NEW TOWNS BILL

HL Deb 11 February 1958 vol 207 cc565-84

2.39 p.m.

Order of the Day for the Second Reading read.

THE MINISTER OF STATE, SCOTTISH OFFICE (LORD STRATHCLYDE)

My Lords, I rise to move that this Bill be now read a second time. Your Lordships will recollect that we had a debate on new towns, on a Motion introduced by the noble Lord, Lord Silkin, on November 20, 1957, in the course of which there was a general review of progress in new towns. The noble Lord referred in his speech to the fact that a Bill for additional finance for new towns was coming along, and suggested that that might be the occasion for a discussion on the general finances of the new towns. That seems the convenient course, and I propose to deal primarily with financial aspects of new towns, rather than with their general progress.

The Bill itself is simple enough. Clause 1 allows an increase in the total money which may be issued from the Consolidated Fund to meet the capital expenditure of the development corporations. The New Towns Act, 1946, provided £50 million for this purpose, and this sum has been successively increased, as will be seen from the Explanatory Memorandum, to £100 million by the New Towns Act, 1952; £150 million by the New Towns Act, 1953; and £250 million by the New Towns Act, 1955. We now propose to increase the aggregate amount, by a further £50 million, to a total of £300 million. As the Explanatory Memorandum to the Bill explains, expenditure of about £225 million has already been approved, mainly for housing, and a substantial part of the £25 million which can be issued under the present law will be needed during this Session of Parliament. We estimate that, at the present rate of progress, the additional £50 million will provide for commitments up to the end of 1959.

Clause 2 of the Bill removes a duplication in the presentation to Parliament of the annual accounts of the development corporations. Previously, copies of the development corporations' annual accounts have been presented twice each year to Parliament, once with the corporations' annual reports, which naturally include their accounts, and a second time by the Comptroller and Auditor General, with his Report on the accounts of issues from the Consolidated Fund and advances to the corporations. The result has been a duplication of some 300 pages of print. Clause 2 amends the 1946 Act so as to require the corporations to include the accounts in their annual reports. At present they are not statutorily obliged to do this, though, as I have said, in practice they all do. Conversely, the clause relieves the Comptroller and Auditor General of his obligation to include the accounts with his Report. He will, of course, continue to present to Parliament annually a report on the corporations' accounts, but he will do this after the corporations' annual reports containing these accounts have been made available and are in print.

That deals with the subject matter of the Bill, and I should now like to turn for a moment or two to the general question of the financing of the development corporations. Advances to meet their capital expenditure are made by the Minister of Housing and Local Government, and by the Secretary of State for Scotland, from issues which are made to them for that purpose from the Consolidated Fund; the corporations have no power to borrow from other sources. These advances are repaid by equal annual instalments of principal and interest over sixty years. The rate of interest now current is 6 per cent. Until September last the corporations were charged the same rate as local authorities are charged by the Public Works Loan Board, but the Government have recently decided that as development corporations are financed by the Exchequer it is appropriate that they should pay the rate for Government credit.

Before I speak of the financial position of the new towns, I should like to explain to your Lordships that their accounts consist of a balance sheet, a general revenue account and a number of schedules which include an ancillary revenue account. This ancillary revenue account shows the revenue costs of services of a. kind which are normally the responsibility of local authorities or statutory undertakings: that is, sewers and sewage disposal works, water, main roads and in some cases parks and open spaces. All other revenue income and expenditure is shown in the general revenue account.

During the year 1956–57, the last for which accounts are available, six of the English corporations and the Welsh corporation had a surplus on general revenue account, and the remaining five had losses, the net result being a surplus of nearly £36,000. On the other hand, all but three had substantial deficits on their ancillary revenue accounts totalling £751,000. During the same year the three Scottish corporations had deficits on general revenue account totalling £307,105 and only a small deficit of £630 on ancillary revenue account. The accumulated deficits of all new towns is at this moment nearly £4½ million.

