HC Deb 14 June 1989 vol 154 cc931-45

  1. '() (1) Each local authority in England and Wales shall receive central Government subsidy to cover the full cost of rent rebates paid out by them in any financial year.
  2. (2) Any rent rebate subsidy payable to a local authority in England and Wales shall be credited to a revenue account which is not the Housing Revenue Account or the Housing Repairs Account.'.—[Mr. Soley.]

Brought up, and read the First time.

Mr. Clive Soley (Hammersmith)

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

The new clause would guarantee that local authorities received central Government subsidy to cover the full cost of rent rebates. My hon. Friends and I regard this as an important proposal because it is designed to counter a classic example of the Government trying to get the poor to subsidise the poorest.

The new clause deals with two issues. First, it would mean the reimbursement of local authorities in full as opposed to the present 97 per cent. level of the rents they subsidise. Secondly, it would ensure that rent rebate subsidy remained a separate and distinct form of central Government subsidy. It would involve crediting the subsidy separately to the housing revenue account.

When the Government originally told local authorities to take on responsibility for housing benefit, considerable reservations were expressed about that requirement. Indeed, the way in which the instruction was forced on local authorities caused mayhem in the administration of many authorities, and led to difficulties being experienced by some tenants in attempting to get the subsidy due to them, for which many of them had paid over the years through their taxes.

In addition, the Government gave a commitment that the housing benefit subsidy would be paid in full by the Government. The then Minister responsible for social security matters in 1982 said that housing benefit subsidy, although administered by local authorities, would be refunded to them by central Government. That commitment was undermined when the sum was reduced to 97 per cent., although most people took the view that there was no point in complaining about a reduction of 3 per cent. That was the thin edge of the wedge, however, and today local authorities have to pick up much more of the bill.

We are here discussing the principle that resonsibility for the relief of poverty should rest with the taxpayer and not be transferred to local people. Otherwise, the person in one house earning an average or even below the average income may, due to the way in which the new system is structured, be subsidising a next door neighbour receiving full housing benefit because he is unemployed. That must be unfair because, as I said at the outset, it means the poorer sections of society subsidising the very poorest.

The Government are deliberately confusing the funding of housing and the funding of income maintenance. There is a strong case for subsidising housing generally by various means, as we have done in the past—funding revenue, capital, and so on—and there is a strong case for funding people through income maintenance. But there is no case for blurring the distinction between the two so that the one becomes confused with the other.

All other countries of which I am aware pay a decent subsidy for housing, enabling people to rent or buy in a fairer way than we do in Britain. They do not put the burden on to the poorer sections of society to subsidise the very poorest. Not only does no other country do what the Government propose, but it has not been done here for many years. Indeed, one would probably have to go back to the 19th century to find it being done on a major scale.

The story does not end there. What is proposed shows the Government's dislike of council tenants. A bizarre aspect of this provision is that is does not apply to housing associaton tenants or to tenants in the private sector. It applies only to council tenants. Why do the Government expect council tenants to subsidise other council tenants out of their rent payments—as distinct from any taxes that they pay—but do not expect anyone else to do the same?

It is all part of the Government's vitriolic campaign against council tenants. They want them to stop being council tenants. They want to push them into the private sector and they are prepared to adopt any measures to achieve that. If that means bullying them, pushing and shoving them and generally making their lives an economic misery, the Government will do it and they have chosen to do it with this particularly nasty legislation.

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What would happen if the Government pursued such a policy in other sectors? For example, would they expect the recipients of family credit to fund the benefits of other, less well-off people? That is what would be involved if a similar policy were followed. The Government should discuss with local authorities a fairer system to deal with services, and keep housing benefit separate from other housing subsidies. Let us not underestimate the importance of this subsidy.

Housing benefit is one of the most important sources of income for many people. For example, the average weekly payment for rent rebate in 1988–89 was £15.37. Some 60 per cent. of council tenants are in receipt of housing benefit and about 3.5 million council tenants receive a rent rebate. The majority are pensioners. The Government will recall the mess into which they got themselves a year or so ago when they cut housing benefit for the seventh time. That caused a crisis even in Conservative areas. Pensioners discovered that they were losing £7, £8, £9 or £10 and sometimes even more per week off their incomes. There were desperate scenes, which hon. Members on both sides of the House will remember from their advice surgeries. Elderly people came along and said that they had fought for the country during the war but now could not manage and feared that they might have to go into a hostel. Such scenes make one realise that, although the overall number of people affected is large, it is still a small enough proportion of the population to mean that the Government are prepared to say that they do not care enough to put the problem right.

I brought to the attention of the Minister some time ago a report of a press conference on the effect of the increased rents when housing was transferred from the council sector to a particular organisation. In that case, some pensioners on a joint income of £150 a week with their separate pensions as well as their state pensions were just outside the level at which they would be entitled to housing benefit, but they were being asked to pay a rent of about £40 a week—in other words, 40 per cent. of their net disposable income was going in rent. If any hon. Member were paying 40 per cent. of his net disposable income in housing costs, be it mortgage payments, rent or anything else, it would only be a matter of time before he got into severe economic hardship. Yet, if the couple in my example were in council accommodation—that particular couple were not, but they might be in the future—the Bill would mean that they would be expected to subsidise people on full housing benefit. That is obviously wrong.

