about £35 million—I would not be surprised if it were a little higher than that—of that housing capital allocation which was to be theirs, if this arbitrary and extraneous factor had not been introduced into the debate.

It is wrong in principle that the linkage should take place. It is wicked to do it in this way. I use the term "wicked" clinically. We are penalising those who live in local authority areas, who are waiting for necessary works for rehabilitation, modernisation, rewiring and a plethora of necessary maintenance for the standard of housing stock. That is being put off because of the Government's ideas about what is a reasonable level of rent.

I say this neutrally, because it is not my job to prejudge whether local authorities are acting rightly or wrongly, but it is not just a small group which has said—as Dundee said—that it will not raise rents at all, which is suffering. A large number of local authorities in Scotland have raised their rents by figures which in any normal year would be considered to be staggering, but they have still failed to reach the level demanded by the hard-hearted Government and have, therefore, forfeited housing capital allocation.

Glasgow is the key example. We have debated that matter before. Therefore, we can only sketch in the argument. In Glasgow, rents have gone up by over 30 per cent., which is a large figure when measured against any reasonable standard of inflation during the period. If we take the Government's projection for inflation in the coming year at face value, the figure is probably three times the inflation rate. It is a higher rate of increase than is likely to be enjoyed in terms of increased earnings by those who must pay the rents.

Even at 31 per cent., Glasgow would have had to have an additional 20 per cent. before reaching the taper area and recovering some of the housing capital allowance which would be cut off from the local authority. Only if the rents were raised by above 50 per cent. would some of the £10 million or £11 million which the authority stood to lose have been retained. It is monstrous to suggest that in an area such as Glasgow, which has real problems and to which the Minister has paid lip service in his usual plausible fashion earlier this evening, 50 per cent. is a reasonable rent figure to impose on a local authority.

Glasgow has raised rents substantially. That has been controversial and has been no secret among the Opposition and my political friends there. Glasgow has tried to compromise between the Devil and the deep blue sea. Even then, the authority has fallen short of the unreasonable demands which have been made. I could give many more examples. In Aberdeen, probably £3.5 million has been sacrificed. Dundee has sacrificed £3 million. there is a substantial list of other local authorities in Scotland which have carried out similar measures.

The list of local authorities which have failed to meet the rate fund contribution criteria, which have exceeded the rate fund contributions guidelines and which are therefore at risk is substantial. It was given in a written answer on Friday 6 March, and includes Tweeddale, Inverness, Lochaber, Nairn, Skye and Lochalsh, Argyll and Bute, Bearsden and Milngavie and Inverclyde, as well as the traditional urban areas, which have for many years been electorally dominated by the Labour Party. It is wrong that we should have wholesale slaughter of housing capital allowances on a totally inequitable and unjust basis.

10.15 pm

I referred a few moments ago to the rewiring needed. My hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) mentioned the matter earlier this evening. My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) and anyone who represents a Glasgow seat can give score upon score of examples of areas where there is not only genuine public discontent but also anxiety about safety and living standards, because we cannot even catch up with the backlog of work to preserve the housing stock. I am not talking about making progress but merely of preventing further deterioration.

Another recent written answer showed that 66,595 houses in Scotland still lack a sink or watercloset. Statistics can be easily bandied about, but one has only to see what is happening, not only in the big cities but in urban areas, to realise how wrong it is to cut back on the housing capital allowance by an artificial linkage to the general level of rents.

On the latest figures, 47,597 people whose last work was in the construction industry are unemployed—25.5 per cent. of the construction industry labour force. The cuts will worsen the situation. The knock-on effect on the construction industry will be substantial. By forcing up rents in a wrongful way, the Government will push even more people on to rebate, when already close on 250,000 are in receipt of it. The effect of the legislation will be disastrous and will be deeply resented throughout Scotland.

We object not only to the effects of the legislation but to the philosophical basis of the linkage. Given that there will be a scarcity of resources, what is there should be distributed on the basis of need. Distribution should not be linked to a narrow, ideological, political point—a preconception about the proper level of rents, such as the Under-Secretary of State demonstrated in recent debates. The hon. Gentleman made it clear in the housing support grant debate only a few weeks ago that his social judgment was that rents in Scotland were too low. He gave a long and sophisticated justification, touching on how much the average Scot spends on alcohol, cigarettes, and so on. The clear implication was that it was not only financial necessity which was forcing up rents but also the hon. Gentleman's social ideals and view of what is desirable.

The rent levels being enforced will cause genuine hardship and force many families to the brink of real poverty. Not only are the Government doing that. At the same time, in a bold, imaginative but totally wrongheaded sweep, they are ensuring that the same people suffer from the cutbacks in maintenance, rehabilitation, modernisation and new-build. That is a superlative example of the Government managing to get everything wrong and to achieve the worst of both worlds. As a protest against the policies, and to try to prevent that from happening, we have put down the new clause.

Mr. Robert Hughes

When one considers the record of the Government and their relationship with local authorities generally, it takes a gigantic feat of memory to recall what was said by present Ministers at the last general election. Running through their speeches and through the Conservative Party manifesto, including the manifesto for Scotland, were fine-sounding phrases to the effect that the balance had changed dramatically towards the State and that the time had come to roll back the frontiers of centralism, to allow people more control over their own affairs and to stimulate and establish local initiative.

Yet we find that in their actions towards local authorities, this Government have done more than any other to centralise Government control at New St. Andrew's House. It is a total negation of their whole philosophy. The balance between local authority and State has tilted, not away from the position at the last election but more and more towards the State. The Government are more and more arrogating to themselves—sometimes without much basis in statute—the authority to do what they wish in terms of political will. I believe that they have done more than any other Government to destroy relationships with local government and to destroy belief in government itself. In my view, they have abused the law in a gross way.

