INCREASE OF RENT AND MORTGAGE INTEREST (WAR RESTRICTIONS) BILL. (Hansard, 21 December 1915)

§ THE MARQUESS OF LANSDOWNE
My Lords, during the last few months your Lordships have agreed to a great mass of legislation intended to meet the exceptional conditions, industrial, economical, and financial, which have arisen and are bound to arise during the progress of a great war. This exceptional legislation and the Proclamations and Orders in Council which have been issued in connection with it are collected in volumes which appear from time to time, and I think there are no less than four such volumes which your Lordships have probably seen. These Statutes abound in provisions of the most unorthodox description, provisions which would shock us profoundly if we were living in ordinary times, but which we accept because we 770 regard them as inevitable and also because they are temporary in their application.
This Bill adds another to the long series of measures of this kind. It is intended to meet a situation of considerable difficulty and one which I have no hesitation in saying might easily become acute if it were neglected. I can describe that situation in a very few sentences. Complaints have reached His Majesty's Government from time to time that the occupiers of small dwelling-houses inhabited by the working classes were being subjected to pressure for an increase of rent, and that the consequences of this demand might, if it proceeded much further, become serious. This was the case mostly in districts which we commonly describe as munition areas. Our inquiries went to show that this demand for an increase of rent was by no means universal, and I should be sorry indeed to suggest that the owners of house property of this kind are generally either avaricious or wanting in patriotism; but the fact remains that in some neighbourhoods there have been, owing to exceptional movements of the population, a great influx of workers, a great shortage of house accommodation, and consequently a wholly abnormal competition for houses. The temptation to the owners has been very great, and their appetite has not unnaturally been whetted by the knowledge that very high wages were being received by a number of the people who occupied their premises. Your Lordships will not have forgotten that even before the war there was a very perceptible shortage of house accommodation of this kind, and I need not add that while the war has been in progress the normal addition to house accommodation of this sort has been interrupted partly owing to the high price of materials and partly owing to the dearness of money.
The general result of our investigations was to satisfy us that there was a real grievance. We also ascertained that this process of rent raising to which I refer was not taking place only in the case of districts where there had been a great increase in the rate of wages, and to that I think one might add that any unrest occasioned by circumstances of this sort was bound to be aggravated by the somewhat unusual atmospheric conditions which prevail at the present time, the general feeling of excitement and nerve tension 771 which is inseparable from the events through which we are passing. In these circumstances we came to the conclusion that it was necessary to do something to relieve the occupiers of house property of this kind in regard to their liability for rent. But it became obvious that it was not possible for us to deal with the liability of the occupiers alone, and that if we touched the liability of the occupiers it was also necessary to do something in regard to the liability of the Owners of the houses in question. These houses have very often been built or bought with borrowed money, and I think it is obvious that it would be inadequate and insufficient to afford protection to the working man who lived in a dwelling of this sort and to give no protection to the person who had built the house and who was liable for interest on the loan out of which the house had been built. We therefore determined that if we were to protect the tenant against the owner of the house it was also necessary to protect the owner of the house against the mortgagee.
On this basis and with this object we propose under this Bill to fix for the occupier what is described as a standard rent, that rent being the rent which was paid before August 3, 1914, and to fix for the owner a standard rate of interest, that being the rate of interest which he was charged before the same date. We enact under this Bill that if the rent charged exceeds the standard rent the excess rent shall not be recoverable in a Court of Law, and in the same way we enact, in the case of interest on a mortgage, that any rate of interest above the standard rate shall not be recoverable and that the mortgagee may not foreclose his mortgage upon the premises—that is, so long as the standard rate of interest is paid. This is no doubt a somewhat rough-and-ready way of dealing with the difficulty, but it seemed to us that it was upon the whole the most convenient mode, and that it was simpler and more likely to achieve the desired result than any attempt to set up investigation in individual cases by means of courts authorised to determine in each case what was a suitable rent for the premises or what was an appropriate rate of interest for the mortgage. That is the real substance of the Bill; you will find it described in nine or ten lines in the first clause. The remaining provisions of the Bill are really ancillary to that main 772 provision and deal mostly with matters of detail.