Unlike mortgage income tax relief, housing benefit has been repeatedly cut by the Government. In April 1988, 1 million people lost all entitlement to income and 4 million lost some entitlement. There is a strong case for mortgage income tax relief, but there is also a strong case for a decent subsidy for tenants, whether private or public. There is also a case for a system that is fairer between the rented and purchased sectors, as I have spelt out on a number of previous occasions.

We cannot do what the Government have been doing recently—continually cutting housing benefit and continually pushing up rent so that people in both the private and the public sector get into greater economic hardship. Now we have the final humiliating insult that those who are already in difficulties, such as those whom I have described, will be asked to subsidise the poorest, who rely totally on housing benefit for their rent. That must be wrong. That is why we are insisting on the new clause.

Mr. Peter Hardy (Wentworth)

I have been looking at this matter in the light of the effects that it is likely to have on my constituency. I have discovered, for example, that retired miners, miners' officials and steelworkers, after a lifetime of hard work and in some cases distinguished military service, are not receiving housing benefit because they have saving levels above the prescribed limit. They are people who live in peace and dignity, but they now face the prospect of having to pay rents that are so high that their savings will rapidly diminish so that they will become recipients of housing benefit. I am glad that my hon. Friend the Member for Hammersmith (Mr. Soley) made the point that the value of housing benefit is being steadily eroded. This will be a cause of division and people will say that there is no point in saving, or in thrift, so that they can provide for a dignified old age, because if they are fortunate enough to be able to save, they will be penalised if they happen to be council tenants.

My hon. Friend is right to point out that this arrangement will not apply to housing association tenants. The Minister may say that people will be able to buy their council houses. What do I say to the chap who spoke to me about this the other day? He is in his 70s and has a reasonable level of savings. Does he use all his savings, which were meant to top up his pension and allow him to have a small holiday every so often, in bearing the burden that the Bill will place on him? The Government have been unwise and unfair. They are not encouraging thrift or dignity, but they will encourage bitterness in the housing estates.

The Minister knows that I have a high regard for him, not least because he has a north of England origin. He may accept the argument that, over the past 10 years, there has been a remarkable increase in division in our society—the division between rich and poor and between the richer areas and the poorer areas. This proposal will compound that division to an extent that I do not believe—I am being generous—the Government have fully perceived. It will not merely cause bitterness in the housing estates as the number of people who pay rents shrinks and the number of people whom the Government will make to feel inferior grows; it will cause enormous difficulty and enormous additional division between the rich and the poor and between the north and the south because the poorer areas that you and I represent, Mr. Deputy Speaker, will be more adversely affected.

I hope that the Minister will ensure that this matter is looked at again, because I believe that it will have a grossly unfair effect, not least on those who most deserve our consideration.

Mr. Allen McKay

I am a neighbour of my hon. Friend the Member for Wentworth (Mr. Hardy) and we have the same problems because the people we represent work in the same industries, and live in the same type of housing developments and in similar areas. The Bill will add to previous similar Bills, all of which were aimed at a year-in, year-out, step-by-step approach. In doing so, they have split communities and created haves and have-nots.

The Bill will carry that effect into what is probably the most precious part of a person's life, his house. Only council tenants will be affected by this, because under the Bill, if one lives in housing association accommodation, one will not be affected. Therefore, the Government are trying to persuade tenants to become tenants of a housing association by voting for that. Nothing is said about owner-occupiers receiving subsidies or about mortgage relief. The Government are picking only on council tenants. They have nothing against the tenants themselves but are after local authorities. If they want them to exist at all, it is only as enabling bodies.

That is part of the Government's grand strategy to ensure that local government as we know it will disappear. The Government make the mistake of failing to acknowledge public recognition of the advisory role played by local council officers. The public are wondering why officers are no longer available to give advice.

The Bill is a form of ring-fence legislation under which councils cannot subsidise local authority funding from their rates or poll tax funds. However, some local authorities have not done so for years, and mine is one of them. It receives no housing subsidy from the Government. Its housing stock was paid for over 40 or 60 years. Under a housing plan, rents from that stock are put into a rented housing pool whose profits after meeting maintenance costs help subsidise new house construction and rent levels. The Bill is taking that facility from local authorities, because the Secretary of State will be the person who determines each year what rent levels will be, and he will raise them to extremely high levels.

As a consequence, more tenants will rely on housing benefit. However, the Government say that they do not want to meet the cost of that support—the demand for which they created. They say that council tenants should generate profits for a local authority's housing revenue account, and that that should be used to meet the expense of rebates to tenants who cannot afford higher rents. That policy is one of the most disastrous that the Government have ever devised and clearly shows their hatred and vindictiveness towards anything to do with local authorities.

The Bill is designed to dilute the powers of local councils and ultimately to deprive them of their housing stocks. It will compel remaining local authority tenants to subsidise those who cannot afford higher rents, which will create an overall split or divide. That marks a return to the days when townships had a body of governors whose job it was to move on any vagrant who turned up because otherwise the vagrant would become the governors' responsibility.