I can understand Ministers saying—although I do not agree with them—that the Government have only so much money to spend—that this is how they want to share it out, with so much for housing, and so on, and that this is the maximum that they as a Government will make available for housing. Everyone understands that. But to go further and to penalise local authorities for not carrying out the political will of the Government is grotesque.

I say that because the Government are taking the coward's way out. There is no necessity for them to act in the way that they do. If the Government are saying that the balance between the level of rents and rate contribution is such that it has gone too far from the way that they wish, they have power under existing statute law to challenge the local authority. Local authorities are not free to do as they wish. They are not free of any inhibition or control by statute. I believe that under section 211(1) of the Local Government (Scotland) Act 1973, the Government can order a local inquiry if they, or indeed any ratepayer, believe that the local authority is acting unreasonable. There are plenty of precedents for that—Clydebank, Glasgow, Dundee, Saltcoats. One could name a whole range of authorities that have been taken to court under that kind if procedure. But the Government are not doing that. They are saying two things. They say that there is a limited amount of money available but that they will reduce that amount and give authorities even less money if they refuse to carry out the Government's political will.

When the Under-Secretary of State came before the Select Committee on Scottish Affairs to be questioned about housing capital allocation, he said—he will correct me if I misquote him—that the most important criterion used by the Government in deciding how to allocate money for capital spending in local authorities was the housing plan. He said that that was of paramount importance. He said that he approved of that system and did not wish it to be destroyed. Yet he himself is destroying it by what he is doing now.

One can see how the system of housing plans grew up. People did not see why the amount of capital spending made available to local authorities should always be based upon history. If they had been big capital spenders for five years, they received the lion's share. It was argued that, as a result of that system, some authorities with real and indeed greater housing needs than others were not receiving a fair share. The housing plan was therefore drawn up. This is an example for all of us who aspire to belong to the governing party. Having adopted on apparently reasonable and rational system, one is now afraid to do anything like that in the future because a Government will come in and completely destroy the spirit in which the discussions took place. There were some agonising discussions with the local authorities before the housing plans system was agreed to and before it was accepted that the housing plans should be the criterion for the allocation of capital spending.

The Government have now said "We have looked at the housing plans and this is how we shall share the money on the basis of need". That need is not just recognised by the local authorities, because the housing plans must have the approval of the Secretary of State. If he is dissatisfied, he can go back and say to the local authority "I do not think that you have given proper thought to the elderly, the disabled or to the mix of housing in terms of size".

Effectively, the seal of approval is given to the housing plans. By doing so, the Secretary of State is accepting that local authority housing plans are rational in terms of need. They are not based on any airy-fairy ideas or delusions of grandeur, nor on the fact that local authorities are trying to tilt the balance away from private housing to local authority housing. They are based on the needs, as the local authority perceives them, of those in the area. Yet the Secretary of State has the gall, once that is done, to go behind the law and say "Unless you increase your rents by a specific amount, you will not get the amount of money available".

We need only to look at the local authorities in our own constituencies to see how house building in Scotland will be cut back beyond anything that has happened in the past. My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) referred to what appeared on the tape one evening. I believe that the president of the House Builders Federation was quoted by the Press Association as saying that last year the number of houses built was the lowest since 1025. I think he meant 1925, but, if he did mean 1025, he was not that far out.

I take as an example the local authority in the city of Aberdeen. Next year, only 29 new houses will be built there, in one of the few cities where the population is growing, and there the housing lists are getting longer. Sometimes when one uses that as the criterion for housing plans and housing capital spending, hon. Members argue that these days there is not the same need for new house building. They argue that local authorities should be more adventurous and far seeing and should try to maintain the character of their areas. They argue that, instead of bulldozing houses to the ground, they should adopt modernisation schemes.

That cannot be done under the present capital spending programme. Aberdeen is not the worst local authority in terms of modernisation. It is one of the best. Yet houses which desperately need modernisation are suffering from what architects call "condensation", which everyone else recognises as damp. There are houses in Aberdeen where so many different pipes run through the kitchen that it is like a maze. Other houses are not properly wired, and some of that wiring must be in a dangerous condition. Yet none of the necessary maintenance will be carried out, and all on the basis of political dogma. There is no other phrase for it.

I accept that the local authority sevice has been built up with the consent of the central Government and with central Government money. But the great local authority advances have often resulted from the attitude of elected councillors who have said "These are the Government's priorities and this is how much money they can spend, but we as a local authority believe that there is a greater need. We are prepared to go to the electorate, which knows that it will mean higher rates, and ask to be returned so that we can raise the extra money to carry out improvements".

I defy anyone to deny that one of the best local authorities in Britain since the war has been the old city of Aberdeen corporation. It built up the finest education services—

Mr. Norman Hogg (Dunbartonshire, East)

Hear, hear.

10.30 pm

Mr. Hughes

I am glad that my hon. Friend the Member for Dunbartonshire, East (Mr. Hogg) has not totally abandoned the city of Aberdeen. The corporation built up marvellous education and health and welfare services, and some of the finest housing estates in the country. It did all that because it was prepared to spend' money. Those were the days when we had to face the electorate every year—not every four years as it is now. Every year we went to the people of Aberdeen with our election addresses and manifestos, telling them what we intended to do and that it would cost money. Aberdeen is traditionally one of the highest rating authorities in the country, if not the highest. Our approach was based on our willingness to provide services.