The figures reveal fairly substantial losses on both the English and Welsh new towns and the Scottish ones but the reasons are entirely different. In the case of the English and Welsh new towns, the deficits are mainly due to the provision of sewerage services. Normally, as I have said, sewerage is a responsibility of the local authority, and in the Scottish new towns the local authorities provide this service; but in England and Wales, because of the scale of the development and the heavy cost it was necessary in most cases for the development corporation to undertake the work. There are exceptions. These are Corby, Welwyn and Hatfield, where there was already a substantial township in being and the local authority was prepared to undertake the work.

Since sewerage facilities have to be provided considerably in advance of the building of houses, shops and factories which in the long run pay for the service, through the sewerage rate, the cost has to be borne by the corporation rather than the present ratepayers. The local authorities make a contribution to the corporations out of the rates, but a considerable share of the total cost of sewerage is left on the corporations' shoulders. What the local authorities' contributions should be is a matter for negotiations between them and the corporations, subject to the determination of the Minister where they are unable to agree. So far, I am glad to say, it has been possible for agreement to be reached, but determinations have been made in three cases.

The development of the new towns has now progressed to the point where, with rapidly increasing rateable value and the revenue from rates that goes with it, the local authorities ought to be asked to take over the works constructed by the corporation and assume their normal responsibility for these services. My right honourable friend the Minister accordingly proposes to invite the corporations to consider with the local authorities for their areas the terms on which the latter should take over main sewers and sewage disposal works built by the corporations.

The provision of water services has also, for similar reasons, been a heavy burden on the three corporations—that is, Harlow, Crawley and Stevenage—which undertook that service. In the case of Harlow, the corporation has been able to dispose of its works to the water undertaking in whose area it lies. Negotiations for transfer are in progress at Crawley but have not so far commenced at Stevenage.

The main reason for the heavy deficits of the Scottish corporations was the impossibility of keeping housing revenue accounts in balance under the old rating system. As your Lordships are aware, changes in the Scottish rating system were introduced by the Valuation and Rating (Scotland) Act, 1956, and these changes are expected to take full effect in 1960–61. These changes, coupled with the prospect of more rent income being available to the corporations, which we are now discussing with them, should, we feel, result in a healthier picture in the Scottish corporations' accounts before very long.

The English and Welsh new towns do not suffer from such rating difficulties. The policy (originally laid down by Lord Silkin when he was Minister) has always been that housing, with the aid of the normal subsidies, should balance; and, broadly speaking, this has been achieved, although a few of the corporations are finding it difficult during the present period of high interest rates and have run into deficit on housing. Recovery from these deficits will necessarily take a little while, but the steps taken by the Government to stop inflation will help by stabilising costs, and when the economic situation has improved sufficiently to enable some relief from the present high interest rates it should be possible to restore the balance.

The overall position revealed by the accounts for 1956–57 is somewhat gloomy, but the prospect for the future is brighter. The corporations are at present in mid-stream. The very large capital expenditure of over £172 million of all corporations necessarily includes a substantial amount—about 15 per cent.—which is not yet remunerative. This proportion of unremunerative expenditure will fall as development proceeds and housing, shops and industry catch up with the advance provision of main sewers, roads, and so on. There is, accordingly, a reasonable hope that in due course the revenue account will come out on the right side. In the very long term when the advances have been wholly repaid after sixty years, there will, of course. be a clear gain because much of the development will still have years of useful life.

Financial success is, of course, not the sole criterion. New towns were not ventured on as a purely financial investment: they were primarily a large-scale planning operation forming one of the most significant social developments of the present century—an experiment which has attracted, and indeed is still attracting, the attention and admiration of experts in planning from many parts of the world. The provisions of the Bill will enable this excellent work to be carried forward, and I therefore commend it to your Lordships' House. I beg to move.

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

2.55 p.m.

