§ LORD STRACHIE rose to ask the Parliamentary Secretary of the Ministry of Health whether the Government are supplying materials for building houses under their market value; further, on what principle, if any, the Ministry of Health are sanctioning the rents to be paid for houses built by local authorities under the housing schemes; and to move for Papers.
§ The noble Lord said: My Lords, the Question that I have on the Paper is addressed to the Ministry of Health. I understand that the representative of that Ministry in this House, Viscount Astor, is absent, and is not likely to be here again during the remainder of this session. It is therefore of no use my deferring the Question. We all regret the noble Viscount's absence in America, and the cause of it.
§ The first part of my Question relates to the matter of building materials. I have been informed that as regards those houses which are being built by local authorities under contract under the Housing Act, the Government supply materials to those contractors considerably under cost price. I have been given two 692 cases. I am, of course, unable to give the name of my informant, because it would probably go very hard indeed with him and he would never get a contract again if his name were made public. I may say, however, in absolute confidence, that the information can be relied upon. I have investigated the point myself. I am told that under a certain contract bricks are being supplied by the Government at from 78s. to 80s. per thousand, whilst at this very moment and in that particular place those bricks can only be obtained in the open market at 90s. per thousand, showing that there has been a large reduction made in favour of reducing the cost of the houses in question. Then again as regards casements. The charge made by the Ministry is 50s. whereas the actual cost, if bought in the open market, would have been from 80s. to 90s
§ I do not know whether the noble Viscount who will answer for the Government will say that the reason why bricks can be sold at from 78s. to 80s. at the present moment, although they are worth 90s. in that particular place, is that the Government some years ago accumulated a large number of bricks at a much lower price than they can be obtained at the present moment, and are therefore giving the benefit of that bargain to those contractors. But although that may be all right, and is only taking it out of one pocket and putting it into another, it is rather deceptive as regards the actual cost of the buildings, which are more expensively put up and at much too high a price for these small cottages, which used to be built for £300.
§ With regard to the second Question, relating to the principle on which rents of houses built by local authorities are sanctioned, I have not so far seen any statement as to what that principle is, and I think that it would be very interesting to know. Is it a principle of this sort? When they want to arrive at an economic rent, do they simply fix that rent upon two-thirds of the cost of the house—that is to say, if a house cost £1,000 would they treat it as if it cost only two-thirds of that amount, and write off one-third as a dead loss, not charging it in the rent? Taking a house which cost £1,000, and allowing for all the outgoings, such as repairs, rates and taxes, and interest on the money borrowed to erect the house, it could not be let for 693 less than £75 a year, so that if they are doing what I have imagined and charging only two-thirds it would mean that the rent charged is £50 a year. What would happen in those cases where the local authorities say it is impossible to get the rent which the Government consider ought to be paid by the would be tenants? Do they in those cases say "Very well, we are going to let this house even at a less figure than two-thirds of the economic rent"?
§ I have some figures here which were obtained by the Rural District Councils Association, showing what is being done. I take the case of the Rural District Council of Crowmarsh. They let parlour houses to agricultural labourers at 9s. per week exclusive of rates, and non-parlour houses at 8s. exclusive of rates. These houses have cost from £1,002 to £1,064. In Wallingford parlour houses for agricultural labourers are let at 8s. or ls. less than at Crowmarsh, and non-parlour houses are also let at ls. a week less. It might be thought that these houses in Wallingford were let at the cheaper rate because they happen to have been built more cheaply, but that is not the case at all. The houses in Wallingford were built at a cost of from £1,002 to £1,082, and, as far as I am aware, wages of agricultural labourers under the Wages Board in this particular area are exactly the same as they are in Crowmarsh.
§ Then, it seems that there is some differentiation as regards the particular employment, and I should like the noble Viscount (Lord Sandhurst) to tell me if that is a principle which the Ministry follow. Do they consider the income of the man occupying the house and what his employment is, and then say they will fix the rent, not at the value of the house, but according to what the tenant can pay. It is interesting to find that in Wallingford, where 8s. is charged for houses let to agricultural labourers, the rent of houses in the same area let to Ordnance Depot men and Great Western railway men is 12s. 6d. per week. In the Rural District Council area of Yeovil in Somerset also they charge 13s. a week for parlour houses which have been erected at the comparatively small sum of £722. So you get in one area a house which cost £1,000 or more let at 8s. a week, and in another area one that cost £722 let at 13s. a week. I notice that in the same area of Yeovil 694 l9s. a week is charged for parishioners and 13s. a week for non-parishioners.
