HOUSING BILL

HL Deb 14 July 1952 vol 177 cc1019-42

4.6 p.m.

Order of the Day for the Second Reading read.

THE LORD PRESIDENT OF THE COUNCIL (LORD WOOLTON)

My Lords, the main purpose of the Housing Bill which is now before your Lordships' House is to authorise increased subsidies for housing as a consequence of the various increases in costs that have arisen since the last authority was given. But the opportunity has also been taken to amend existing legislation with a view, first, to enabling what are commonly known as "tied" cottages inhabited by agricultural workers to qualify for subsidy under certain conditions; and, secondly, to facilitating the sale of houses by local authorities, again under prescribed conditions. I think the most convenient procedure will be for me to deal separately with these three aspects of the Bill.

The proposals for increased housing subsidies are contained mostly in Clause 1 of the Bill. As your Lordships will be aware, the general standard subsidy for the ordinary house has for many years been based on a system of a unit grant and assessed by reference to national average costs. Under the Act of 1946 introduced by the previous Government the subsidy was made by reference to the estimated cost of a standard three-bedroom house of typical size, the cost being assumed to be £1,100—I am afraid that the rest of my speech will sound rather like a balance sheet but it is my duty to put before your Lordships these figures. The amortisation charges on this sum of £1,100, spread over sixty years and calculated at the then prevailing interest of 3⅛ per cent., amounted to £40 14s. 0d. a year. To this was added £7 8s. 0d. for supervision, repairs and management, making a total annual charge of £48 2s. 0d. In relief of this charge it was assumed that a rent of 10s. per week, exclusive of rates, could fairly be credited; and the balance of cost was divided between Exchequer subsidy and the rate subsidy in the standard proportions of three to one, to give the figures of £16 10s. 0d. from the Exchequer and £5 10s. 0d. from the rates, payable annually in each case for the period of sixty years. This was the statutory minimum contribution from the rates.

The subsequent annual reviews of this subsidy arrangement under the Statute showed that there was a steadily rising figure of capital cost; and it was later agreed that a figure of £10, instead of the £7 8s. 0d., should be included in the calculations for supervision, management and repairs. No increase in the subsidies was, however, allowed, and, consequently, the calculations had to be balanced in these later reviews by assuming a figure for rent steadily rising above the original figure of 10s. per week. When the present Government took office they announced, as part of their general review of the finance of housing, the increase in the interest rates payable by local authorities to the Public Works Loan Board. They announced their decision to bring forward and start immediately the annual review of the factors involved in this calculation that I have put before your Lordships. In this review, which was, as usual, taken in co-operation with the local authorities, it was agreed that the standard house under the old designs now cost about £1,575. Furthermore, the figure of £10 per annum for supervision. management and repairs, was now inadequate, and a figure of £12 has been substituted, with the consequential amendment proposed in subsection (3) of Clause 1 of the Bill, so as to provide that the minimum annual contribution to the Housing Repairs Account shall be £8 per house, instead of £4, the remaining part of the £12—that is £4—being for supervision and management.

However, to set against these increases in costs it is hoped to secure savings in capital expenditure by new designs for the houses along lines first developed by the previous Government and actively pushed forward by the present Government. These will secure some valuable savings in the cost of the houses, without any diminution in the size of the rooms and without any abandonment of what are regarded as essential standards. The savings to be made in this way by new designs and strict economy in layout, and by economy in the fitments of these houses, are put by the Minister of Housing at a figure of £50. This is a very modest deduction; it has been kept at this low figure in order to provide a margin against error or subsequent alterations in any of the factors of the calculation. To amortise the sum of £1,525 over sixty years at the current rate of 4¼ per cent. requires loan charges of £70 19s. 3d. per annum to which, as I indicated a moment ago, must be added £12 for supervision, management and repairs.

The next and most important question is the figure of rent which is to be credited against this sum. In 1946, as I have already mentioned, a rent of 10s. per week was assumed, but this had steadily to be increased at subsequent reviews, until at the time of the last review of the previous Government, in May, 1951, it amounted to 16s. This assumed rent is called a notional rent: I gather it is a rent that nobody pays; it is merely an assumption used as a basis for calculating these subsidies. The actual rent is not determined by this Bill or by Parliament but by the local authority. We accept the same principle as has been assumed before. We assume, for the purposes of our calculations, that the rent must continue to rise and we assume that the tenant must be prepared to accept his proper share of these increased charges. The rent credited in this calculation now reaches a figure, for a notional rent, of 18s. per week instead of 16s. per week.

We start, therefore, with an annual charge of £70 19s. 3d. required to amortise the capital cost of the house, plus £12 per annum for supervision, management and repairs, giving a total of £82 19s. 3d. From this we deduct the annual receipt from rent at 18s. per week, leaving a balance of £35 12s. to be shared by the Exchequer and the rates in the proportion of three to one. This gives the figures contained in Clause 1 (1) (a) and Clause 1 (1) (c) of the Bill before your Lordships—namely, an Exchequer subsidy of £26 14s. and a rate subsidy of £8 18s., making a total of £35 12s.