I do not know how the Government can say that they believe in democracy, in initiative and in people being elected and acting responsibly, and then strip them of any authority or dignity, and humiliate them in the process of advancing their political dogma. It is a scandal, and the Government do not seem to realise what they are doing.

Let me turn to the Under-Secretary's appearance before the Select Committee. Before anyone gets excited, let me explain that I am speaking as an individual Member of Parliament, not as Chairman of the Select Committee. People sometimes get upset if that distinction is not made. I thought that the Under-Secretary was a little shifty when he was asked to explain the grounds on which he had made the linkage. I asked him whether he had taken the advice of the Lord Advocate on whether what he was doing was consistent with the law. His answer was that we could not expect one Minister to say what consultations the Government had had.

I wish sometimes that local authorities would challenge the basis of this action. I do not believe that the Government have any right, where the law is silent, to say that silence means consent. The Government should operate on a specific statute. No one can point to any statute that gives the Secretary of State a positive right to link rents to housing capital allocation.

The Secretary of State may argue that he has complete discretion as to how much money he has available. If he simply wants to cut down the money spent on housing, he should not hide behind some bogus morality that says that rents are too low or that he is giving the authorities the option to have more money. They are not having more money. He is saying that he will reduce their money unless they comply.

It would be different if the right hon. Gentleman were using an incentive. If he were to say that he would make so many millions of pounds available for capital spending but that if the authorities wanted more he would match them pound for pound on what they could raise from rents, there might be some morality in such an approach. I do not say that I would accept that approach, but it would be a more honest policy than the one he is adopting. Local authorities are the best people to know what is best for their areas and their people.

If the Secretary of State continues as he is going, every action he takes will be to take more power into his hands and to destroy local government. It would be far better for him to bring forward next Session an abolition of local government Bill and to run local authorities as he runs health boards—appointing people locally to carry out what he wants. That would be far better than the nonsense we have now, in which the right hon. Gentleman is asking local authorities to take all the blame for what he does. It would be a much more honest system.

The Secretary of State has done more than any Minister I can think of to destroy local government, local democracy and the trust of people in politics. I know that sometimes people overplay this point. It is not simply a question whether it is the Opposition or the Government who carry the least weight. It is a question of people seriously asking themselves whether democracy has any future in this country. It is perhaps hardly surprising that people are turning to extreme solutions, because they see very reasonable actions and assumptions twisted and turned in a paranoid way by a Government who have no right to stand at the Dispatch Box and claim that they have any support in the country for their actions.

Mr. Bill Walker

I am following the hon. Member for Aberdeen, North (Mr. Hughes) because, just as he showed that he had no knowledge of the porn shops in the Socialist countries of Europe, it is clear that he has little knowledge of what goes on in local authority housing in Scotland, despite his pained rhetoric about capital spending and the connection between that and the balance which has to be met as between the rents collected and the housing capital allocation.

Perth and Kinross district supports the measure fully, so it is quite wrong for the hon. Gentleman to suggest that in Scotland the local authorities do not approve of it. Perth and Kinross approves of is because it believes that it is the sensible road for housing policies.

I draw the hon. Member's attention to the fact that Labour administrations in Scotland have used council house rents to buy votes, and it is time that he woke up to that fact. In Scotland we have seen this done blatantly. People who can afford to pay economic rents have received, under Labour administrations, subsidised rents, because Labour administrations were determined to hold on to votes. Fifty per cent. of the council house tenants—this is true in Perth as in Dundee and elsewhere—receive assistance with their rents, and at least 25 per cent. of them do not pay any rent at all.

Mr. Foulkes

How can the hon. Member even purport to speak for the people of Perth when he was widely quoted in the press in that area as saying that he would vote against the Government in regard to the 20p impost on petrol but did not have the guts to do it?

Mr. Walker

That was an interesting intervention, because the hon. Gentleman will be unable to find anywhere in the local press a report to the effect that I was to vote against the 20p on petrol. I said that the Government could not count on my support, and that is what was reported. The Government did not get my support and, what is more, the Government were warned well in advance. I am not prepared to stand in this House and pretend that I am something that I am not.

With regard to Labour council properties in need of renovation and repair—

Mr. Robert Hughes

The hon. Gentleman accused me of not knowing what is happening in local government. The new clause does not deal with the grants that the Government give to local authorities. Rent is already taken into account for that. This is the Government directing local authorities as to how much housing they will build and modernise, and if they do not do what they are told in regard to raising rents, that need is destroyed.

Mr. Walker

I thank the hon. Gentleman for that intervention. The public money coming from the Government has strings attached to it, and that is what Labour Members are complaining about. It is right that strings should be attached, because Labour administrations have blatantly manipulated council rents in order to buy votes in council areas in Scotland.

Mr. Dewar

I take it that the hon. Gentleman is making a social judgment that rent levels are too low at the moment, and that it is not simply a case of financial stringency and the difficulties of the Government; even with no financial crisis, rent levels are too low in Scotland. Is that his position and is that his party's position as he understands it?

Mr. Walker

Rent levels outside of Perth are too low—[Interruption.]—and on that point I shall conclude.

Mr. Craigen

The hon. Member for Perth and East Perthshire (Mr. Walker) said that rents were too low, yet earlier he seemed to take pride in the fact that, in his area, one household in four did not pay rent.

I support the new clause. Given our present housing needs, particularly in inner city areas and on housing estates, it is vital that we should accept it. No doubt the Minister will tell us about his concern for public expenditure. How does he justify the fact that the taxpayer has to pay for the one building worker in four who has been forced into unemployment? The Government have said that the cost of an unemployed person is £6,000. My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said that 47,000 building workers are unemployed. Therefore, the Government are paying out twice as much as the housing support grant for 1981–82 in supporting idleness in the construction industry.

