HOUSING BILL (Hansard, 11 July 1961)

THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (EARL JELLICOE)

My Lords, I beg to move that this Bill be read a second time. Your Lordships are familiar with the White Paper entitled, Housing in England and Wales (Cmnd. 1290), which was published in February. That White Paper contains the background to, and the reasons for, the present Bill. Because of your familiarity with the broad picture, and because I want to be as brief as possible, I will not go over the general ground traversed by that White Paper. Suffice it to say that for the early postwar years the pressing need in housing was for more family accommodation. However, since the war ended, nearly 3,400,000 new houses have been built in England and Wales, of which rather more than 2½ million have been built since Sir Winston Churchill's Administration took office in November, 1951. Building continues at the rate of about 270,000 houses a year. In any event, by about 1954 the overall position, which I do not wish to minimise, had eased to the point where we could once more take up again the work of slum clearance which had been cut short by the war.

The survey carried out by local authorities in 1955 suggested that there were about 850,000 houses in England and Wales which were unfit to be lived in. Of these, 270,000 slum properties have now been dealt with; and others are being cleared or closed at the rate of about 60,000 a year. Slum clearance, indeed, remains the first priority. Nevertheless, we are now coming in sight of the time when some authorities at least will be free to turn their attention to other urgent tasks, such as the relief of chronic overcrowding, overspill, the modernisation of old houses, and to meeting what each Census reveals as a growing problem —the housing requirements of older people. As the problems change, so changes are necessarily required in the network of powers and financial provisions with which we seek to solve these matters. In the Government's opinion, 87 the time has now come for a recasting of the subsidy system to make it rather more flexible, and to concentrate financial assistance where it is most needed. That is one main purpose of the Bill. It is to be found in Part I, which also contains important provisions designed to stimulate the building of new houses to let.

My Lords, the first six clauses of Part I of the Bill are solely concerned with housing subsidies. Two main changes are made here. The first is that in future subsidy will be payable on all houses built by a local authority which are approved by the Minister, instead of only on those built for specified purposes, such as slum clearance. That gives local authorities the added flexibility which we consider they should now have. The second change is that, with limited exceptions, with which I shall deal later, the rate of subsidy payable on local authority houses will in future be discriminatory; it will depend on an assessment of the particular authority's need for financial assistance. In this way, the Government aim to give more assistance where assistance is most needed, while maintaining the total call on the taxpayer at about its present level—that is to say, some £61 million a year covering existing subsidies, with about an extra £3 million a year for new subsidies.

The provisions for determining the appropriate rate of subsidy will be found in Clause 4 of the Bill, which is the kernel of this part of it. The method is to compare the local authority's actual expenditure on housing, as debited to the statutory housing revenue account in the last year for which figures are available, with their potential housing income. This potential income is arrived at by taking the actual income credited to the account from all sources other than house rents and the general rate fund, and adding to it a sum equal to twice the gross value of the authority's houses and flats. If the expenditure exceeds the potential income, the authority will qualify for a basic subsidy of £24 per house per year for 60 years. If not, they will receive only £8.

The logic of this formula is that a sum equal to twice the gross value is a contribution which in the Government's view every local authority should be able to find without undue difficulty from 88 its own resources in the shape of rents, with or without assistance from the rates. Some authorities already collect more than this in rents alone. Consequently, local authorities who, if one assumes such an income, would be more than able to meet their liabilities can fairly be said to be in much less need of assistance than the rest. What rents are actually charged will, of course, remain, as now, entirely a matter for the local authority to decide.