LORD SILKIN

Can the noble Lord say what is the assumed rate of interest in these calculations?

LORD WOOLTON

I did I said that it was 4¼ per cent. I hope that I have made clear—certainly I have made them as clear as I can—the financial provisions of the Bill. Provision is also made for corresponding increases in the subsidies for flats on expensive sites, and details are given in the Schedule that your Lordships will see in the Bill. The extra subsidy payable for houses built on expensive sites—that is to say, sites costing more than £3,000 per acre when developed—has also been recalculated, and on a more generous basis, but it assumes a density of fifteen houses to the acre, whereas I think the previous assumption was that the density would be twenty-two and a half houses per acre.

I should call your Lordships' attention to paragraph (b) of subsection (1) of Clause 1. This increases from £25 10s, to £35 14s. the special standard allowance from the Exchequer for houses built by a county district to meet the requirements of the agricultural population. But payment of the special standard amount will no longer be automatic: it will be at the discretion of the Minister. The old subsidy was introduced when the agricultural industry was less flourishing than it is now, and it was primarily intended to give relief to the tenant by means of a lower rent. But returns obtained from local authorities showed that about half of them did net pass on to the tenant this relief. Your Lordships will be aware that this fact led to some comments by the Public Accounts Committee in the Session of 1948–49, following which the Government undertook to review the arrangement is at the first opportunity. The new discretionary subsidy is designed for a different purpose—namely, to assist in meeting the extra costs of providing houses in small groups, in isolated areas, for the needs of the farming community. The exercise of the discretion will be the subject of an administrative scheme agreed between the Ministry of Agriculture and Fisheries and the Treasury. Indeed, a draft scheme for the operation of this subsidy has been put to the Rural District Councils Association and the County Councils Association.

I come now to Clause 2, which raises the problem of the tied cottage. As your Lordships know, since 1938 a subsidy of £15 a year for forty years has been payable in respect of houses built for the agricultural population by persons other than local authorities. But the last Government, under the Housing (Financial and Miscellaneous Provisions) Act of 1946, excluded from these arrangements cottages which were occupied under a contract of service—what we call tied cottages. Clause 2 of the Bill withdraws this limitation, and at the same time provides that such cottages shall be eligible, under Section 23 of the Housing Act, 1949, for grants for the improvement of existing cottages, if occupied (I quote the words of the Act) "by members of the agricultural population," which is different from "agricultural workers."

The tied cottage question is, I know, a matter of some political difference between the two sides of the House, but the Government are anxious to use every means to increase the number of houses available for the people, and we consider that the tied cottage should be allowed to qualify for Government assistance. But in response to representations made in another place my right honourable friend the Minister of Housing and Local Government inserted in the Bill the provisions now contained in subsections (3) to (5) of Clause 2, making it a condition of Exchequer grant that the recipient permits the occupant of a tied cottage to continue in occupation for not less than one month after the termination of his contract of service. This arrangement is in line with the ordinary decent code of good conduct practised by land owners and farmers, and I hope that your Lordships will regard it as a reasonable middle course in an otherwise controversial question.

EARL JOWITT

May I ask the noble Lord a question? I do not pretend to be familiar with this subject, and his explanation has been very clear. But I should like to ask what would happen, supposing a member of the agricultural population, in respect of whom a subsidy is granted, no longer resides in the cottage and somebody who is not a member of the agricultural population comes in. What effect will that have? Assuming that the cottage is no longer used for agricultural purposes, and that somebody else comes and lives there, what effect will that have on the subsidy in the past and the subsidy in the future?

LORD WOOLTON

May I speak with a certain reservation on this point?—it is a latitude a Minister always has when dealing with somebody else's Bill. Regarding the past, I think that it makes no difference, because the subsidy is an annual subsidy and the house has been occupied by a person engaged in an agricultural pursuit; but in the future the subsidy will cease and any grant will be forfeited. I believe that I am right in that interpretation.

I come now to Clauses 3 and 4 which deal with the disposal of houses by local authorities. Under the existing law, local authorities have the power, with the consent of the Minister of Housing and Local Government, to sell or lease their houses. But from 1945 onwards the previous Administration have followed the policy, which they announced, of refusing consent to any such sales or letting. Perhaps on this issue we are not agreed, but we think that local authorities should be allowed to make use of this power if they wish to do so, and if the tenants wish to purchase the houses they occupy, provided—and I lay special stress on this—that the terms and conditions of the disposal are equitable and appropriate to the prevailing conditions.