LORD SILKIN

My Lords, I am glad that the noble Lord, in introducing his Bill, finished his speech on a much more cheerful note than when he began. Whether that is a form of art in which he kept our expectations up to the end, or whether, as he went along, he became more enthusiastic about new towns, perhaps only he can say. He told us that if one looked at the picture at this moment it was gloomy but that the prospect for the future was much brighter. I would remind the noble Lord that if he went on to any building site in the early stages he would find it an awful mess, but that would be no indication of what: that site is going to be like when the job is finished; and this job, in the case of a number of the new towns, is likely to be finished in the course of the next few years. Indeed, one of the remarkable things about the new towns is that, by and large, they have kept up to the original programme. It was contemplated that they would be substantially completed within ten to fifteen years, and the fact is that most of them will have been completed within that period from the time they were started.

I would invite the noble Lord to look at the picture as it is likely to be at the time when they are virtually completed, and I think he will go away in a much more cheerful financial mood than would appear from the picture he gave to us this afternoon. I fully agree with him that the case for new towns does not rest primarily, or solely, on finances, but these new towns have got to justify themselves financially as well as socially, and I believe that that is exactly what they are doing.

The noble Lord gave us a number of figures, but there is one figure which I wish it would have been possible for him to give us, because it would, in my view, have provided a realistic picture of what has been achieved. Would it not be possible to get a valuation of the capital that has been invested in each of the new towns? When we take new towns that are fairly well advanced—such as Crawley, Harlow, Hemel Hempstead, Stevenage—it is to-day possible to value the property that has actually been completed; and from all the inquiries I have made the view is widely held by people in a position to know that already the value of the assets of the new towns is higher than the amount of capital expenditure. In other words, if the assets of the new towns were valued, they would already show a surplus.

I leave out housing, because that is a social service which would have had to be provided in any case, if not in the new towns then in the towns from which population has been exported. And may I say, in passing, that if that had been the case, in many instances the cost of building those houses in the old towns would have been very much higher than the cost of building them in the new towns. They would have been built to a considerable extent in the form of flats, and everybody knows how much more costly it is to build flats on expensive sites in the towns than to build houses on relatively cheap sites in the new towns. But leaving housing out of account altogether, I would maintain that already a proper valuation would show that there is today a surplus in all the towns where substantial progress has been made. I would ask the noble Lord whether it is not possible to get some kind of valuation in order on a future occasion to give to the House a realistic picture of where we stand.

If these schemes had been carried out by private development, private developers would have certainly anticipated being able by this time to show a profit—and, indeed, proof that the general view is that these towns are profitable is given by the fact that a number of people who are already connected with the existing new towns are very anxious, as a private venture, to start a new town themselves. They certainly would not be doing it—and they are in a position to know—if they did not imagine that there was a substantial profit in the new towns. For these reasons I hope that we shall have these figures at some time in the near future, and I am sure that the noble Lord will then be in a position to present a much more cheerful picture than he gave us this afternoon.

If I am right that already there is a surplus in the case of those towns that are substantially developed, and if the noble Lord is right in saying that he is fairly confident that in the long run they are going to be profitable and that the new towns have achieved all that he says in the way of social development and the betterment of the people who are living in them, better health for the children and better surroundings for the people as a whole, I should like to ask the noble Lord why additional new towns have not been built. The case for them is made out; it is conclusive. Noble Lords opposite claim that they are just as enthusiastic about new towns as we were—at any rate, they no longer allege, as they did at the outset, that these were Utopian ideas. Those ideas actually materialized, and to-day noble Lords opposite are just as keen as we are. If that is so, why have they not designated a single additional new town since the Labour Government designated the last? We designated fifteen, and there are fifteen. I am not sure about one in Scotland. That might have been under consideration at the time, but, if that is so, the noble Lord can have that one. Apart from that, however, not a single one have they designated, and they have gone out of their way to say that it is not their policy to build any further new towns.

If the case for it is justified in the case of the existing ones, then surely there is exactly the same case for additional new towns—namely, the need to disperse populations from the large conurbations, such as Manchester, Liverpool and Birmingham and even Greater London. The six existing new towns are quite inadequate for the purpose. Although there is on the Statute Book the Town Development Act, which is designed to do very much the same kind of thing, in fact little progress has been made with any town development under the Town Development Act. It is a complicated business which requires the agreement of so many local authorities that it has been hardly possible to achieve agreement with any of them, and really the right solution is the new town. So I hope that the noble Lord can tell us why we have not had any more new towns.