In Glasgow, new building has come to a grinding halt. The local authority has been reviewing its current and future housing programmes. It is evident that there will be a serious shortage in the number of two-apartment dwellings in the city. That augurs ill for the housing needs of the retired and elderly. Such people are often desperate to move from three-or four-apartment accommodation into smaller and more suitable accommodation. It is clear that the city will not be able to meet its sheltered housing needs. After this debate, we shall deal with the health services in Scotland. A growing problem is the number of elderly people who require hospital accommodation. The more that can be done to develop sheltered housing policies, the more the health services will be spared increasing demands for geriatric accommodation.

There is a tremendous backlog in the modernisation of many inter-war local authority housing schemes. I refer, in particular, to the Ruchill scheme and to the 1924 Act houses in that area. The Minister will remember that last year I went to see him at the New St. Andrew's House. We discussed the Government's commitment to the Maryhill corridor project. He assured me that he would be in touch with the Scottish Special Housing Association, which I hoped would have a commitment to the project in Maryhill second only to its existing commitment to the Glasgow Eastern Area Renewal programme. As a result of the SSHA's budget cutbacks, it is being forced to hand over to Glasgow district council its programme for the modernisation of houses in Ruchill.

The town clerk depute sent me a letter in response to representations that I made about the urgency for modernisation in Ruchill. The letter states: I … confirm that the Scottish Special Housing Association have asked the District Council to take the 524 inter-war local authority houses in Ruchill into the Council's capital programme for attention … even the alternative strategy type of improvement and repair plus tenants' grants, if applied to Ruchill, would make considerable demands on the Council's capital allocation for expenditure". 10.45 pm

The town clerk depute adds: The Council's priorities for expenditure on housing over the next two-and-a-half to three years are presently being discussed by a sub-committee of the Housing Committee", which will be considering these matters at a meeting on 9 April.

Two or three years have passed since a modernisation programme was mooted here. The discussions between the Glasgow district council and the SSHA over who would do the necessary work have been akin to the man on the flying trapeze. In the meantime, tenants face an increasingly intolerable situation. Rewiring is urgent and window frames need to be replaced. There are difficulties regarding dampness, although they are not confined only to this area.

I raised the problem of dampness with the Under-Secretary of State last year. I asked what Government backing would be given to Glasgow district council's programme for tackling dampness in a number of key areas in the city. I gather that the commitment ran to £1 million only, and the Minister was not prepared to designate even that sum of money. It was to come out of the general allocation to the Glasgow district council, which is considerably less than the district council maintains that it requires to stand still in terms of providing the necessary services to tenants.

My hon. Friend the Member for Aberdeen, North (Mr. Hughes) asked about housing plans. My impression is that housing plans have ceased to exist for this Government. A great deal of time and effort have been poured into the preparation of these plans. People's expectations were built up, only to be dashed.

I hope that the Government recognise that they are paying a dear price for keeping the construction industry running at undercapacity. There have been articles in the press in the past fortnight commemorating or certainly recalling the blitz on Clydebank 40 years ago. Certain parts of the city of Glasgow look as if the blitz took place yesterday, because the gaps remain. It is not that the local authorities or the SSHA did not have the necessary plans. The trouble is that the Government have been cutting off the resources required by the local authorities if the plans are to reach fruition.

Mr. John Maxton (Glasgow, Cathcart)

I hope that my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) will not mind if I do not follow his line of argument directly. However, much of what I have to say will be in agreement with what he said.

I should like to take up some of the points made by the hon. Member for Perth and East Perthshire (Mr. Walker). In many ways the hon. Gentleman represents the true Tory backwoodsman. The true Tory prejudices come out when he speaks in this place.

The hon. Gentleman referred to council house rents being too low and heavily subsidised and submitted that something should be done about them. In a sense I prefer the hon. Gentleman's honest prejudice to the smooth eloquence of the Under-Secretary of State who, in doing what the hon. Member for Perth and East Perthshire wants him to do, covers it up with quasi-legal and pleasant expressions.

I am glad that my hon. Friend the Member for Maryhill intervened to force the hon. Gentleman to admit that his view was that, except in Perth, council house rents are too low and that they are being subsidised by others. Yet, at the same time, the hon. Gentleman said that many people have their rents paid for them and others are in receipt of rent rebates. They do not have the income to pay the rent, That is why they get rent rebates and subsidies.

One cannot argue that rents in relation to incomes are too low, on the one hand, and then say, on the other hand, that many people get their rent paid for them. What that proves is that the incomes of too many people are so low that they cannot afford to pay even the low rents that the hon. Member mentions. He cannot have it that way.

The other point has to be made loud and clear. I can tell my hon. Friend the Member for South Ayrshire (Mr. Foulkes that as an owner-occupier and mortgagor I am as heavily subsidised if not more heavily subsidised than is the average council tenant in Scotland. I get as much subsidy from the State, in tax relief on my mortgage interest payments, as the average council tenant. That point ought to be made repeatedly so that the lesson is brought home to Conservative Members.

I turn to what the Government are doing in terms of capital allocation. In the first part of the questioning of the Minister before the Select Committee, we tried to make it quite clear that what mattered in terms of the capital allocation to the local authority was that authority's housing need as perceived through its housing plan. The Minister admitted that one of the reasons why the Government were doing away with the annual housing plan and moving it to every three years was that local authorities were becoming more refined and were getting better at working out and showing their needs clearly, and that therefore there as no need for an annual plan and it could be done every three years with merely amendments between plans.