I think that probably we in this House shall be generally agreed that there is much social advantage in the ownership of property by the individual, and that the purchase of his house is the finest form of saving which a family man can make. At any rate, I personally feel very strongly that this is a form of saving and investment which should be encouraged. Not only is house purchase advantageous to the individual, but I would draw your Lordships' special attention to the fact that it relieves the State of a long-term subsidy liability in respect of housing for people who can, in fact, financially afford to buy their Louses. The existing statutory provisions in the Housing Acts need to be amended, however, because they require that the local authority, if it sells the house, must do so at the best price reasonably obtainable. It is clearly undesirable that local authorities should be required to exact the scarcity price in houses which has prevailed in recent years, though of course, on the other hand, they must be precluded from making sales at too low a figure. Clause 3 therefore repeals the existing requirement, and enables a local authority to sell with the consent of the Minister, which may be given generally or in relation to a particular house or houses.

This power to sell at a price which is reasonable but is below the market price of a scarcity demand must not be used to enable purchasers to buy council houses at fair prices, and then to sell them at scarcity prices. Accordingly, the clause provides that in making any such sale the local authority can limit the price at which the house may be sold, or the rent at which it may be let, during any period not exceeding five years from the date of the sale. This rent becomes the standard rent for the purpose of the Rent Restrictions Acts. The clause further gives the local authority power to reserve to itself a right of pre-emption during that period of five years in the event of the purchaser wishing to sell the house. A draft circular explaining a provisional scheme of arrangements under the clause has been discussed with representatives of the local authority associations. It is intended to give them a wide discretion to sell, and an equally wide discretion as regards the price at which they may sell, provided that this is not below a reasonable minimum, and provided also that the measures against profiteering are included as a condition of sale. My Lords, I hope that I have said enough, without trespassing unduly on your time, to commend this Bill to you. Its primary purpose is to enable the municipal housing programme to proceed without an undue burden on the tenants or on the rates. On this I do not think there will be any disagreement among us. I now commend this Bill to your Lordships for a Second Reading.

Moved, That the Bill be now read 2ª.—(Lord Woolton.)

4.29 p.m.

LORD SILKIN

My Lords, I am sure the House will be grateful to the noble Lord for the very clear way in which he explained this somewhat complicated measure, and particularly for the interesting figures that he gave us showing how the subsidy has been calculated. Of course, the origin of this Bill is to be found in the increase it interest rates: but for that, it is doubtful whether this Bill would have been introduced at all. Its primary purpose is to make good to the local authorities the burden which will fall upon them, in view of the increase of interest rates on borrowing, from 3⅛ per cent., on which the previous subsidy had been calculated, to the present rate of 4¼ per cent. Indeed, on February 19 last the Minister actually said that he would make good to the local authorities the whole of the increased cost to them caused by the new rate of interest. He was asked specifically: (OFFICIAL REPORT, Commons; Vol. 496, Col. 26) Are we to understand that the increase in the housing subsidy is guaranteed to be sufficient to cover the whole increased cast to local housing authorities of the new rate of interest? and his answer was: Yes, Sir. When he was pressed by Mr. Douglas Jay, he said: I have answered perfectly straightforwardly the question put to me. The answer is 'Yes, Sir'. Of course, this Bill does not provide anything of the kind. The cost of the increased interest is being shared between the Exchequer and the focal authorities. It may be that the Minister was somewhat over-optimistic about what he could persuade his right honourable friend the Chancellor of the Exchequer to allow in the way of making good the cost of increased interest. However, I have no quarrel with the actual amount of the subsidy. It has been calculated on the same principles as were followed by the previous Government. I understand that it satisfies the local authorities—in so far as it is possible to satisfy them at all. At any rate, no serious complaint about the amount of the subsidy was made in another place, and therefore it is not for me to make any complaint about it now. But I do want to place on record that the Bill does not do what the Minister purported to do—that is, make good to the local authorities the whole of the increased cost attributable to the increased rate of interest.

There are a number of comments that I should like to make on the subsidy. The first is that it is, as the noble Lord agreed, one of the by-products of the increase in the bank rate; and it is an extraordinary thing that, having increased the bank rate, it is then necessary for the Government to cushion the local authorities against the effects of the increase. But in any case there is no doubt that the effect of the increased bank rate will be to increase the rates. The Exchequer contribution at the minimum is increased by £3 3s. 0d. per annum per house for sixty years. That is in respect of housing: there is no corresponding increase in subsidy in respect of other local government services, such as education and so on, and in those cases it will be for the local authorities to shoulder the whole of the increased burden. It is a remarkable reflection on the Government's financial policy that they should, on the one hand, be reducing the subsidy on food and on the other, be increasing the subsidy on housing. Whilst the Government are getting the better of the bargain—because they are saving £150,000,000 a year on the food subsidies and increasing the housing subsidy by a figure which is very much less—nevertheless, that is the kind of thing that happens when you endeavour to deal with our financial position by way of increasing interest rates.