This assessment of resources has to be done afresh each year. An authority with a surplus of resources over expenditure which continues to build on a large scale will sooner or later reach the point where expenditure exceeds potential income, and they will then qualify for the £24 a year subsidy in respect of houses which they build after that. If the excess of expenditure over income continues to mount, they may of course in time qualify under the First Schedule of the Bill for a higher rate of subsidy on future building—for a subsidy of £29 per house, of £34 per house, reaching a maximum in special cases of £40 per house. I know that the Bill has been criticised in some quarters for not giving more assistance to some authorities with grave housing problems. Liverpool, I think, is a case in point. But your Lordships will appreciate, from what I have said, that it does provide a means whereby authorities who not merely have a problem but also tackle it vigorously may progress to a higher rate of subsidy as their housing programme grows, and, in consequence, the strain on their finances grows.

I mentioned just now that there were some exceptions to this new general subsidy system, and I should now like for a moment to turn to them. They will be found in Clause 3, which provides a flat rate of subsidy for houses built for certain specific purposes. The most important of these is overspill. Houses provided for this purpose will qualify for a subsidy of £28 per year for 60 years, instead of the present £24. That applies equally to houses built by local authorities under their own town development schemes, and to houses built by development corporations in new towns. At the same time, the annual extra Exchequer contribution payable by the Minister under the Town Development Act is being increased, under 89 Clause 10, from £8 per year, payable over ten years, to £12 per year, payable over fifteen years. My right honourable friend hopes that this increase in financial aid for overspill building, which amounts to an increase to a maximum of from £32 per house to £40 per house per year, will give a fresh impetus to the building of houses for the relief of congestion in our larger towns and cities. Clause 3 also continues the present subsidy of £24 per year for 60 years in respect of houses built by a local authority for workers coming into their area to meet the urgent need of industry.

Perhaps in this connection I might be allowed to mention Clause 33, right at the end of the Bill. When the Town Development Act, 1952, was passed, it was thought improbable that a county borough could qualify as what is called a "receiving authority"; but it would now appear that there are, or may be, some smaller county boroughs which could play a useful part as receiving authorities and thus help to relieve overspill pressures. Subsection (1) of this clause would make this possible.

There is one further point, my Lords, in connection with subsidy which I should draw to your Lordships' attention. The new subsidies, like the present ones, will normally be payable for 60 years. But Clause 2 (4), gives the Minister power, once the Bill has been in force for ten years, to abolish or reduce subsidies payable under it in respect of houses which have already been built, as well as on houses for which tenders have yet to be accepted. This is essentially a precautionary measure, designed to ensure that the Exchequer is not committed, as it is under present legislation, to payment of subsidy for the full 60-year period irrespective of any changes that may occur in the needs of local authorities for financial assistance.

The present arrangements can have pretty odd results. Thus, an authority may be receiving subsidies on houses on which it now makes a clear profit. I can, of course, reaffirm what has already been made quite clear, I think, in another place—namely, that this power will not be used unless there has been a major rise in income levels, and consequently in the capacity of tenants to 90 pay rents. In consequence, I would submit that there is little force in the criticism which has been advanced, that it will make it impossible for local authorities to plan ahead.

On the whole, as your Lordships will now be aware, Part I of the Bill does not break a great deal of new ground; but before leaving it I should like to direct your Lordships' attention to the clauses in it which do in fact break new ground —namely Clauses 7 and 8, which deal with housing associations. The housing association movement started, as many of your Lordships are doubtless aware, about the time Queen Victoria came to the Throne. Its origins were philanthropic, and the ideal of social service has always played a notable part in the movement. Over the years these associations have done very useful work in helping to meet housing needs, especially perhaps of old people, to whose requirements they are able to bring a personal touch.

There are about 900 housing associations in all, I understand, and since 1945, they have provided some 45,000 new houses in Great Britain, a significant but none the less quite small proportion of the total of new houses built in this country since the war. For the most part, they work in close co-operation with the local authorities and on the basis of loans from them; also by making what are termed authorised arrangements with their local authorities, associations are able to obtain through them the Exchequer subsidy which would have been paid to the local authority if they themselves had been providing the houses. A fruitful partnership has thus grown up between the local authorities and the housing associations.