The noble Lord has told us (it is the first time that I have heard it) that it is now intended to ask certain local authorities—I do not know whether it is all of them—for a contribution in respect of main sewerage and sewage disposal and water, the cost of which hitherto has been borne to a considerable degree by the new towns. I have not the slightest objection to there being discussions, but I hope there will not be undue and unfair pressure on the local authorities. In a number of cases they have had a heavy burden to bear by reason of the coming of the new towns into their area. They have had to incur considerable expenditure in advance of getting any return from the rates, and while I think it is right that, if they are getting a return from the rates in respect of these works, they should make their contribution, I hope that there will not be undue pressure.

My noble friend, Lord Latham, is going to deal with the subject of interest on rents and I do not propose to say much about it, except that I feel that the Minister should explain why the development corporation should be asked to pay a higher rate of interest than that which is charged by the Public Works Loan Board. But my noble friend will develop that point and no doubt the Minister will have an opportunity of explaining it. As the noble Lord said, we had a debate on November 19 last in which the new towns were fully discussed, and I do not want to detain the House any longer in discussing the financial aspects. I would repeat that, in my view, already there is clearly an indication that the new towns are a financial success, as well as the social success that the noble Lord agrees they are, and, in the light of those facts, I repeat that I hope the Government will in the near future reconsider their decision about starting additional new towns.

3.7 p.m.

LORD LATHAM

My Lords, we have just listened to a wise and compendious speech by my noble friend Lord Silkin, who I think all noble Lords will agree is entitled to feel a proper sense of pride in being what I may describe as the legislative architect of this great social experiment, which has now become an impressive social achievement, The noble Lord, Lord Strathclyde, concisely, if perhaps a little restrictively, explained the purposes of this short Bill. I confess to being a little intrigued that this Bill, which deals with twelve new town corporations of England and Wales and three of Scotland, should have been introduced in the other place by the Joint Under-Secretary of State for Scotland; and in this House by the Minister of State for Scotland. I do not know whether one has to attach any real constitutional significance to that fact—whether it rather indicates that, in the unfolding development of the Commonwealth, England and Wales is likely to become a dependency instead of a protectorate.

The noble Lord said that this—was as indeed it is—a proper occasion to consider certain financial aspects of the new towns, and there are, of course, important financial aspects which have their social repercussions with which the noble Lord did not deal and to which I propose to refer. I shall rely largely upon the published reports of the operations of the twelve new towns of England and Wales up to the end of March, 1957. Those reports together constitute a great and impressive social document, and I shall take the opportunity to quote rather freely from the various reports, seeking so far as possible to quote from the new towns' reports, so to give, as I think, a representative view of the many problems, difficulties and frustrations which they have faced and are still facing.

It is stated in the Memorandum accompanying the Bill, in paragraph 4, that: At the present rate of progress the additional £50 million in the Bill will provide for commitments up to the end of 1959. No doubt that is the case. But, unhappily, this rate of progress is being retarded by the operation of increased costs, principally by the operation of higher rates of interest, and in some cases at the positive instance of the Minister. The Joint Under-Secretary of State for Scotland, introducing this Bill in another place in November last said [OFFICIAL REPORT (Commons), Vol. 578 (No. 18), col. 1316]: The interest rates which corporations have to pay to the Exchequer necessarily affect the scale and planning of their own building programmes and all the corporations have been reviewing their commitments and deferring any expenditure which can be deferred. He went on to say that this was sensible. But is it? Is it sensible to retard the progress of this great social experiment because the financial management of Her Majesty's Government has led to high interest rates? We are now told that the rate is to be 6 per cent.