The Bill will produce bitterness among local authority tenants, who will have to pay increased rents to meet the cost of housing rebates for the poorest members of society. As my hon. Friend the Member for Hammersmith (Mr. Soley) remarked, it is a system that makes the poor subsidise the poorest. Once again, the Government are abdicating their responsibilities.

Mr. George Howarth (Knowsley, North)

I fully agree with the arguments advanced by my hon. Friends that the Bill is all part of a piece and reflects the Government's vendetta against council tenants. I take that argument further and say that the Government's vendetta is motivated by an attempt to smother their own incompetence.

A number of my right hon. and hon. Friends now in the Chamber sat through the various stages of the Housing Act 1988, which has three central objectives. The first is to break up local authority housing monopolies in certain areas. Part IV gives the Government power to establish housing action trusts or the so-called alternative of tenants' choice, whereby tenants can opt out of council housing into tenancies under approved landlords. The Act's second objective is to encourage by various means the growth of private landlords, and its third is to introduce to some extent private finance to the housing association sector.

5.15 pm

Two months ago, in an attempt to test the success of the Housing Act 1988, I put down a number of questions. The House may be interested to learn the effect so far of that legislation, with its 130 clauses, which took three and a half months to debate in Committee. As to the provision to create HATs and to allow private landlords to take over public sector housing, of the seven original trusts proposed, at least five are unlikely to go ahead, and the other two are tottering along with no clear indication of their future. Up to two months ago, only five organisations had applied to become approved landlords. Clearly there is no great rush to take on that responsibility.

I was also able to establish that, during the lifetime of the present Government, the number of private landlords has decreased from over 11 per cent. of all landlords to less than 8 per cent. Bearing in mind the fact that an increase in private landlords is a central objective of the Act, I asked by what percentage the Government expected the number of private landlords to increase over the next two or three years, but they declined to answer. We all know that when the Government decline to answer a question it is because the answer is not very favourable to them.

Mr. Tony Banks (Newham, North-West)

Yes, but how does one know when they are lying?

Mr. Howarth

I shall not repeat my hon. Friend's intervention for fear of incurring your wrath, Mr. Deputy Speaker, but no doubt Hansard will pick it up.

I remind the House that the Act's third objective is to introduce private finance into housing associations. I remind the House also that one of the Ministers concerned with the Bill has moved to greener pastures, while another has gone out of the door altogether. The hon. Lady concerned was, I think, a victim of the new eviction regulations, because she was shunted out of her little bolthole at an early stage.

As to that third objective, the Secretary of State for the Environment claimed that the legislation would lead to an explosion in funding for housing associations. I cannot get an answer from the Housing Corporation or from the Minister, but we know for sure that expenditure on that sector will decrease this year because of the mess that the Government made of housing association finance. There will be fewer completions this year than last. Housing associations are in an absolute mess because they cannot work out exactly how to move forward. They have to negotiate each allocation they receive separately with a financial institution. Many of them do not even know whether they can spend that allocation. That was the reality of the Government's policy this time last year.

I had started to explain why the Government have this vendetta against council tenants; it is because they wish to smother their own incompetence. Their policies have totally failed to break up council housing monopolies, as they call them. The inevitable logic of the Government's thinking is that, because their policies are failing, they have to make life so awful, expensive and miserable for council tenants that their only option will be to try to seek an approved landlord because the Government will have weighted the terms so heavily against them.

What a nonsense of a policy for a Government to move from one housing mistake to the next merely to cover up previous mistakes. The Government are in chaos on many fronts, but nowhere is that more true than in their housing policies, which are a mess and utterly disastrous. The sooner we get them out of power, the better.

Mr. John Battle (Leeds, West)

I shall focus my comments on housing benefit, which is sometimes referred to as the rebate system. Some people do not realise that the two are the same.

It became clear in Committee that, in the income and costs equation, management, maintenance and debt repayments are on one side, and rents are on the other. In the equation, housing benefit payments will come under expenditure—that is management, maintenance and debt repayments. Some of us would like to press the Government on why housing benefit has been taken out of the income support system, which should be paid in common taxes through the Treasury and passed on to tenants at local level.

At the moment, the poor are being taken out of the national budget and those who are slightly better off, the rent payers, will have to cover them. The national budget in this House should be the place for discussing the relations between pensions, benefits and taxes. We should not push that on to the slightly better-off rent payers.

Before I came to the House, some Opposition Members argued that housing benefit should not have been handed over to local authorities. I have checked the record; it shows that, at that time, it was said that it would become confused with the housing revenue account. It was said that local authorities would become confused with the social security system, and that the Government were determined to ensure that poverty was taken out of the national debate.

It is no surprise that in recent weeks the Secretary of State for Social Security has denied that poverty any longer exists in Britain. His statement was reiterated by the Prime Minister, who said that we no longer had to talk about poverty because we now have only wealth. I should express the argument in slightly less dramatic terms.

The Under-Secretary of State for the Environment speaks for the country on housing. Does he want his hands tied by what happens in the Department of Social Security? In future, what happens to his budget will depend on the level at which income support is set each year. The Minister will have to watch the social security upratings like a hawk, because they will affect every housing revenue account of every local authority in the budget. The Secretary of State for Social Security lost the brief for health and has decided that poverty does not exist. Perhaps he now wants to run the housing department as well. The housing budget should not be run by the DSS.