There is one criticism which may possibly be directed at this measure as to which I might, perhaps, say a word in passing. We may be asked, if we are going to prevent the owner of a house from charging more than a certain rent for that house, and if we are going to prevent a mortgagee from charging more than a certain rate of interest for his mortgage, why we should leave the occupant, the working man who inhabits the premises, alone and leave him free to charge what he pleases for his own labour? It might be put in this way, "If you are going to have a standard rent and a standard rate of interest why should you not have also a standard rate of wages?" I think it must be perfectly obvious to anybody who will give the matter a moment's thought that to interfere in the way in which we interfere with rents and rates of interest is a very different thing from attempting to interfere with wages. The question of wages is infinitely more complex. You find yourself face to face with problems as to the value of the labour which the man renders in respect of his wages; you find yourself called upon to look into the purchasing power of the money which the man receives. All these create difficult problems. But apart from that there is also this fundamental difference between the two cases. As long as you are dealing with rents and with rates of interest you have a perfectly simple remedy ready to your hand. You enact that the excessive rent or the excessive rate of interest is not to be recoverable in a Court of Law. But when you come to wages it is impossible for you to fix a rate and then say to the man "You must work at that rate of wages." Nor, again, if yon could make him work could you exercise any control over the output of labour which he produced. But this question of the position of the wageearner has certainly not been lost sight of by us. We fully realise that nothing could be more disastrous at the present time than a general demand on the part of the working men of this country for an all-round increase of wages. It would be not only disastrous, but it would be futile. The demand would be justified on the ground that prices had risen. If you granted an increase of wages, the effect would immediately be that prices would rise again. Thereupon would follow another 773 demand for a further increase of wages, followed of course by a further rise of prices, and so you would go on working in a vicious and interminable circle.
We have endeavoured to touch at any rate the fringe of this important problem at two points. Your Lordships will not have forgotten the provisions contained in the Munitions Act, and I think in other Acts of the same kind, for dealing with labour differences between masters and men in controlled industries. Those provisions concern increases in rates of wages and alterations in the hours of work and in the conditions of labour; and they certainly have a very important bearing upon this question of the liberty of the working man to demand improved terms. But apart from that we have kept in view the necessity for doing all in our power to remove the causes which have acted, and are likely to act, as incentives to further demands for improved wages. This Bill by itself, by dealing with the question of house rents, takes away one of those incentives, and the legislation to which reference has been made already this evening in regard to what we speak of as "war profits" is another step of the same sort. Probably there is nothing which has contributed more to render the working men of this country dissatisfied and discontented than their suspicion that enormous profits were being made by their employers and that they themselves did not get a reasonable share of those profits. I do not think it is too much to hope that the working men of this country, saved by this Bill from excessive demands on account of rent and reassured by other legislation in regard to this question of war profits, will hesitate before they take any steps to restrict the output of their labour or plunge this country into the disasters of an industrial war.
There are other points in the Bill which are of interest but which are mainly matters of detail, and of which I need not say much. With regard to the scope of the measure, when it was originally introduced we proposed that it should be applied by Order in Council to certain limited areas which could properly be described as populous areas and in which there was a dearth of houses distinctly traceable to the war. We found, however, that the complaints about rent raising were general, and that it was impossible to describe what 774 I suppose I might call a scientific. frontier around the areas where special protection was really indispensable. The Bill, therefore, applies to the whole country, but it is limited in its application to houses of which the rent or rateable value is in London under £35, in Scotland under £30, and elsewhere under £26. There are subsections dealing with various cases in which exceptions have to be made in regard to the application of the Bill, notably, for example, in regard to cases where the owner of the premises has during the war spent money upon their structural improvement. In such cases we propose that the owner should be allowed to charge rent over and above the standard rent but not exceeding 6 per cent. upon his outlay. There is a similar exception in a subsection under which, in the case of premises where the owner is liable for the rates, he is allowed to add to the standard rent such a proportion of the rates as is properly chargeable to the premises in question. I do not think I need say more as to the provisions of the Bill. I will only add this observation, that it was debated at great length on four separate occasions in the House of Commons, that the discussion was a perfectly good-humoured one, and that not a single Division was taken upon any of the clauses of the Bill. We are extremely anxious that it should become law as soon as possible, and if your Lordships will give your permission to take the Committee stage to-morrow and to pass the Bill through its remaining stages on that day we shall be extremely grateful.