This running down of progress inescapably means that the intended pattern of the new towns is being distorted, and practically all the corporations are very disturbed at the fact that they have been required to limit the progress which it was intended they should make. In one after another of these published reports we find corporations complaining of the crippling effect of increased costs, especially of the high interest rates which are being charged. Rates have gone up from 3 per cent., in 1951, to over 5 per cent. in 1956; and as the noble Lord has said, the present rate is 6 per cent. And that is, of course, 6 per cent. for sixty years—not for a short period. If lower interest rates are brought about in the near future, the corporations will still be left with a liability for a rate of 6 per cent. in respect of any monies which they borrow at that rate, a liability which continues for sixty years.

I should like to quote the views of the Hemel Hempstead New Town Corpora tion, appearing at page 285 of the volume of published reports: Rising costs of building, increased borrowing rates and economic crises have all combined to reduce the standard of housing and to increase the rents. It is very unfortunate that in these new towns the standard of housing should be reduced, for that standard, and the maintenance of a high standard, is not only important to-day but will be even more so in the years to come. The same report goes on: Furthermore, Government policy has prevented many desirable amenities and social attractions from being provided. That quotation relates to Hemel Hempstead. The Crawley Development Corporation say (page 166): While high interest rates generally tend to curtail or postpone capital investment, a development corporation at the peak of its programme is inevitably committed by the impetus arising from investment completed and in progress. To this extent higher interest rates must have an inflationary tendency. So it follows that the policy of Her Majesty's Government of having a high rate of interest in order to defeat inflation is, in the view of the Crawley Development Corporation, actually encouraging inflation. Another representative new town is Peterlee—and I quote now from page 336 of the published volume, which says this: As can be seen from the report, during the year under review the corporation's normal programme has been reduced at your Ministry's request in order to conform with the restrictions placed upon capital expenditure and as a matter of internal policy. The decision to reduce the building programme was taken by the corporation after full consideration of the effect on rents of the high interest rates which prevailed during the greater part of the period and which affected all developers in some measure. As will be clear from those extracts, which are representative of the situation facing all the corporations, high interest rates have led not only to a retardation of the progress of the corporations but also to high rents, with the result that the pattern of the new towns is becoming distorted. There is a danger that the pattern of the community which it was intended the new towns should provide may become unbalanced. Because of the high rents there is great danger of there being an excess proportion of residents drawn from those groups which can pay higher rents. Workers in a number of cases (I belies e an increasing number) are finding the rents so high that they are reluctant to go to the new towns. I will not pretend that there is yet a serious drift back, but there is a drift back from some new towns by some persons who have been taken there from London.

It is equally the case—though I do not wish to exaggerate the extent of this difficulty—that there is an increasing number of instances where industrialists and those running commercial enterprises in the new towns, who have taken their factories and their premises to the new towns, are finding it difficult, largely because of the high rents, to get the necessary labour. As I said, I do not want to pretend that at the moment this is a serious problem but, what I have said, speaking from some knowledge and as a co-opted member of the Housing Committee of the London County Council, is based upon actual happenings and actual facts. Sir Humfrey Gale, who is the Chairman of the Basildon Corporation, in evidence before the Public Accounts Committee stated, and put in figures in proof, that high rents were due as to 70 per cent. to high interest charges and as to 30 per cent. for increase in building costs. And that, my Lords, was before the bank rate went to 7 per cent., and (as has been confirmed by the noble Lord this afternoon) before the corporations were to be charged 6 per cent.

I now come to the question of the housing pool. I am aware that under Section 12 (1) (I think it is) of the New Towns Act, 1946, the housing pool is entitled to receive only the rents from houses, coupled with the subsidy, which I think is at the rate of £32 per dwelling per annum, and the housing pool fund is required to balance. It may well have been that, with lower and appropriate rates of interest, that result could have been achieved. The income from industrial and commercial properties is excluded from the housing pool. Why, I cannot understand, because the whole conception of the new towns was that there should be created a community of residents and of industry and commerce. It was no good providing residences for people a long way from their place of work therefore it was intended, and has to a very large extent been achieved, that industry and residents should be brought together. They are both parts of one problem they are not two separate problems. And it seems to me highly proper that if, for reasons of high interest rates or high cost, the housing pool accounts cannot be balanced by the inclusion only of housing rents, then the rents of the industrial and commercial properties should be included.