The second thing I want to mention in connection with the subsidy is the enormous differentiation that exists between the subsidies on houses and those on flats. This matter has been the subject of comment in this House, in another place and, to a considerable degree, outside the House; it has been suggested that the very high subsidy given for flats will encourage local authorities to build flats rather than houses, and to build flats on expensive land. I do not propose to go in any detail into the financial implications of these subsidies, but I think it right in this debate that I should express my own view that it will do nothing of the kind. I believe that there is every justification for this Government, as for their predecessors, pro- viding a higher subsidy for the erection of houses and flats on expensive land; otherwise many local authorities would hardly be able to build at all.

In my own experience, I have never known a local authority be influenced by the matter of subsidy in its policy as to whether it should build houses or flats. In most cases the decision as to what type of dwelling to build really settles itself. It settles itself on the basis of the needs of the local authority, the housing pressure of its existing population, and, particularly, the specific needs of that population. For instance, in the case of Liverpool there was an area where flats were developed at a very high density. The reason was that the site was near a dock area, and large numbers of dock workers found it necessary, in view of the irregular hours they were supposed to be working, to live close to their work. For that reason, the Liverpool Corporation, quite rightly, decided to build flats at a very high density. I think it is perfectly justifiable that there should be this higher density in a case of that sort, and in many other cases throughout the country. It is also the fact, as we all know, that in many parts of the country local authorities have almost exhausted the whole of the land that is available to them, and it is essential that they should use what land is left in the very best way, as efficiently and economically as possible. There is, of course, a good deal of pressure, particularly in this House, to prevent local authorities spreading themselves out and using up good agricultural land when they can build more intensively on existing sites. For all these reasons I think that the policy is sound, and I am very glad that the Government have not departed from it.

The other point I want to make on the subsidy is this. We are reaching pretty high figures in the way of subsidy. Normally, a subsidy, as the noble Lord explained, is now going to be £35 12s. 0d. a year—which is a substantial increase on the previous subsidy, an increase of over £10 a year—which is the equivalent of 13s. 9d. a week. In extreme cases the subsidy may actually amount to £2 a week or more, and this will extend over a period of sixty years. I feel that the time has come when this Government should do as its predecessors would have had to do—that is, to review the position to see where we are going. On the basis of 250,000 houses to be built this year, the combined subsidy will be something like £10,000,000 a year.

LORD WOOLTON

I take it that by combined subsidy the noble Lord means rates and Exchequer.

LORD SILKIN

Yes, rates and Exchequer. And possibly the amount will be more than the figure I have mentioned. It all depends upon the amount of building that takes place on expensive land, but I am putting it on the low side. This figure is cumulative. If we were to start now, it would be £10,000,000 this year. If we went on building 250,000 houses next year, it would be £20,000,000; the year after, £30,000,000, and so we should go on, until we might very well reach a figure of £200,000,000—£300,000,000 a year in subsidies on housing. That is a very sad reflection. It means that if we go on, more and more people are having large contributions made towards their rents out of public funds.

Of course, that is not the whole picture. We have to take into account the large number of people who are being subsidised out of private sources—that is, under the Rent Restrictions Acts. It looks to me as if, before very long, 90 per cent. of the people of this country will be housed at the expense of other people.

EARL WINTERTON

My Lords, while disclosing to your Lordships my interest in the matter, as a large owner of property, do I understand the noble Lord to say that in any review undertaken by this or any subsequent Government the working of the Rent Restrictions Acts should be considered, as well as the point of issue in this Bill?

LORD SILKIN

I have not put the matter so specifically as that. I have just put to the House the general picture. It might possibly lead in the direction in which the noble Earl would like it to go, but at this moment I am not providing any answer I think at this moment, when we are so largely increasing the public subsidy for housing, it is right that we should realise where we are going and that in the years to come this will become a burden which we shall not be able to bear. I should have hoped that the noble Lord, Lord Woolton, would have had something to say on this subject.

Let me say at once that I do not for a moment agree that the right solution is to bring down the cost of houses by reducing standards. But, apart from that, I think a good deal could be done in bringing down the cost of houses. The noble Lord will remember that we were faced with the same kind of problem in the years immediately following the First World War, when the cost of houses had reached a figure which in those days was colossal—something like £1,200–£1,300 a house. Certain action was taken, with the result that before long the cost of housing went down and eventually fell to £300–£400 a house. I do not know whether that is possible to-day, but it surprises me that the noble Lord has had nothing to say on this subject of cost, which is so fundamental to the whole problem of housing. I should like to see some kind of inquiry into this whole question, because I feel convinced that at some time or other we shall he compelled to call a halt. I do not think the solution lies in a reduction of standards, nor in the direction of an increase of rents. Most people are already paying as high a rent as they can afford. Indeed, in fixing the amount of the subsidy account was taken of what was a reasonable rent for a family to pay, having regard to their earnings. It may be that something should be done about ensuring that people who do not need a subsidy do not get it. I do not rule that out at all, although I am not advocating it this afternoon; it is a fair point for consideration.