Later we found out that what the Minister really meant was that, first, because of public expenditure restraints, he would be cutting even the housing need. The Minister used the example of Glasgow in discussions in the Select Committee. He said that when housing plans were submitted, authorities put in bids that were far higher than they really needed, and, therefore, they had to be reduced.

In the first year, Glasgow bid for £98 million and received £79 million. The Minister said that if that was viewed in relation to what was to be given this year, the ratio was very similar. This year, Glasgow bid for £79 million—exactly what it received three years ago. The bid was probably becoming more realistic. What did the Government do? Did they admit that that was a more realistic figure? No. It was cut to £66 million, and even then reduced still further by being linked to the rents and the rate contribution.

That is grossly unfair to Glasgow. As my hon. Friends have pointed out, what is happening in Glasgow is that we are reaching a situation in which Glasgow will no longer be able to maintain its housing stock at its present level—not improve the stock, not build new houses, not build the houses that are needed for the elderly, for single persons and for the disabled, not build for the special housing needs but simply maintain it at its existing level of repair. Glasgow just cannot do that because what is required in large areas of Glasgow, in the constituencies of Cathcart, Provan and Garscadden, all of which contain large housing schemes, is for large sums of money to be spent in redeveloping schemes in terms of housing stock and the environment. That money will not be available, if the capital allocations that the Government are laying down and the way in which they are trying to lay them down are carried through. We shall see more and more private building companies closing down. The Government are extremely keen to support private enterprise, that was why they came into power. "We must cut public expenditure so that private enterprise can take off''. What is happening? In the private sector of the building industry company after company are going to the wall because they do not have the work to carry on. Private industry relies upon the local authority to give it work. That is another aspect of the capital allocation argument.

In Glasgow, tenants are facing higher rents and higher rates. Conservative Members must not forget that council house tenants pay rates as well as rents. Sometimes that tends to be forgotten. The tenants are facing higher rents and rates and poorer services in their housing. Many council house tenants in my constituency come from the building industry and are out of work as well. That is the vicious circle that the Government are forcing local authorities into.

As my hon. Friend the Member for Aberdeen, North (Mr. Hughes) said, that is a threat to democracy. Local councillors and those who elected them are becoming disenchanted with what local government can do as the Government are increasingly taking its powers away. Legislation is going through the House which will take away from local authorities their rights to carry out certain actions. If that continues, as my hon. Friend said, the only honest thing for the Government to do is to pass a Bill to do away with local government altogether and to pass the powers into the central Stalinist State, which it seems that the Government are determined to see carried through.

Mr. Maclennan

I support the new clause moved by the hon. Member for Glasgow, Garscadden (Mr. Dewar). It raises a deeply important issue of principle. I wish especially to note what was said by the hon. Member for Aberdeen, North (Mr. Hughes), with which I am largely in agreement.

It is about five years since the Layfield committee on local government finance described the situation which was developing in Scotland. It is only fair to recognise that Layfield pointed out that already in 1975 there was a tendency towards much greater central control over local government finance than there was south of the border.

The report described that tendency in paragraph 67— A larger proportion of total local authority expenditure in Scotland is capital expenditure which is subject to stringent control. Furthermore, the smaller number of local authorities in Scotland permits the Scottish Office to develop a much closer relationship with them than is possible between English government departments and local authorities. That tendency was something that the Labour Government did nothing to reverse.

Mr. Lambie

The hon. Member was a member of that Government.

Mr. Maclennan

But Layfield pointed out the different political situation that existed in Scotland at that time. There was broadly an identity of view between local government and the central Government about what were the proper objectives for them to be pursuing. Indeed, that is brought out clearly in the report. It says: The Scottish Office is putting itself in a position to take an overall view of the affairs of each local authority and also to ensure that the actions of its departments are properly coordinated and directed to agreed objectives. The fundamental difference between the situation then and now is that the objectives are not agreed. The Government are acting in total defiance of local opinion in Scotland in pursuing their housing policy. This goes wider than housing itself. It extends to the whole question of local democracy and the right of people to determine, at a local level, the priorities of expenditure.

11 pm

Admittedly, the Government have to take a broad, overall, view of what the country can afford and what can be afforded in total by local government. The Government have failed to recognise that they are building up, by their actions, the greatest resentment among people who have been elected, just as they have been elected, to do a job that they were specifically charged to do—to provide housing at rents that people can afford. That is an area that the Government are patently neglecting.

I predict that if the Government pursue this course with such scant regard for local feeling they will come gravely unstuck. People in Scotland will recoil from the drift towards the centralisation of local government finance, which was described by Layfield, and will recognise that there must be greater internal devolution of financial responsibility, the other option that Layfield put forward, and which I believe is necessary.

We cannot accept a situation that depends wholly on an identity of view between local government and the central Government for its effectiveness. If local government is to mean anything, it must mean the power to dissent on such matters as housing finance from the view of the central Government.

Mr. John Home Robertson

I have heard some silly speeches in this Chamber since I have been an hon. Member. I had thought that the Chancellor's Budget took the prize, but the right hon. and learned Gentleman has been pipped at the post by his hon. Friend the Member for Perth and East Perthshire (Mr. Walker). It was an incredible assertion that council rents are too low everywhere except Perth.

As the House is discussing housing capital allocation on the housing revenue account, the hon. Gentleman might be interested to know that, in 1978–79, Perth and Kinross district council wanted to spend £9.7 million but was only allowed to spend £4.6 million. In 1979–80, the council had a programme costing £6.9 million but was only allowed to spend £5.1 million. In 1980–81, it reduced its programme still further. It wanted to spend £4.6 million but is being allowed to spend only £3.7 million. I should perhaps explain to the hon. Gentleman, for his benefit, that we are not talking about grants from the central Government. We are talking about the authority to borrow money.