§ EARL ST. ALDWYN
My Lords, my noble friend correctly described this measure as unorthodox and only justified by the circumstances in which we are at present placed. I hope it will not be taken in any way as a precedent for future legislation when the war is happily over, because it is one of the strongest interferences with private contract that it is possible to conceive. For the present I agree that some such measure as this is necessary with regard to the small dwelling-houses inhabited by the working classes, but there is one point in the Bill to which my noble friend very briefly alluded but to which I should ask the careful attention of His Majesty's Government.
775 The noble Marquess told us that this Bill applied to houses in London of £35 value, in Scotland £30, and elsewhere £26. I suppose that a house of £35 value in London would not be above the limit of value which might be occupied by members of what we call the working-classes—those, in fact, who are in receipt of weekly wages. But when you come to the rural parts of the country there is no such person certainly occupying a house at anything like £26 in value. Persons who occupy houses of that value in rural districts are persons of fairly high social position. There are many farm houses occupied by large farmers which are not assessed above that rate. It is not really beyond the scope of the Bill that it should be made applicable to houses of that kind, and the fact that it is made applicable might have an effect which I am sure is not contemplated by those who framed the Bill. If my noble friend will look at subsection (4) of Clause 2 he will see—this is in the case of mortgages—that the Bill would not apply "to any mortgage comprising one or more dwelling-houses to which this Act applies and other land if the rateable value of such dwelling-houses is less than one-tenth of the rateable value of the whole of the land comprised in the mortgage." That is obviously intended to exempt from the Bill mortgages on what are ordinarily known as landed estates. But if you place the value of the house so high as £26, I think you will find that a good many country estates will come under the scope of the Bill although there is no reason whatever for bringing them under it.
My main point is this, that a house of £26 value in a rural district ought not to come within the scope of the Bill at all. You ought to adopt something like the plan of the old Composition for Rates Act, and have a much lower value than £26 applicable to rural districts. I would suggest £12 for rural districts. I do not believe you will find a single person in receipt of weekly wages in an agricultural district in the country occupying a house above that value. I hope this will be carefully considered by His Majesty's Government, because I need not say that the whole scope of the Bill shows that it is intended to apply only to the working classes, and that was the gist of the speech of my noble friend. Why you should bring in persons of a much higher social status I do not understand, unless you 776 make it general and applicable to all. I will place an Amendment on the Paper, and perhaps my noble friend will consider the point before to-morrow.

§ THE MARQUESS OF LANSDOWNE
I will have the matter looked into. In the meanwhile I will endeavour to ascertain how the figure of £26 was arrived at.

§ EARL ST. ALDWYN
I think it was arrived at, as sometimes happens in Parliament I am sorry to say nowadays, without the slightest consideration for the rural districts. Those who framed this Bill—although I am bound to say I am surprised at it in regard to my right hon. friend Mr. Walter Long—did not take the rural districts into consideration at all, only the towns.

§ THE MARQUESS OF LANSDOWNE
I imagine that what this Bill is intended to relieve is the kind of thing you find occurring, not in rural districts, but in urban districts.

§ EARL ST. ALDWYN
Yes, I should think so.