There have been 14 changes to housing benefit in less than 14 years, which means that there has not been annual budgeting. The budget for housing benefit has not been stuck to each year; transitional arrangements have been put in in between. How on earth can the Minister expect local authorities to put together their budgets and audit them when the figures are changed every few months because the Department of Social Security decides to change its contributions to housing benefit?

The Minister's budget should enable him to improve the housing stock of this country and bring it up to modern standards. Only this last week we have seen another report from the Royal Institute of British Architects suggesting that there is a large job to be done even at this late stage. Why does not the Minister get on with that job instead of making cuts in the benefit system through the back door of the housing revenue account? That is what will happen as long as the rent rebate system remains in the equation.

I press the Minister to assure the House that he understands the sense of the new clause and agrees that we should take housing benefit out of the equation and put it back where it belongs: in the national budget. We could then make decisions in this Chamber about taxes, pensions and benefits, which is where they ought to be made in the context of the national budget, so that the poor are not pushed back on to the limited resources that remain to the rent payers who are not in difficulties.

Mr. Tony Banks

I speak in favour of new clause 19. In a few hours' time the Chamber, certainly the Conservative Benches, will be full of Members who have come in to talk about dog registration, in which there will be much interest, not only on the Floor but probably in the Press Gallery. The Government seem to care less about council tenants than about dogs, and they do not care very much about dogs.

I know that the Minister was in the London borough of Newham last week. Unfortunately, I was unable to be there to go round with him, but I know that my hon. Friend the Member for Newham, North-East (Mr. Leighton), at whose invitation he came, was with him to ensure that he saw what was happening in the borough. I hope that what he saw made some impression on him and that he appreciated the scale of the problems, particularly of housing, in Newham, where 65 per cent. of council tenants receive housing benefit.

It seems scandalous that the London borough of Newham is unable to get back 100 per cent. of the money that it paid out. It is doubly scandalous that, under the Government's proposals, an additional 3 per cent. will have to come out of the housing revenue account. As my hon. Friend the Member for Hammersmith (Mr. Soley) said, the Government seem to want the poor to pay for the totally impoverished, which seems to fly in the face of decency.

There is very little which is decent left in this Government of second-hand car salesmen, Arthur Daleys and low life generally, which is why we tabled the new clause—[Interruption.] My hon. Friend the Member for Leeds, West (Mr. Battle) says that I have been unfair on second-hand car salesmen. I probably have. There are other forms of human existence and activities that would make more apposite comparisons with Conservative Members, but if I went through the list I am sure that I would quickly be brought to order.

The poor are in an extremely onerous position, which is unfair, unjust and typical of the Government. I say, and have done so many times, that I have a slight flicker of hope that one day one of the Ministers will be moved by the experience of coming to a borough such as Newham and seeing how appalling the housing conditions are in terms of demand, need and shortage.

I have not yet had a chance to talk to the Minister, but I should like to know whether he felt that his visit to Newham last week was worth while. Perhaps he can now share some of the experiences of Opposition Members. Week after week in our advice surgeries, we have to confront constituents complaining about the appalling housing conditions in which they live.

This is a reasonable new clause which a reasonable Minister would accept. Will this Minister show himself to be almost alone on the Conservative Front Benches in being a reasonable man with a heart?

5.30 pm
Mr. Jeff Rooker (Birmingham, Perry Barr)

I should like to raise a point that is subsidiary to those raised by my hon. Friends.

The Government seem to be saying that local authorities will not be reimbursed directly for payment of housing benefit because those payments will effectively have been made by other tenants. I draw the Minister's attention to a report published by the National Audit Office only a few days ago, on which the Public Accounts Committee will take evidence next Wednesday. It deals with the housing benefit scheme which, according to one headline in today's press, was "botched up" in April 1988. No doubt the PAC will have an interesting session. The report, incidentally, is available in the Vote Office.

Paragraph 3.14 explains that a new system for housing benefit was designed last April under which a high rate of direct subsidy would be paid on most, but not all, housing benefit expenditure. Part of the purpose was to give local authorities an incentive to control some of the costs.

What incentive have local authorities now to control rents, let alone costs? Clearly, if the housing revenue account is to be ring-fenced as the Bill suggests, there will be no incentive for local authorities or for central Government. Rents will go up and up, and the level of housing rebate expenditure will not matter. The cost will, be borne by the other tenants, so what the hell—why should there be any need to consider costs and efficiency? Where is the built-in management function to ensure that tenants will not be ripped off more than they are already?

There will now be no incentive for the Government or local authorities to control rents or costs, because the Government will not be part and parcel of the system and the rest of the local authority budget will not pay its share. The responsibility will be on the backs of the tenants. If the Minister can explain that, he will help me to question the Permanent Secretary or accounting officer of the Department of Social Security on Wednesday. The PAC may then obtain better value for money in taking evidence on the report, which is highly relevant to the Bill. The Permanent Secretary will say, "We are going to change the scheme." We know how this scheme is to be changed—we are doing it here tonight—but it would be helpful if the Minister would address himself to paragraph 3.14 of the report.