I hope that the hon. Gentleman will explain to his constituents that they are paying far too little rent and that if they are having to wait longer for houses, this is because of the refusal of the Government, whom he so enthusiastically supports, to allow the local authority to build the houses that are needed.

I wish to endorse the comments that have been made about the arbitrary, unfair and irrational nature of the mechanism which the Government are imposing by using reductions in housing capital allocations to try to compel local authorities to increase their rents. This is a completely irrational and arbitrary system. I cite two figures as an illustration.

In order to qualify under this new scheme that the Under-Secretary has cobbled together, the Dumbarton district council will have to increase its rents during the current year by 92 per cent., while in the same year the East Kilbride district council will not be required to put up its rents at all, according to figures provided to hon. Members by Shelter. The Minister has also seen them; they were drawn to his attention in the Select Committee on Scottish Affairs. I understood him to acknowledge then that those figures were correct.

That proves conclusively that the system is arbitrary, irrational and unfair. I therefore wholeheartedly support the proposal of my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar).

Mr. Rifkind

The hon. Member for Berwick and East Lothian (Mr. Home Robertson) should not pick on my hon. Friend the Member for Perth and East Perthshire (Mr. Walker), suggesting that he knows nothing about the problems of council tenants. My hon. Friend was brought up in a council house, and probably knows more than the hon. Gentleman does about that part of the Scottish housing scene. The hon. Gentleman should hesitate before making such remarks.

The hon. Gentleman also did not pick the most appropriate example in seeking to illustrate that my hon. Friend had misled the House. He quoted the programme of Perth and Kinross district council, and suggested that its allocation for 1981–82 was far less than it had asked for. He should check his facts. If he had done so, he would have found that the council asked that its 1981–82 capital allocation should be no more than the £3.15 million on offer to it. The allocation that it has received is exactly what it asked for.

Mr. Home Robertson

rose—

Mr. Rifkind

The document that the hon. Gentleman is holding no doubt gives a different figure, but if he waits a moment he will probably find it unnecessary to intervene.

A local authority may have had a particular programme at one stage, but the hon. Gentleman should be aware that local authorities regularly revise their programmes in the light of what they decide is appropriate. The latest position is that the allocation that the council asked for happens, to be exactly what it has been given, and I am informed that it is not seeking any further allocation.

I turn to the general policy. Opposition hon. Members will be aware that there are housing expenditure limits, the concept of which means that in so far as a local authority chooses, by increasing its rate fund contribution, to increase its housing expenditure, it is inevitable that the Government find it necessary to reduce housing expenditure elsewhere. Knowing the sort of rent levels that local authorities might otherwise have fixed, we could have simply reduced the capital allocations. They would have been reduced to about 80 per cent. of the actual maximum allocations that had been indicated to local authorities. No doubt that would have avoided the need for this debate, because then we should not have been automatically linking capital allocations to local authorities' rent decisions. All that we should have done would be gratuitously and unilaterally to reduce the total maximum capital allocation by about 20 per cent.

It was because we believed that it was preferable to allow local authorities more discretion as to what their priorities were—

Mr. Robert Hughes

Patently dishonest.

Mr. Rifkind

No one tried to interupt the hon. Gentleman. If he will allow me to conclude, he can then make such derogatory comments as he chooses.

We could have simply reduced by about 20 per cent. the capital allocations of local authorities, if we had wished. We thought it more appropriate that individual local authorities should decide whether their priority was to do all within their power to get their maximum potential capital allocation or whether they believed that it was more important to keep the rents down to a certain level. That is their decision.

I am not saying that it was an easy decision. I am not saying that we offered the authorities two alternatives one of which was very attractive while the other was not. what I am suggesting is that the alternative procedure that we could have applied would have given local authorities no discretion. As it is, the discretion that we have given them has, for more than half of them, been responded to most constructively and in a way that illustrates that they prefer the discretion that we have given them to a unilateral reduction in the total capital allocation.

The hon. Member for Caithness and Sutherland (Mr. Maclennan) was anxious to have more local—

Mr. Robert Hughes

rose—

Mr. Rifkind

I shall not give way to the hon. Gentleman. He has had plenty of opportunity to acquaint the House with his views. No doubt he will be able to speak again in the debate if he catches your eye, Mr. Deputy Speaker. I am not giving way to the hon. Gentleman.

The hon. Member for Caithness and Sutherland said that he was anxious to increase local choice. There are 56 housing authorities in Scotland and 28—

Mr. Hughes

rose—

Mr. Rifkind

No. I am not giving way to the hon. Gentleman.

Mr. Hughes

Will the hon. Gentleman give way?

Mr. Rifkind

I am not giving way to the hon. Gentleman.

Mr. Hughes

This is most unlike the hon. Gentleman.

Mr. Rifkind

Indeed. I am glad that the hon. Gentleman concedes that.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

Order. The hon. Member for Aberdeen, North (Mr. Hughes) knows that if the Minister remains standing at the Dispatch Box he must remain in his place.

Mr. Rifkind

I was saying that 28 of the 56 housing authorities in Scotland will receive the full allocation. A further two authorities asked for less than their full provisional allocation. Therefore, about 30 of the 56 authorities will be receiving the full allocation or as much as they requested. Only 12 of the remaining authorities will receive the minimum allocation and 14 will receive an allocation between the maximum and the minimum. It is interesting that, of the 26 authorities that are not receiving their maximum allocation because of the rate fund contribution decisions that they have taken, three will receive allocations that are within £100,000 of their full allocation and a further nine will receive allocations that are more than 80 per cent. of the full allocation.