I know, or at least I apprehend, that the noble Lord, Lord Strathclyde, will have a ready and quick and, if I may say so, an equivocal answer. He will tell the House that this was a policy decided upon by my noble friend Lord Silkin, which has been followed, I understand, by successive Ministers. That may be the case—it is not my business to defend Lord Silkin; he is quite capable of doing that himself—but there is this to be said for that policy. It was adopted on the basis that the rate of interest, which was 3 per cent., and building costs, which were much lower than they now are, were such that the housing account could balance on the basis of the receipt of only housing rents. But that is not the case to-day, and it seems to me to be a little inept for the Government to insist that commercial rents should not be credited to the housing pool.

Furthermore, this policy of limiting the housing pool strictly and rigidly to housing rents has been carried almost to an absurd point by the Government. For instance, the rents of garages which are attached to the dwellings are properly and admissibly brought into the housing account. But if (as is the case, I believe, with all the corporations), instead of attaching an individual garage to an individual house, groups of garages are built in what might be called (inoffensively, I hope) compounds, so reducing costs and helping to enable the corporation to achieve its intended density, the rents of those garages are not permitted to be brought into the housing account. That seems to me to be a Gilbertian situation.

I should like now, my Lords, to say a word or two on the question of amenities. In most of the new towns there is a sad lack of social, recreational and cultural amenities, with the result that the younger people are finding it difficult to settle down. There is a crying need for the provision of playing fields and swimming baths; indeed, many of the corporations are lacking what are now regarded as the accepted minimum health facilities. In that connection I should like to quote from the Report on the Hemel Hempstead New Town, page 285 of the volume. This is what it says: Furthermore, Government policy has prevented many desirable amenities and social attractions from being provided, It is the case that a number of these amenities are normally provided by local authorities, but under the restraints and the restrictions of local government expenditure, local authorities are unable to provide them in the list of their own priorities. I understand that in a number of cases, even when the local authority was willing to provide the amenities, loan sanction from the Minister could not be obtained. It seems to me unfortunate that the utility and value of the new towns, upon which so much has been spent and to the creation of which so much thought and service have been given, should be, as it were, damnified by the absence of reasonable and acceptable amenities.

I come to a matter which was referred to forcibly, I thought, by my noble friend Lord Silkin—that is, the decision of the Government that there are to be no more new towns in England and Wales. Large cities are facing an almost insoluble problem of how to deal with what we now call overspill of their populations. An acute situation in that respect exists, so we are told by the Press, in Birmingham, in Manchester and, I believe, also in Glasgow, where it is estimated that 300,000 people will have to be dispersed, if that is the word, or decanted—that is not a pleasant word.

Last week it was stated in the Press that representatives of nineteen county districts in Middlesex had met in conference to discuss whether something could not be done to provide a new town, or new towns, for the excess population of their districts. They are proposing to make representations to the Minister. The London County Council, after pressing the Minister for well over two years for another new town, especially, but not exclusively, to provide for the remaining overspill of London, and after getting the reply that the Government did not propose to build any more new towns in England and Wales, have been compelled to decide to build one themselves, at an estimated cost of in the region of £50 million over ten years.

The question of dealing with the overspill from great cities, and especially from the conurbations (to use an ugly word), is not a problem which ought to be left to individual local authorities or to a number of, relatively speaking, small local authorities, such as the nineteen district councils of Middlesex. This was recognised in 1946. It was thought then, with the concurrence of most informed people of good will, that it was a matter for the Government. It is a national matter. Especially is that the case in regard to conurbations. Under the proposed legislation of the Government steps are to be taken to deal with these conurbations. Commissions are to inquire into them in England and Wales and a Royal Commission into the situation in Greater London.