I am convinced that we cannot afford to go on and face the possibility that in years to come this country will have a burden of several hundreds of million pounds a year in the way of subsidising rents. I hope that the noble Lord and his colleagues will find some way out of this dilemma, which is a national one and not a Party one.

LORD WOOLTON

My Lords, the noble Lord has great experience of this subject, an experience which we on this side of the House all respect. I wonder whether he would be prepared to develop his ideas? I personally should be grateful to him if he would do so, and would say something as to the way in which we could bring down the cost of houses. I am not thinking about the way in which. we could divide the cost between various people. The housing figures he gave us, I remember well. I remember the late Lord Addison getting into much trouble about houses which cost £1,300, and that they were brought down to £380. If the noble Lord has any experience which will be of help to us, we shall be most grateful.

LORD SILKIN

I wish that I could oblige the noble Lord and provide a ready-made solution. I have not one single answer to this. There are a number of things that will have to be done. It may be possible on another occasion to have a debate especially on this subject, but I was going to make one or two suggestions. One is that it may be possible to reduce the cost of houses by providing greater incentives to workers to build more quickly. Even the present Government have not been able to reduce at all materially the period it takes to build a house, which is over twelve months. If houses could be built in nine months, that would bring down the cost substantially. It ought not to be beyond the bounds of human ingenuity to devise some method of getting houses built in a shorter time. If the House were patient, I could make a number of suggestions, but I would rather reserve them for an occasion when we are discussing this specific problem.

This enormous cost might be bearable if we really were getting on and solving the problem. But we are not solving it entirely. Every year a large number of houses become obsolescent and the result is that even if we build 200,000 or 300,000 houses a year, a substantial number of old houses are lost to us through obsolescence. One newspaper has said that the total number of new houses is lost, but I think that that is possibly an overstatement. At any rate, the net result of all our activities is that we are just keeping pace with obsolescence. I think possibly we are making a little headway, but we are hardly building a sufficient number of houses, on balance, to provide for the increase in the number of separate families; and this number is still increasing and will do so for a number of years.

I think that much more could be done by way of improvement and conversion of existing houses. I know that the 1949 Housing Act provides for a subsidy for the conversion of houses, but it is more difficult for a private person to fulfil the conditions to get that subsidy than to get a licence to build—and that is saying a great deal. If the noble Lord could look at the 1949 Housing Act once more, to see whether he can facilitate conversion of houses and make it worth while (in this case I am frankly using the profit motive) for people to convert existing houses, I think that would be a way of producing more accommodation much more cheaply and, incidentally, of solving other problems.

There are other ways. As I say, I hope it may be possible at some time in the future to have a discussion on this to see whether there is not another way. I realise also—here I impinge on the question which the noble Earl, Lord Winterton, put to me—that there is the problem that, not only are large numbers of people being subsidised by private owners of land, but in many cases, though not in all, houses no longer produce a profit to the owner. At existing rents he is even unable to carry out the necessary repairs, and houses are rapidly going into decay.

EARL WINTERTON

Does not the noble Lord agree that it goes further than that? There are statistics available to show that in some cases houses are actually being given away to local authorities. It affects the whole question of the housing supply.

LORD SILKIN

That is quite true—indeed, in my own experience, I have been offered a row of houses which I have had to decline for that very reason. The position is most serious.

I do not want to go into the controversial subject of the tied cottage this afternoon. There will be an opportunity of discussing it at greater length on the Committee stage, and, in any event, my noble friend Lord Wise, who has much more experience of that matter than I have, proposes to address your Lordships, amongst other things, on that question. However, I should like to ask the noble Lord, Lord Woolton, a question with regard to Clause 2 (1). The noble Lord made it clear—and, of course, it is the case—that under the Act of 1946 the subsidy, which had hitherto been payable to persons other than local authorities who built houses for members of the agricultural population, ceased. This Bill pro- poses to restore that subsidy. Therefore, a person who now builds a house for a member of the agricultural population, if he satisfies the necessary conditions, will become entitled to the subsidy of £15 per annum for forty years. I should like to know what happens to the person who built a house after 1946 and before the coming into operation of this Bill. If he had built it prior to 1946 he would have secured his subsidy, which would have gone on for forty years. If he builds after the coming into operation of this Bill, he will also get the subsidy.

But what happens to the poor fellow who built, say, in 1948? He is unable to satisfy the conditions, because under the 1938 Act, which provides for the subsidy, he has to get the consent of the local authority and to go through certain paraphernalia before he becomes entitled to the subsidy. It was impossible for him to do that in 1948, because there was no subsidy available. Nevertheless, he has done just what the noble Lord wishes him to do: he has provided a house for a member of the agricultural population; he is letting it at a rent which is in accordance with the provisions of the 1938 Act; and generally he is comporting himself in every way as if he were entitled to the subsidy. I should like to know whether such a person will be entitled to the benefit of this clause, and whether it will be retrospective to the date when he first built a house during those years, provided he has satisfied the necessary conditions. In other words, is Clause 2 intended to place such a person in the position he would have occupied if the 1938 Act had been in operation all the time?