The effect of the figures is that only 14 of the 56 authorities will have an allocation that is less than the one that they would have received if instead of introducing this system we had merely reduced the total sums available for capital allocations by about 20 per cent. That would have been the only alternative open to us. Only 14 of the 56 authorities would have been better off if we had adopted that course, while 32 would not have been better off. Most of the 14 would have been better off by only a relatively small amount.

I do not suggest that the local authorities had a pleasant alternative available to them. They were not presented with an easy option. Labour Members may not like facts, but that does not make them other than facts. If we had not introduced the system that is under discussion, we would have reduced the overall capital allocations and 32 of the 56 local authorities would not have been any better off than at present.

Mr. Maclennan

The hon. Gentleman has indicated some local discretion and cited examples of different authorities reacting in different ways. It is like offering local authorities the option of commiting suicide by giving them in one hand a revolver and in the other a cyanide capsule and telling them that their freedom of choice has been retained.

Mr. Rifkind

It is nothing remotely like that. All authorities are aware that 50 per cent. of their tenants—those on low incomes, those who are unemployed and pensioners—do not pay the rent increases that are being proposed. We know that 25 per cent. of tenants pay no rent at all and that another 25 per cent. have their rents heavily subsidised. Fully half of the remainder have a household income of more than the national average.

Mr. Foulkes

Is the Minister saying that 50 per cent. of all people have an income that is above the national average?

Mr. Rifkind

The hon. Gentleman has illustrated his own ignorance by making that remark. I do not need to expand on that any further.

The hon. Member for Caithness and Sutherland must be aware that, as a consequence, the rent increases that have been imposed on a number of local authorities do not affect the poor, the unemployed or people on very low incomes.

Mr. Maxton

Does the Minister agree that the lowest take-up of any social benefit is in that area? Many people will suffer from the increases because they are not aware of rent rebates and allowances, and, even when they are, some are too proud to take advantage of them.

11.15 pm

Mr. Rifkind

It is a curious proposition that decisions on rent, rates and so on should not be taken not because people cannot afford to pay the increases but because they may not be aware of the rebate or may not take advantage of it. We are all bound to ensure that everyone entitled to rebates claim them. It is their entitlement, and everybody should take advantage of it.

The new clause is not an appropriate approach to capital allocations. When it comes to the choice, rent decisions of local authorities are consistent with the basic interests of tenants and the general housing policy.

Mr. Robert Hughes

Before the Minister sits down—

Mr. Deputy Speaker

The Minister has resumed his place.

Mr. Hughes

I thought that he had recovered from his earlier bout of ill temper and was giving way.

Mr. Dewar

It was fascinating to see the Under-Secretary of State in a petty fury. To his credit, I must say that it is not a common sight. I was also intrigued by his closing sentences. To paraphrase on what he said, local authorities which agree with him and which do what he tells them are constructive. That is a prejudiced view.

The debate has not been without interest. My hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) has learnt a cardinal rule of political debate in Scotland—not to take as fact the contents of memoranda submitted by the Under-Secretary of State. He made the mistake of quoting from the Minister's submissions to the Select Committee, which immediately brought forth flagged notices from the advisers to the effect that the information was wrong.

We also discovered that the hon. Member for Perth and East Perthshire (Mr. Walker) is apt to proclaim the startling fact that the Government cannot count on his support. Roughly interpreted, it means that he does not have the courage of his convictions but is hoping that no one will notice—he can disguise it with a slightly dishonest form of words.

The range of my hon. Friends' reactions has underlined how deeply concerned we are about the departure in Government housing policy. My hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) mentioned the 1924 houses in Ruchill. I, too, am familiar with the scheme. I know how upset and alarmed the people are at the demolition of not only hopes but promises given by the district council and the SSHA, acting on Government assurances.

There is no justification for the linkage. It is an infringement of local government independence and an attack on local democracy. It is also financial madness.

In a written answer to me the Under-Secretary of State reckoned that, if he had his way and rents in Scotland rose to the level that he was looking for, it would mean an increase in rent rebate expenditure of about £19 million. It is crazy logic for him to argue that he is attempting to save public expenditure, when a by-product of his prejudices will be to increase public expenditure by that amount and to force to claim rebate a substantial additional number of people over and above the 250,000 already in receipt of the concession. In almost pained horror, he told us that the alternative was "gratuitously and unilaterally" to cut the housing allowance. We had the impression that gratuitous and unilateral cuts were totally foreign to the nature of the Government. But they are happening right across housing expenditure at the moment in the most cruel and direct way.

We deeply resent this innovation and the departure from the basic principle that housing capital allowances are based on need. We reject the idea that they should be linked to the party prejudice and ideological quirks of Conservative Minister's minds in this or any other year. I have no hesitation in asking my hon. Friends to divide the House on this clause.

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

The House divided: Ayes 85, Noes 129.