The problem of dispersing population is related to, and part of, the problem of conurbations. and these can be prevented, as they ought to be, by the building of new towns. Whilst, as my noble friend said, it may well be that, in the long run—and I do not think that the noble Lord, Lord Strathclyde, dissented from this: it depends how long the run has to be—these new towns will prove to be very worthwhile investments financially, apart from their great and lasting merits socially. But initially the burden which would be cast upon a local authority in building a new town is such that only the largest—probably only the London County Council, Manchester and Birmingham—could face the initial financial obligations involved during, say, the first ten years in buildng a new town.

Already where people have been decanted to some other district, the exporting local authority has lost a considerable amount of rateable value. It is true that it has also lost the obligation to provide certain services, which the local authority of the place where the new town is must provide. In regard to education, there can be a considerable saving to the exporting local authority and a heavy expense to the importing one. There are many other services which have been created to deal with a population, and these services remain and have to be maintained even though the population is substantially reduced, as was the case of London, whose population went down from 4,300,000 around 1930 to something like 3,380,000 to-day. A local authority exporting its population has to maintain services which have become in some measure redundant because of the fall in population.

It is much to be hoped that the Government will think again and reverse their decision not to build any further new towns in England and Wales. I hope the noble Lord, Lord Strathclyde, will be able to give us some satisfaction on the points I have raised, even to considering whether in the special circumstances of the new towns, Section 12 (1) of the New Towns Act, 1946, cannot be amended in order that commercial, industrial and shop premises and other rents, receipts and incomes can be brought into the housing pool, and also whether, having regard to the burden of 6 per cent. interest which is cast upon the new towns development corporations, some adjustment by way of a special rate of interest or by way of an increase of subsidy cannot be considered. I should point out that the subsidy of £32 per dwelling was fixed when interest rates and costs were much lower, and there is a case for review as to whether, in these circumstances, the £32 is adequate. We hope that the noble Lord will be able to give us some encouragement that these important financial aspects, which have their social repercussions, will receive the earnest consideration of Her Majesty's Government.

3.51 p.m.

LORD STRATHCLYDE

My Lords, I thank both noble Lords opposite who have taken part in this debate for the points they have put forward and for the criticisms they have raised, which are always helpful. The noble Lord, Lord Silkin, started off by castigating me for being a gloomy kind of person. But I was not intending to be gloomy. After all, I was, as he said, merely looking at the financial side of the picture, and as I saw it it was my duty to present the true picture and not to endeavour in any way to paint the lily. The noble Lord asked me, in particular, whether it would not be possible to have a valuation made of the properties: that is to say, the land, the buildings, the sewerage schemes and all the rest which have been built by the new towns development corporations. I assume that it would be possible, but at this stage it would certainly be a major task. I should have thought that the best time to undertake such a valuation, if it was to be undertaken at all would be when the development corporations' work was completed and they were being wound up. But in view of the increase in values which has been going on everywhere, I should be very surprised indeed if at the end of the day the assets did not prove to be worth more than the money which has been expended in creating them.

The noble Lord, Lord Silkin, then asked why it was that additional new towns had not been built. We are getting on with some fifteen at the present time. It is true, as he said, that fourteen of them had been started during the period of office of the Labour Government, but in addition one has been started in Scotland under the present Government. We found in Scotland that although we might want to build more new towns, we simply could not get the skilled men necessary to set up and run the organisation. That was the position there, and presumably that applies also to England. If it were not so, then surely we could attract the technicians and others to build further new towns in Scotland.

I turn now to the speech of the noble Lord. Lord Latham, which interested me particularly. He asked me, first of all, whether it really was sensible to retard progress and defer expenditure. That, of course, is Government policy in relation to all public expenditure, and all authorities have been asked to defer what they can. But so far as the main housing programme is concerned, that is being continued.