It looks as if that is the intention, because the clause says that Section 3 of the 1938 Act shall cease to have effect. If it ceases to have effect, the normal meaning of that would be that he becomes entitled to his subsidy. But it is not at all clear, arid I should be grateful if the noble Lord would tell us the intention of the Government in that respect. If it is the intention—as I hope it is, because I think it is fair—that such a person is to be treated in the same way as if the subsidy had never been terminated, then I think that some amendment will be necessary to Clause 2 to make that absolutely clear.

With regard to Clause 3, I want to agree straight away that if it is the policy of the Government in present conditions to encourage house ownership of local authority houses, then probably, on the whole, this clause is not an unreasonable one. I feel that one could argue that the period during which the purchaser should be tied should be a little longer; but I shall not quarrel with the actual conditions, apart from that. Nor should I quarrel with the right that is given to the local authority to sell houses at less than the market price. But I strongly disagree with the policy of permitting the sale of local authority houses at the present time. In view of what I have said, that seems to me to be a most foolhardy policy. The noble Lord thought that this might mean some saving to the Exchequer and the local authority. Of course, it will mean nothing of the kind, because every house that is sold will be taken out of the pool of letting. Therefore, it will be necessary to build an additional house, and unless the local authority get back in the selling price the whole of the subsidy they hake paid in the past they will actually be losing on the transaction, because they will have to begin subsidising for a further period of sixty years a new house which they will have to build to replace the house they have sold.

It is quite correct to say that by selling houses which the local authority have built you are reducing the pool of accommodation. Noble Lords who have been on local authorities will agree, I am sure, that the number of houses which become vacant by the normal process of people dying, or leaving the houses for other reasons, is greater than the number of new houses that the authorities build. Local authorities rely very much on the vacancies that arise in their existing pool of accommodation. In the case of the London County Council—I believe I have quoted this before—who to-day have something of the order of 150,000 houses, the vacancies that arise amount to something like 20,000 houses a year, which all become available for re-letting; whereas the number of new houses they build is under 10,000. Therefore, by far the greater contribution to the solution of their housing problem is made by the letting of existing houses than by the building of new houses. By permitting the sale of existing houses, the Government will be removing those houses from the pool of letting. I should have thought that that was an extremely foolish policy at the present time.

Now I do not for a moment say, and nor do any of my friends on this side of the House, that it is wrong for people to own their own houses. In normal times, subject to proper safeguards, there would be no objection to local authorities disposing of such houses as were not needed for the purpose of re-letting. But to embark upon a policy of this kind at a time when there is this desperate shortage, and when, as I have indicated, we are making hardly any progress—whether we build 200,000 houses or 250,000 houses a year, we are making hardly any impression on the housing problem—can be due only to ideological causes and not to any desire to solve the housing problem. I hope that noble Lords will reconsider Clause 3 and hesitate before they do something which must react against the provision of houses for those who are most in need.

I have said all I want to say about this Bill. We do not propose to divide against it. We accept the subsidy, in spite of what I have said about it. We regard the subsidy as being a reasonable one in the circumstances. But I do hope that noble Lords will give serious consideration to the whole question, because I am convinced that unless we find some solution to this problem of the growing cost of building houses we shall find before long that we shall inevitably come to a standstill.

5.2 p.m.

LORD LUKE

My Lords, I should like to give general support to the Second Reading of this Bill, but I wish to deal with just one point and take a very few moments over it. It happens to be a point which was raised by the noble Lord who has just sat down. It is the question of subsidies for conversion. As the noble Lord pointed out, the grant to private individuals of subsidies for conversion is allowable, but I understand that the subsidies do not go very far and that not many conversions are thus made. I should like to suggest that there should be subsidies for local authorities to convert in their area such houses as it is desirable to preserve. There are many large houses in this country, perhaps mostly in the countryside, but quite a number with some considerable historical, architectural or artistic value in our ancient cities, which are lying empty simply because they are too large for anybody to live in them. It seems rather a pity that local authorities cannot get a subsidy in order to convert them into flats or other accommodation more in accordance with our modern way of living.

It seems a little extraordinary that we should always be building on new ground outside our congested areas, while inside there are buildings which can be converted and which are at the moment of no use to anyone. That is the point I should like to make on this Second Reading. Perhaps it is more of a Committee point, but I wanted to raise it; and I hope that it will be considered and that something may be done in the Committee stage to meet it. I have no doubt that there are two arguments that will be raised against it. One is that the Treasury have to consider any extra cost very carefully, and the other is the known difficulties of adapting old buildings to new forms. I hope that neither of those difficulties will prove insuperable.