The Parliamentary Under-Secretary of State for the Environment (Mr. David Trippier)

I am bound to suffer from déjà vu, as we discussed this matter so many times during the many weeks of the Committee stage. I thought when we were discussing the details of the housing revenue account that Conservative Members were at a distinct advantage, as it was a rather technical matter. I was quick to point out towards the close of the proceedings that the one Opposition Member who seemed to have got it right was the hon. Member for Leeds, West (Mr. Battle). I said that several times, not merely to damage the hon. Gentleman's chances of reselection but to compliment him genuinely. The hon. Member for Hammersmith (Mr. Soley) and his supporters should, I felt, hang their heads in shame because they had not taken the time and trouble to study the subject and to come to understand it. Now, however, I must claw back every compliment that I paid the hon. Member for Leeds, West.

Mr. Tony Banks

On a point of order, Madam Deputy Speaker. Conservative Members below the Gangway may not be interested in what the Minister is saying, but we are interested. He may not tell us a great deal, but we still want to listen. Can they be brought to order?

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. I am sure that the whole House can hear what the Minister is saying.

Mr. Trippier

I said informally to the hon. Member for Hammersmith that we had the advantage not only of excellent briefing from civil servants but of access to diagrams—which are always helpful to Members of Parliament, who may be able to take pictures on board more easily than words. When it was suggested that we might offer Opposition Members the same facility in Committee, I denied them the opportunity so as to retain our advantage. On reflection, I think that I made a great mistake. Had I sent the diagrams across we might have had great fun going through them. No doubt it would have introduced a lighter note to the proceedings, and we might not have encountered the difficulties that we seem to be having today.

I have a simple and straightforward message for the hon. Member for Leeds, West. His speech today got it right in all respects but one—he did not seem to realise that the new housing subsidy is provided by the taxpayer. The subsidy is one side of the equation, supplementing or complementing the amount being made available in the form of rents, which is the other side. Thus we balance the management and maintenance functions that the hon. Gentleman mentioned with the rent rebate—I think that he is still the only hon. Member to have got the point about rebates being confined to council tenants.

It is nonsense for the hon. Members for Hammersmith, for Barnsley, West and Penistone (Mr. McKay) and for Knowsley, North (Mr. Howarth) to suggest that the Government are anti-tenant. That is so ridiculous that it stretches credulity to breaking point. Which Government introduced the right to buy, which has been so successful? Which Government introduced the priority estates project and Estate Action? Which Government introduced estate management boards to devolve responsibility to tenants whom we wish to have more influence over the running of their affairs? The present Government have done all those things. The Labour party never thought of doing those things when it was last in office.

Mr. Allen McKay

If the Minister will look again at the history of my local authority, he will find that we had tenants associations and organisations on estates long before the present Government came to office.

Mr. Trippier

I think that the hon. Gentleman will regret that intervention. We are not talking about tenants associations, which have been supported for a considerable time—since before the last war, I believe. Having come up through local government, I know what an important rôle they play. But they are not the same as estate management boards. I will send the hon. Gentleman details of estate management boards in the post tonight. They allow tenants to vote some of their number on to a board which runs the estate and has the power to appoint a local government officer in a neighbourhood office serving tenants to their best advantage. There is a link, because we hope that tenants associations will put forward candidates to serve on that body. The schemes are working very well, although they were started only recently. There are now eight in the United Kingdom, and we want to see far more.

As I have said—especially to the hon. Member for Leeds, West—housing subsidy uses taxpayers' money. Under our new policy, rent rebates are taken into the subsidy calculation in full. If there is a surplus from the operating side of the subsidy—the hon. Gentleman will remember that we debated this at length in Committee; I think that that was the term that he rightly used—where will the surplus go?

We must explain to the hon. Member for Wentworth (Mr. Hardy) what we are not trying to do. He can be excused everything, as he did not sit on the Committee. We are not changing the rules on who is eligible for rent rebates or the level of support that people will receive. We are merely looking at how the cost of rent rebates is met. We are not concerned with the cost of anything but the rent rebates granted to a council's own tenants.

Time and again in Committee, Opposition Members claimed that we were bringing into the equation the cost of allowances to private tenants, rate rebates and community charge rebates under the new system. They tried to give the impression that in some way all these extra costs would fall on council tenants. That is absolutely and completely wrong. All rebates and allowances, other than rebates to a council's own tenants, are outside the authority's housing revenue account. The cost is outside the account and will remain outside it. Rebates and allowances to private tenants therefore do not come into the picture.

In the early years of the present system, which we are anxious to change, as well as receiving help with rebate costs most councils also received the general bricks and mortar Government subsidy. They needed Government help to balance their housing revenue accounts. The position today is very different. Councils are providing much less new housing, so the loan charges that they have to pay on capital projects are growing older and being eroded by inflation. The costs falling on housing revenue accounts today are therefore less, in real terms, than they were in the early 1970s. Authorities have enjoyed recently some windfall benefits because of the success of our right-to-buy policy. It is interesting that the hon. Member for Hammersmith suggests that the Government are discriminating against council tenants, but the present system does not discriminate against them. [Interruption.] I always know that I am on to a good point when the hon. Member for Hammersmith bursts into peals of laughter because he is so embarrassed. Perhaps if I speak slowly he will be able to take the point on board.