§ As far as these returns go it looks as if the Ministry of Health act upon no principle at all, for I have been given to understand that these rents are actually sanctioned by the Ministry of Health. It seems to me curious that a house is not let at its economic value and that it should be let according to the income of the tenant. In the case of a mining area I suppose you might charge 10s. or 15s. or even £1 a week, but if it is an agricultural area you must not charge more than 7s. or 8s. a week.
§ I have put down a Motion for Papers, not as a matter of form but because I am anxious to get a Return showing the exact principle upon which these rents are fixed in the different areas. I am going to ask for a Return showing rents approved by the Ministry of Health for houses erected by local authorities under the Housing Act, stating upon what principle such rents are fixed for such houses, either as regards the cost of such houses or the employment of the tenants. I beg to move.
§ Moved, That there be laid on the Table of the House a Return showing rents approved by the Ministry of Health for houses erected by local authorities under the Housing Act, stating upon what principle such rents are fixed for such houses, either as regards the cost of such houses or the employment of the tenants.—(Lord Strachie.)
§ VISCOUNT SANDHURSTMy Lords, I sympathise with my noble friend in what he said with regard to the absence of the Parliamentary Secretary, Viscount Astor, for reasons which we all deplore. I will do my best to answer the Question, but I am afraid I shall not be able to enter in detail into the various comparisons to which my noble friend alluded.
With regard to the first part of the Question, in order to secure that material should be available for housing schemes and with a view to obtaining for local authorities the advantage of bulk prices, the policy was adopted of purchasing materials in advance and in large quantities for distribution to housing schemes. At the close of the war the position in regard to various materials such as bricks was that production had fallen very seriously. Orders were placed with a view to stimu- 695 lating production and to avoid shortage of material in the carrying out of work. Contracts have been negotiated direct with manufacturers and trade associations, and prices have been obtained which are generally lower than those quoted to the outside trade. In the case of forward deliveries these prices are subject to sliding scale increases following rises in cost of fuel or wages. In addition to forward contracts the Department holds certain stocks of bricks, slates, and doors which have been bought from time to time during the past 18 months at prices below the then current rate.
The materials dealt with by the Department comprise bricks, slates, tiles, drain pipes, sanitary ware, cement, light castings (baths, ranges, and stoves, etc.), cisterns, water fittings, ironmongery, and glass. These materials are supplied principally for housing schemes being carried out by local authorities and public utility societies. Private builders carrying out housing schemes, such as those assisted by the subsidy to private persons, are supplied where the Department hold actual stocks or where manufacturers agree to supply on the Department's special terms. The prices charged to local authorities and others are the actual cost to the Department, plus expenses such as the cost of organisation. No profit is sought, but the whole of the cost is borne by the Assisted Housing Scheme Accounts of the local authorities or by public utility societies.
The noble Lord also asks on what principle, if any, the Ministry of Health is sanctioning the rents to be paid for houses built by local authorities under the housing scheme. The rents charged for houses erected by local authorities are fixed in accordance with conditions prescribed in the Regulations made under the Housing Act. These Regulations require that in fixing the initial rents regard shall be had to (a) the prevailing rents in the locality for similar houses; (b) additions authorised by the Rent Restriction Acts; (c) additional amenities of the new houses; and (d) the class of tenant for whom the houses are provided. For the protection of the taxpayer it is provided in the Regulations that the Minister of Health may, if the rents actually charged by a local authority are in his opinion insufficient, make deductions from the Exchequer subsidy payable to the local authority.
696 Where dispute arises between the Minister of Health and a local authority as to the rents to be charged, it is provided by the Regulations that the matter shall be referred to a special tribunal constituted under the Regulations. This tribunal consists of two members nominated by the Minister of Health, one member nominated by the Association of Municipal Corporations, and one member nominated by the Urban District Councils Association and Rural District Councils Association jointly, with a chairman appointed by the members so nominated. As a working arrangement it has been settled that the Urban and Rural District Councils Associations shall each suggest one member, and that the urban member shall sit when urban cases are under consideration and the rural member when rural cases are to be decided.
My noble friend has moved for Papers, and has suggested that he wishes to ask for a particular Return. I think he will understand that I am hardly in a position to say whether that Return can be given. At the same time I will make inquiries, and I shall be very glad to communicate with him at once in order that he may decide what course he would then like to take.
§ LORD STRACHIEI am much obliged to the noble Viscount for the full reply he has given. I very gratefully accept his proposal that he will go into the question to see if some Return can be given.
§ Motion, by leave, withdrawn.