5.5 p.m.

LORD WISE

My Lords, I wish to intervene in this discussion for only a few moments, partly to ask the Government various questions with regard to Clause 2, to which clause I propose to confine myself entirely. It is no doubt within your Lordships' knowledge that the provisions of Clause 2 caused a good deal of discussion in another place, and I think I can say that my friends there at that time, as always, were very much opposed to the spending of public money upon either the building or the reconditioning of houses which will become tied cottages. I do not propose at this moment to go into the merits or demerits of tied cottages. I know that I should be on thorny ground, but I might be able to persuade noble Lords that the demerits far override the merits. The noble Lord shakes his head—well, we can disagree with that. I have my own views which perhaps are not entirely held by my colleagues, but we will leave it at that.

With regard to Clause 2, as a layman I find difficulty in properly interpreting the phraseology of the clause. I believe that in a final discussion in another place, subsections (3) (4) and (5) were inserted in view of certain representations which had been made in regard to the conditions of service or, at least, the conditions of notice. I think the difficulty is partly this. Subsections (1) (2) and (3), dealing with the old Acts, are dealing with contributions which are made to the owners of property, whereas in subsection (4) of Clause 2, there is introduced another person—the employer. I am wondering whether the previous subsections would not be better if they were redrafted, because I cannot find anything in them to connect the employer with the contract which the owner has made, nor can I find that the employer, if he is, for example, a tenant of a farm, is under any obligation whatever to take with regard to his employee the steps outlined in subsection (4).

There is another difficulty which I feel. If the noble Lord, Lord Woolton, will refer to subsection (4) he will find a reference to a "condition," and it is referred to also in line 13 on page 3. It deals with the question of the erection of a new house. The difficulty, I think, is to know whether that condition refers also to the second paragraph of subsection (3) which deals with the reconditioning of a property. I should be grateful if the noble Lord who is to reply could give me some information whether the condition laid down in subsection (4) refers to the two eventualities in subsection (3)—that is, the erection of a new house and the reconditioning of an existing building.

Now I come to another point. Paragraph (c) of subsection (4) says: "… by the death of either party." Is it clear that the word "either" in that subsection refers to the employer and to the employee? Or has it any connection with the owner of the property who is referred to in the previous subsection? These may be small matters, but I think it might be better if this particular clause were taken back by the Government and looked at again with a view to the possibility of redrafting it and making it clearer. If, of course, subsection (3) refers only to an owner or to an occupying owner, then I can see that it is quite clear; but you are bringing into sub- section (4) a new person altogether: the employer. I think that that might be made more clear.

There is one point which was raised in another place and with which I think we must disagree; that is the question of the four weeks' notice which is dealt with in subsection (4). Some of us hold the view, and it may be right, that by the introduction of this particular provision the service occupier is put in a far worse position than he is at the present time. I believe I am right in saying that under present legislation a period of time must elapse between the notice to quit and the actual removal from the cottage. I believe it is the fact that that is so if the case is taken to the court.

LORD WOOLTON

That is a decision of the court and not a question of law.

LORD WISE

At any rate, I believe that there is a period of time which is usually given before the occupier is forced to leave. There is also a gentleman's agreement with the Farmers' Union—I observe signs of agitation on the face of the noble Lord, Lord Carrington—whereby these evictions and suchlike operations of the law do not take place immediately or within an unreasonable period of time. The difficulty I foresee is that, having inserted the words "four weeks," that particular period of time may be the limit which the occupier is able to stay in the cottage. It may be so, though perhaps some noble Lords will think otherwise; but I should be much happier if I could feel in my own mind that at any rate the occupier of a service cottage was not being placed in a worse position by this Bill than he occupies in present circumstances.

There is one other point to which I should like to refer. I put it to the noble Lord, Lord Carrington, because it touches his Department rather closely. Under the Agriculture Act, 1947, the owner of property is called upon to exercise proper estate management. In the exercise of that proper estate management he may be called upon to recondition or improve a cottage. Can the noble Lord tell me whether or not, if he is under a supervision order and he is instructed by the authority to carry out certain repairs or improvements to a farm cottage and he does so, he benefits by the particular subsidies laid down in this Bill? I have made these few observations in no hostile spirit whatsoever, but I hope the Bill will be redrafted where necessary. I hope the Government will have another look at it, and, if there is anything in the views I have expressed, perhaps the Government will give them consideration before the Bill comes before your Lordships' House again.

5.18 p.m.

LORD CLYDESMUIR

My Lords, I hope you will forgive my temerity in addressing myself to you on a Bill which does not extend either to Scotland or to Northern Ireland. There is, I know, under discussion in another place (I believe it is in the Scottish Grand Committee) a measure which contains a number of the same features as this Bill, and I am bold enough, therefore, to say a word. I wish to pay tribute to the argument so courteously and pleasantly presented to the House by the noble Lord, Lord Silkin, but it had yet a flaw in it, if I may say so. And I am going to be bold enough to join issue with so great an authority as the noble Lord on this matter and to put my point of view.