Division No. 116]	[11.20 pm
AYES
Adams, Allen	Lamond, James
Alton, David	Lewis, Ron (Carlisle)
Atkinson, N, (H'gey,)	Litherland, Robert
Beith, A, J.	McCartney, Hugh
Booth, Rt Hon Albert	McKay, Allen (Penistone)
Bray, Dr Jeremy	McKelvey, William
Brown, Hugh D. (Provan)	MacKenzie, Rt Hon Gregor
Brown, Ron (E'burgh, Leith)	Maclennan, Robert
Callaghan, Jim (Midd't'n & P)	McNamara, Kevin
Campbell, Ian	McTaggart, Robert
Campbel-Savours, Dale	McWilliam,John
Canavan, Dennis	Marshall, D (G'gowS'ton)
Carmichael, Neil	Maxton, John
Clark, Dr David (S Shields)	Millan, Rt Hon Bruce
Cocks, Rt Hon M. (B'stol S)	Morris, Rt Hon C. (O'shaw)
Concannon, Rt Hon J. D.	Mort on, George
Cook, Robin F.	O'Neill, Mart in
Craigen, J. M.	Pavitt, Laurie
Crawshaw, Richard	Powell, Haymond (Ogmore)
Cryer, Bob	Prescott, John
Dalyell, Tam	Roper, John
Davis, T. (B'ham, Stechf'd)	Ross, Ernest (Dundee West)
Dempsey, James	Rowlands, Ted
Dewar, Donald	Sever, John
Dixon, Donald	Skinner, Dennis
Dormand, Jack	Snape, Peter
Douglas, Dick	Spearing, Nigel
Dubs, Alfred	Steel, Rt Hon David
Duffy, A. E. P.	Stewart, Rt Hon D. (W Isles)
Eadie, Alex	Strang, Gavin
Eastham, Ken	Tinn, James
Foster, Derek	Welsh, Michael
Foulkes, George	White, Frank R.
Grimond, Rt Hon J.	White, J. (G'gow Pollock)
Hamilton, W.\N. (C'tral Fife)	Whitehead, Phillip
Hardy, Peter	Wigley, Dafydd
Harrison, Rt Hon Walter	Wilson, Gordon (DundeeE)
Haynes, Frank	Wilson, William (C'try SE)
Hogg, N. (EDunb't 'nshire)	Winnick, David
HomeRobert son, John	Woolmer, Kenneth
Hooley, Frank
Hughes, Robert (Aberdeen N)	Tellers for the Ayes:
Janner, Hon Greville	Mr. Joseph Dean and Mr. James Hamilton.
Johnston, Russel (inverness)
Lambie, David

NOES
Alexander,Richard	Fairgrieve,Russell
Ancram, Michael	Fletcher, A. (Ed'nb'gh N)
Atkins.Robert(Preston N)	Fletcher-Cooke.SirCharles
Beaumont-Dark,Anthony	Fowler, Rt Hon Norman
Berry, Hon Anthony	Fraser, Peter (South Angus)
Best, Keith	Garel-Jones, Tristan
Bevan, David Gilroy	Goodlad,Alastair
Biggs-Davison,John	Gorst,John
Blackburn, John	Gray, Hamish
Bonsor.SirNicholas	Greenway, Harry
Braine.SirBernard	Griffiths,Peter Portsm'thN)
Bright, Graham	Gummer, JohnSelwyn
Brinton, Tim	Hannam, John
Brooke, Hon Peter	Hawkins, Paul
Brotherton, Michael	Hawksley, Warren
Budgen, Nick	Henderson, Barry
Carlisle, John (LutonWest)	Hurd, HonDouglas
Carlisle.Kenneth(Lincoln)	Jopling.RtHonMichael
Chapman,Sydney	King, Rt Hon Tom
Clark, Hon A. (Plym'th, S'n)	Knight, MrsJill
Clarke, Kenneth (Rushcliffe)	Lang, Ian
Cockeram.Eric	LeMarchant.Spencer
Colvin, Michael	Lester Jim (Beeston)
Cope.John	Lloyd, Peter (Fareham)
Corrie.John	Lyell,Nicholas
Crouch,David	Macfarlane, Neil
Dover, Denshore	MacGregor, John
Dunn, Robert(Dartford)	MacKay, John (Argyll)
Dykes, Hugh	McNair-Wilson,M.(N'bury)
Fairbairn,Nicholas	McQuarrie,Albert

Madel, David	Rossi, Hugh
Major, John	Rost, Peter
Marlow, Tony	Sainsbury, Hon Timothy
Marten, Neil (Banbury)	Skeet, T. H. H.
Mather, Carol	Speller, Tony
Maude, Rt Hon Sir Angus	Spicer, Jim (West Dorset)
Mawhinney, Dr Brian	Spicer, Michael (S Worcs)
Maxwell-Hyslop, Robin	Sproat, Iain
Meyer, Sir Anthony	Squire, Robin
Mills, Iain (Meriden)	Stanbrook, Ivor
Moate, Roger	Steen, Anthony
Monro, Hector	Stewart, A, (E Renfrewshire)
Morgan, Geraint	Stradling Thomas, J.
Morrison, Hon C, (Devizes)	Taylor, Teddy (S'end E)
Mudd, David	Temple-Morris, Peter
Murphy, Christopher	Thomas, Rt Hon Peter
Myles, David	Thompson, Donald
Neale, Gerrard	Thornton, Malcolm
Needham, Richard	Townend, John (Bridlington)
Nelson, Anthony	Townsend, Cyril D, (B'heath)
Neubert, Michael	Trippier, David
Newton, Tony	Waddington, David
Normanton, Tom	Wakeham, John
Page, Rt Hon Sir G, (Crosby)	Walker, B. (Perth)
Page, Richard (SW Herts)	Waller, Gary
Parris, Matthew	Ward, John
Pattie, Geoffrey	Watson, John
Pollock, Alexander	Wells, Bowen
Proctor, K. Harvey	Wheeler, John
Raison, Timothy	Wolfson, Mark
Rathbone, Tim	Young, Sir George (Acton)
Renton, Tim	Younger, Rt Hon George
Rhodes James, Robert
Rhys Williams, Sir Brandon	Tellers for the Noes:
Ridley, Hon Nicholas	Lord James Douglas-Hamilton
Rifkind, Malcolm	and
Roberts, M. (Cardiff NW)	Mr. Robert Boscawen.

Question accordingly negatived.