The principal matter to which the noble Lord, Lord Latham, devoted himself was the rate of interest at present running, and the fact that it is payable throughout the long repayment period of sixty years. I think lie felt that the Treasury should be content with a lower rate of interest, and that any difference between that rate and what the Treasury might have to pay for its borrowings should be borne by the Exchequer. But the Consolidated Fund out of which the advances; are made is fed by revenue of all kinds, plus such borrowings as are required to make up the difference between total outgoings, whether revenue or capital in character, and receipts, and it is not possible to relate a particular advance from the Consolidated Fund with any particular receipt into it. Whether the advance is thought of as coming out of revenue surplus or out of Government borrowing, the rate of interest based on the Government's own borrowing rate is still justified, since if the advance were not being made, the money saved would either imply a reduced need of Government borrowing or it would go to the reduction of debt. It seems to me that the Corporations must, therefore, pay the current rate of interest for their borrowings, just as every other borrower, including the Treasury, has to do.

LORD LATHAM

My Lords, apart: from the Treasury, other bodies normally have the right to pay off at the end of a limited period and re-finance according to what the rates of interest may be. That is not the case with the new towns.

LORD STRATHCLYDE

Perhaps I should try to deal with that point. What the noble Lord says is that it is iniquitous to charge the corporations a high rate for sixty years, since the Treasury borrows, as it sees fit, on short, medium or long term, and on average during the repayment period is likely to pay less than the high rate fixed at the date of the particular advance to the corporation. I suggest that that argument cuts both ways. The corporations have had substantial advances at 3 per cent. repayable over sixty years, and the cost to the Exchequer of financing these advances through the present high-interest period is likely to be considerably higher than 3 per cent. If the corporations were to be given the advantage of averaging for loans made at a high-interest rate, the Treasury, surely, would correspondingly be entitled to average for loans made at low interest rates. It does not seem to me that the corporation can have it both ways; and overall they might be in no better position than they are at the present moment, when, let me inform the noble Lord, on all advances the rate is still below 4½ per cent.

LORD LATHAM

My Lords, at the moment, the London County Council are borrowing for a maximum of twenty or twenty-one years at 6 per cent. They previously borrowed at 2¾ per cent. At the end of twenty or twenty-one years they have the right to repay and to borrow at the rate of interest then prevailing, which may be much lower than 6 per cent. The new towns corporations have no such right.

LORD STRATHCLYDE

My Lords, as I have said, it appears to me that the argument can cut both ways.

The noble Lord further asked me about the exclusion from the housing pool of income from industrial and commercial properties. The situation with regard to that is simply that the deficits on sewerage and other services are so heavy that everything that can be obtained from industry and commerce will be needed to offset them. The real question which the noble Lord raised was whether housing can pay for itself. At the present moment it can. There are one or two cases where the corporations are encountering difficulties and they have run into deficit. But as long as it appears reasonable that housing can pay for itself, there does not appear to be any reason why anyone else should Pay for the housing which is provided. I am glad to be able to give the noble Lord one ray of comfort. He spoke of the rents of garages which were built separately from private houses and excluded from the rent pool. That, indeed, was the position, but it has been decided that wisdom lies, as the noble Lord himself has suggested, in including these rents in the general pool.

The question of overspill is a problem in itself. Whether or not it should be left to individual authorities is a matter on which different views are held, as the noble Lord knows. As he said, at the moment the London County Council are considering building a new town for themselves, as in effect they have been doing over a number of years. We may call these developments housing estates, but in fact they are in the nature of new towns. Other local authorities are doing the same thing. From the taxpayers' point of view, I think they should be encouraged to continue in that course.

During the previous debate in November, we went fully into the whole question of amenities. It is certainly true that the Government would like to see every amenity provided for these new towns at the earliest possible date, but we have to have regard to the national situation at any given moment, and this is not the time to go ahead with things which are not essential to the life of a community. After all, we have to think of those people in the large cities who have nothing like the amenities of the people in the new towns. They have to be considered as well as the populations of the new towns.

The noble Lord spoke of the higher rents which higher interest rates were making necessary. I would put it to the noble Lord that while costs and interest rates have risen, the incomes of the people have risen considerably since 1946, and that is a matter which should be taken into account. I have done my best to answer the various points which were put to me, and I would now invite your Lordships to give this Bill a Second Reading.

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