The noble Lord said that it was unwise, especially at present, to embark on a policy of selling any houses, because every house sold went out of the pool of houses available for the local authority, and its sale, therefore, left a gap. But there is surely not a gap, since the house satisfies somebody who is wanting a home and whoever buys that house will in future carry the burden. It may be hedged about with restrictions but it does not drop out of the pool if it satisfies someone who wants a roof over his head and will be paying for that roof in the future. On the other hand, with regard to so-called tied houses, particularly in rural areas, I welcome the provision that an improvement grant will be available for these houses in future, because that may prevent a number of valuable dwellings from going out of use. I speak with knowledge of Scotland rather than of England, I confess, but I should think the position is probably the same. In a number of rural areas there are such houses which are in danger of going out of use simply because at present there is no improvement grant for them. As they go out of use they do drop out of the pool—and for good. In my view, that is the difference in the merits of this proposition.

I welcome this Bill. The noble Lord was very right to bring before us the dangers ahead of us in the cost of housing. We must all apply our minds closely to the problem. So far as the Bill prevents property from going out of use, by providing for an improvement grant for the tied house, it is a wise step in the right direction. And I think the selling, under very careful supervision, of houses to persons who will keep them up and who are in need of houses is also a wise policy.

5.21 p.m.

LORD WOOLTON

My Lords, I have little to which to reply. I very much welcome the speech made by the noble Lord, Lord Silkin, as I always welcome what he says, because he speaks with so much authority. After all, on all the major issues here, there is no Party division. We want to get the maximum possible number of houses for people. I was particularly interested in his views about the possibility of reducing the cost of houses; and I hope that at some time he will take the opportunity that he indicated of developing them in your Lordships' House. He asked me an interesting specific question—namely, what happened to an enterprising gentleman who built a house for a member of the agricultural population in 1948 and who apparently needed no inducement to do so. The answer is that he will not get any subsidy because Clause 2 is not retrospective.

If I may reply to other noble Lords who have asked specific questions, I can then go into the more general issues involved. The noble Lord, Lord Luke, asked a question, the reply to which is that the local authority already have power to pay grants for purposes of conversion to the owners of houses of the sort to which he referred, and that they do get back from the Exchequer three-quarters of the amount that they pay. Perhaps the noble Lord, Lord Wise, will permit me to say that, whilst I followed the questions which he raised, it would be more convenient if he would raise them in Committee, since they were questions of detail, and I would deal with them then. I hope that that will not be troubling the noble Lord too much.

The noble Lord, Lord Silkin, drew the attention of the House to the fact that some 90 per cent. of the people of this country were being housed in part at somebody else's expense, and he said that that was a matter of very great importance. Indeed, I can assure him that it is causing us concern and that we are at present looking into it. I gathered from him, if I am not taking liberties with his language, that we might expect support from him, at any rate for some investigation of that problem. The noble Lord said he was surprised that I had not said anything about reducing the cost of housing. I am sure he was not really surprised, because it would not have been very appropriate on this Bill that I should inflict on your Lordships my views on this matter. It was pretty clear, as the discussion went on, that the noble Lord himself had no very clear ideas as to how we could bring down the cost of housing; but, if he will give us his further views on that, we shall be very glad indeed to have them.

Another point raised by the noble Lord, Lord Silkin, was that we were in fact only just keeping pace with obsolescence, which is indeed an important issue.

EARL JOWITT

Does the noble Lord accept it?

LORD WOOLTON

No, and neither did the noble Lord. To be precise he did not say that we were "only just" keeping pace; he suggested that there was some danger of it. He qualified the position. The fact that there is so much obsolescence is making us at the present time inquire into the whole situation. Subsequently, I hope to be able to say something about it.

I did not follow the noble Lord's arithmetic on the other question which he raised, that about house ownership. He agreed that it was a good thing that we should encourage house ownership and then he said—I am not quoting him verbatim—that if somebody who possessed the necessary money bought the council house in winch he was living, that would involve the council in building another house in order to meet the needs of the situation. I do not see why. It seems to me that the fact that somebody purchases the house in which he is already a tenant does not in the least affect the extent of the demand, provided that he remains in the house. If, on the other hand, he subsequently wants to sell the house, then the council, under this Bill, during a limited period has a right to purchase it back. Bet let this be quite clear. There is no pressure involved in this issue. We are not pressing local authorities to sell houses; we are giving them the right to do so if they want to. I think they are really competent judges of their local situation.

I do not want to occupy your Lordships' time any more. I am grateful to noble Lords opposite for the general support that I think I can say they have given to the main features of this Bill. We shall, of course, have an opportunity in Committee of dealing in detail with the points of disagreement.

On Question, Bill read 2ª, and committed to a Committee of the Whole House.