The truth is that we are introducing a system which means that the new housing subsidy will be met by taxpayers' money. Moreover, the windfall profits being made by local authorities will enable them to keep public sector rents down. The same advantage is not available to the private rented sector. That is one of the reasons, as was fairly said by the hon. Member for Knowsley, North for the decline in the private rented sector. However, I would argue strenuously with him, here or anywhere else he wishes, that the reason why it has fallen from 50 per cent. to the present 8 per cent. is principally because of the substantial expansion of public housing and because, due to the Rent Acts, it has not been attractive for people who would normally invest in the private rented sector to do so.

The result of these quite dramatic changes is that, far from needing Government help to balance their housing revenue accounts, many councils are now able to generate surpluses on the account. Nowadays, only about 70 authorities, less than one fifth, claim general housing subsidy, yet throughout this time the Government—or, to be precise, the national taxpayer—have continued to pick up virtually the whole of the local rent rebates bill. An authority might be able to make a very healthy surplus on the account, but this one item alone in the account continues to attract almost the whole subsidy. What began in 1972 as a subsidy directed to authorities which needed help, as most then did, has become an unnecessary subsidy paid to authorities which could quite comfortably meet either the whole or a share of the cost of rent rebates without it.

The general point that I make to the hon. Member for Leeds, West is that the whole purpose of introducing a new housing subsidy along the lines that we discussed at length in Committee is to make a fairer distribution to local authorities, principally in the midlands and the north where the hon. Gentleman and I come from, as recognition of the problems that they face with their housing, particularly in the inner city areas.

The effect of the Opposition's new clause would be to remove the local contribution that the hon. Member for Leeds, West mentioned. I can see what he is driving at. He wants to ensure that tenants will not have to make a contribution, even as little as 3 per cent., to the cost of all rebates. I can reassure him about that. I hope to make a statement as soon as possible. I trust that the hon. Gentleman will take comfort from what I have said.

I think that I have demonstrated to all those who wanted to listen that the Government are not doing anything devious. The housing finance package provided for in this part of the Bill is specifically designed to meet the concerns that have been expressed by Opposition Members. They do not like the package. They know that it will be successful. For that reason, I hope that my hon. Friends will reject the new clause.

5.45 pm
Mr. Soley

The last few minutes of the Minister's speech demonstrated his best used-car salesman's approach. It would have warned anybody else off. I can now see why he was given pictures to look at to help him to understand. However, one is supposed to fill in the colours on the pictures according to the numbers. That is what the Minister has not understood. He is totally wrong, and he knows it. That is why he did not deal with the fact that the poor are being asked to subsidise the poorest. Any money in the housing revenue account over and above that which allows the account to break even will be used to subsidise the housing benefit system. In addition to their taxes, people will be paying a subsidy to the poorest. That is where the Minister has got the colours wrong in the picture book. I will give him another picture book for his birthday if he will let me know when that is.

The tenants who will be asked to subsidise the system will have to shoulder a double burden. They will pay a subsidy through their taxes and a subsidy through their rents. The Minister has the audacity to say that he expected rents to be kept reasonably low and that the system is designed to help council tenants who will receive additional help. The statements that the Minister made in Committee about council rents varied from one day to the next. On one occasion he said: A council's rent policies have not caused distortions in the market that affect people's freedom of choice. The next thing that he said was: We have no preconception about the level to which rents should eventually rise. We have no target for council rents. Then he said: We are not seeking to control rents. After that, he said: The purpose of the subsidy will be to enable efficient authorities to provide a good standard of service at a reasonable and realistic rent. However, he never told us what a reasonable and realistic rent would be. He then said again: We are not seeking to control rents. In the background has been the Government's constant commitment—much muted, I concede, in the last 12 months—to market rents. Now they are saying that they do not want market rents because, suddenly, they are embarrassed by them. Yet the Government are pushing council rents towards market rents in all these areas. I shall return in due course to some of those areas because of the incredible mess that the Government have made of presenting the Bill on the Floor of the House.

We have to deal with all the amendments and new clauses in two days. It would be absurd to pursue this matter now to the extent to which it deserves to be pursued, and I readily concede that we pursued it in considerable detail in Committee. The basic principle that the Minister constantly avoids—that the poor are being asked to subsidise the poorest and to do so in addition to what they are already paying through their taxes—leads us to the conclusion that we must press the new clause to a Division.

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

The House divided: Ayes 142, Noes 36.

Division No. 242] [5.48 pm
Abbott, Ms Diane Henderson, Doug
Alton, David Hinchliffe, David
Anderson, Donald Home Robertson, John
Archer, Rt Hon Peter Howarth, George (Knowsley N)
Ashdown, Rt Hon Paddy Howell, Rt Hon D. (S'heath)
Ashton, Joe Howells, Dr. Kim (Pontypridd)
Banks, Tony (Newham NW) Hughes, John (Coventry NE)
Barnes, Harry (Derbyshire NE) Hughes, Roy (Newport E)
Barnes, Mrs Rosie (Greenwich) Hughes, Simon (Southwark)
Barron, Kevin Illsley, Eric
Battle, John Janner, Greville
Beckett, Margaret Jones, Ieuan (Ynys Môn)
Beith, A. J. Kaufman, Rt Hon Gerald
Benn, Rt Hon Tony Kirkwood, Archy
Bennett, A. F. (D'nt'n & R'dish) Leadbitter, Ted
Bermingham, Gerald Leighton, Ron
Bidwell, Sydney Lestor, Joan (Eccles)
Blunkett, David Lewis, Terry
Bradley, Keith Litherland, Robert
Bruce, Malcolm (Gordon) Livingstone, Ken
Buckley, George J. Lloyd, Tony (Stretford)
Callaghan, Jim Lofthouse, Geoffrey
Campbell, Ron (Blyth Valley) Loyden, Eddie
Campbell-Savours, D. N. McAllion, John
Cartwright, John McWilliam, John
Clark, Dr David (S Shields) Madden, Max
Clarke, Tom (Monklands W) Mahon, Mrs Alice
Clay, Bob Maxton, John
Clwyd, Mrs Ann Meacher, Michael
Cohen, Harry Meale, Alan
Coleman, Donald Michael, Alun
Cook, Frank (Stockton N) Michie, Bill (Sheffield Heeley)
Cook, Robin (Livingston) Morgan, Rhodri
Corbyn, Jeremy Morris, Rt Hon A. (W'shawe)
Cousins, Jim Morris, Rt Hon J. (Aberavon)
Cox, Tom Mowlam, Marjorie
Crowther, Stan Murphy, Paul
Cryer, Bob O'Brien, William
Cummings, John Orme, Rt Hon Stanley
Cunningham, Dr John Owen, Rt Hon Dr David
Davies, Rt Hon Denzil (Llanelli) Patchett, Terry
Davies, Ron (Caerphilly) Pendry, Tom
Davis, Terry (B'ham Hodge H'l) Pike, Peter L.
Dixon, Don Powell, Ray (Ogmore)
Dobson, Frank Prescott, John
Dunwoody, Hon Mrs Gwyneth Primarolo, Dawn
Eastham, Ken Redmond, Martin
Fatchett, Derek Rees, Rt Hon Merlyn
Fearn, Ronald Richardson, Jo
Field, Frank (Birkenhead) Robertson, George
Fields, Terry (L'pool B G'n) Robinson, Geoffrey
Fisher, Mark Rooker, Jeff
Flannery, Martin Rowlands, Ted
Flynn, Paul Ruddock, Joan
Foot, Rt Hon Michael Sedgemore, Brian
Foster, Derek Sheldon, Rt Hon Robert
Foulkes, George Shore, Rt Hon Peter
Fraser, John Skinner, Dennis
Garrett, John (Norwich South) Smith, C. (Isl'ton & F'bury)
George, Bruce Smith, Sir Cyril (Rochdale)
Gordon, Mildred Smith, Rt Hon J. (Monk'ds E)
Gould, Bryan Smith, J. P. (Vale of Glam)
Griffiths, Win (Bridgend) Snape, Peter
Grocott, Bruce Soley, Clive
Hardy, Peter Spearing, Nigel
Hattersley, Rt Hon Roy Taylor, Mrs Ann (Dewsbury)
Heffer, Eric S. Taylor, Matthew (Truro)
Wall, Pat Wise, Mrs Audrey
Wallace, James Worthington, Tony
Walley, Joan
Wardell, Gareth (Gower) Tellers for the Ayes:
Williams, Rt Hon Alan Mr. Allen McKay and
Winnick, David Mr. Frank Haynes.
Adley, Robert Forsyth, Michael (Stirling)
Aitken, Jonathan Forth, Eric
Alexander, Richard Fox, Sir Marcus
Alison, Rt Hon Michael Franks, Cecil
Allason, Rupert Freeman, Roger
Amess, David Fry, Peter
Amos, Alan Gale, Roger
Arbuthnot, James Gardiner, George
Arnold, Jacques (Gravesham) Garel-Jones, Tristan
Arnold, Tom (Hazel Grove) Gill, Christopher
Ashby, David Gilmour, Rt Hon Sir Ian
Atkinson, David Glyn, Dr Alan
Baker, Nicholas (Dorset N) Gorst, John
Beaumont-Dark, Anthony Gow, Ian
Bendall, Vivian Greenway, Harry (Ealing N)
Bennett, Nicholas (Pembroke) Greenway, John (Ryedale)
Benyon, W. Gregory, Conal
Biffen, Rt Hon John Griffiths, Peter (Portsmouth N)
Blackburn, Dr John G. Grist, Ian
Blaker, Rt Hon Sir Peter Gummer, Rt Hon John Selwyn
Body, Sir Richard Hague, William
Bonsor, Sir Nicholas Hamilton, Neil (Tatton)
Bottomley, Peter Hampson, Dr Keith
Bottomley, Mrs Virginia Hanley, Jeremy
Bowden, A (Brighton K'pto'n) Hannam, John
Bowden, Gerald (Dulwich) Hargreaves, A. (B'ham H'll Gr')
Bowis, John Hargreaves, Ken (Hyndburn)
Boyson, Rt Hon Dr Sir Rhodes Harris, David
Braine, Rt Hon Sir Bernard Haselhurst, Alan
Brandon-Bravo, Martin Hayes, Jerry
Brazier, Julian Hayhoe, Rt Hon Sir Barney
Bright, Graham Hayward, Robert
Brown, Michael (Brigg & Cl't's) Heddle, John
Browne, John (Winchester) Hicks, Mrs Maureen (Wolv' NE)
Buchanan-Smith, Rt Hon Alick Hicks, Robert (Cornwall SE)
Buck, Sir Antony Higgins, Rt Hon Terence L.
Burns, Simon Hind, Kenneth
Burt, Alistair Hordern, Sir Peter
Butterfill, John Howard, Michael
Carlisle, John, (Luton N) Howarth, Alan (Strat'd-on-A)
Carlisle, Kenneth (Lincoln) Howarth, G. (Cannock & B'wd)
Carrington, Matthew Hughes, Robert G. (Harrow W)
Carttiss, Michael Hunt, David (Wirral W)
Channon, Rt Hon Paul Hunter, Andrew
Chapman, Sydney Irvine, Michael
Chope, Christopher Jack, Michael
Churchill, Mr Janman, Tim
Clark, Dr Michael (Rochford) Johnson Smith, Sir Geoffrey
Clark, Sir W. (Croydon S) Jones, Gwilym (Cardiff N)
Colvin, Michael Jones, Robert B (Herts W)
Conway, Derek Jopling, Rt Hon Michael
Coombs, Anthony (Wyre F'rest) Kellett-Bowman, Dame Elaine
Coombs, Simon (Swindon) Key, Robert
Cran, James Kilfedder, James
Davies, Q. (Stamf'd & Spald'g) Knapman, Roger
Day, Stephen Knight, Dame Jill (Edgbaston)
Devlin, Tim Knowles, Michael
Dickens, Geoffrey Knox, David
Douglas-Hamilton, Lord James Lang, Ian
Dover, Den Latham, Michael
Dunn, Bob Lawrence, Ivan
Durant, Tony Leigh, Edward (Gainsbor'gh)
Dykes, Hugh Lennox-Boyd, Hon Mark
Eggar, Tim Lester, Jim (Broxtowe)
Emery, Sir Peter Lightbown, David
Fairbairn, Sir Nicholas Lilley, Peter
Favell, Tony Lloyd, Sir Ian (Havant)
Field, Barry (Isle of Wight) Lloyd, Peter (Fareham)
Finsberg, Sir Geoffrey Luce, Rt Hon Richard
Fishburn, John Dudley Macfarlane, Sir Neil
Fookes, Dame Janet MacKay, Andrew (E Berkshire)
Forman, Nigel Maclean, David
McLoughlin, Patrick Speller, Tony
McNair-Wilson, Sir Michael Spicer, Sir Jim (Dorset W)
McNair-Wilson, P. (New Forest) Squire, Robin
Madel, David Stanbrook, Ivor
Mans, Keith Stanley, Rt Hon Sir John
Marlow, Tony Steen, Anthony
Marshall, John (Hendon S) Stevens, Lewis
Marshall, Michael (Arundel) Stewart, Andy (Sherwood)
Martin, David (Portsmouth S) Stokes, Sir John
Maxwell-Hyslop, Robin Stradling Thomas, Sir John
Miller, Sir Hal Sumberg, David
Mills, Iain Summerson, Hugo
Mitchell, Andrew (Gedling) Tapsell, Sir Peter
Moate, Roger Taylor, Teddy (S'end E)
Montgomery, Sir Fergus Tebbit, Rt Hon Norman
Morris, M (N'hampton S) Temple-Morris, Peter
Mudd, David Thompson, D. (Calder Valley)
Nicholls, Patrick Thompson, Patrick (Norwich N)
Nicholson, David (Taunton) Thorne, Neil
Norris, Steve Thornton, Malcolm
Onslow, Rt Hon Cranley Thurnham, Peter
Page, Richard Townend, John (Bridlington)
Paice, James Townsend, Cyril D. (B'heath)
Patnick, Irvine Trippier, David
Pawsey, James Twinn, Dr Ian
Peacock, Mrs Elizabeth Vaughan, Sir Gerard
Powell, William (Corby) Waddington, Rt Hon David
Price, Sir David Wakeham, Rt Hon John
Raison, Rt Hon Timothy Waller, Gary
Riddick, Graham Walters, Sir Dennis
Ridley, Rt Hon Nicholas Ward, John
Ridsdale, Sir Julian Wardle, Charles (Bexhill)
Rifkind, Rt Hon Malcolm Watts, John
Rost, Peter Wells, Bowen
Rumbold, Mrs Angela Wheeler, John
Sackville, Hon Tom Widdecombe, Ann
Scott, Nicholas Wilkinson, John
Shaw, David (Dover) Winterton, Mrs Ann
Shaw, Sir Giles (Pudsey) Winterton, Nicholas
Shaw, Sir Michael (Scarb') Wood, Timothy
Shelton, Sir William Woodcock, Dr. Mike
Shephard, Mrs G. (Norfolk SW) Yeo, Tim
Shepherd, Colin (Hereford) Young, Sir George (Acton)
Shepherd, Richard (Aldridge) Younger, Rt Hon George
Shersby, Michael
Sims, Roger Tellers for the Noes:
Smith, Sir Dudley (Warwick) Mr. Michael Fallon and
Smith, Tim (Beaconsfield) Mr. David Heathcoat-Amory.

Question accordingly negatived.

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