The Bill does not in any way propose to interfere with that. Indeed, the Government look to the local authorities to maintain and to extend the help they are already giving to the associations, who are supplementing their own work. My right honourable friend's wish is that local authorities will continue to finance the schemes of these housing associations and, by making authorised arrangements with them, pass on the subsidy to them wherever the houses being built by them would have attracted subsidy had the authority themselves 91 been building them. The rate of subsidy which housing associations would attract will be the higher one of £24.

In addition, the Government believe that housing associations may have a special and valuable rôle to play in one rather important sector of the housing front. At present, the resources of private industry and private capital are almost entirely devoted to meeting the sustained demand for houses for owner occupation, while local authorities are naturally concentrating on the needs of those who cannot look elsewhere than to the local authority for accommodation. As paragraph 41 of the White Paper puts it: More new houses to let are also needed for people who do not wish or cannot afford to buy a house, though they require no help from public funds. Very little such accommodation is at present being provided. In the Government's view, there is great scope and great opportunity here for housing associations, standing as they do midway between private enterprise and the local authorities. Therefore, the Government propose to make available, under Clause 7 of the Bill, the sum of £25 million, from which the Minister may advance loans direct to non-profit-making housing associations, who undertake building to let at cost rents.

My right honourable friend will need to be satisfied that there is a real need in the area concerned for the type of accommodation proposed, and his approval to the proposals will be required. Under the agreement which the Minister will enter into with the associations, he will be able to advance loans up to 100 per cent, of the cost, though it is hoped that the associations will "chip in" with some money of their own. The rate of interest will be the same as that at which the Public Works Loan Board lend to local authorities.

One particular type of housing association which the Government hope will be encouraged under Clause 7 is the co-operative association, in which would-be occupiers build and collectively manage the houses or flats in which they live. In a number of countries abroad, especially on the Continent, such schemes have proved their worth. They have been a great success, I gather, in 92 the Scandinavian countries, and also have worked pretty well in Switzerland and Western Germany. Up till now there have been only one or two rather embryonic experiments along these lines in this country. We believe that this trend towards mutual responsibility and self help in the housing field is one which the Government should encourage.

Since houses or flats built by housing associations under Clause 7 will be for people who lie rather outside the normal range of local authority housing, being rather better off, it would not be right to subsidise such building, but the Government propose to make one exception to that rule. That will be for schemes for specially designed accommodation for old people, whose needs in the housing field, as the White Paper has made very clear, are becoming increasingly important. In this exceptional case it is of course common sense for the subsidy to be paid direct by the Minister instead of through the local authority. I am glad that my noble friend Lord Gage, who is President of the National Federation of Housing Societies, will be speaking later in the debate. My right honourable friend is anxious that the Federation should play a leading rôle in stimulating and guiding the course of such projects, and he is discussing with the Federation the possibility of substantially increasing the grant paid to it.

We shall have to see, of course, how fruitful the scheme proposed under Clause 7 is in practice. It is difficult in advance to gauge what success it will have, but I would emphasise the Government's intention by this scheme to inject new vitality into the whole potential field of housing associations' work. In addition, we regard the scheme to some extent as a pump-priming operation. We hope that it will demonstrate that there is a real need for new houses of this type and that, once a successful lead has been given, private capital will again be attracted to this field.

I now wish to turn to Part II of the Bill, to which my right honourable friend attaches considerable importance. In Part II, Clauses 12 to 22 contain new powers whose aim is to enable local authorities effectively to deal with what is perhaps the worst housing evil remaining in this country—the problem of the 93 squalid living conditions too often to be found in what are called multiple-tenancy houses. In many ways these are the real slums of mid-twentieth century Great Britain.

Many of your Lordships will be only too familiar with this problem. Of course it has many facets, but a typical one is where, in one of our larger cities, a district has slipped back. Some 70 or 80 years ago it may have been relatively well-to-do and comprised a large number of pretty large and well built houses, each occupied by a prosperous Victorian family. Between the wars the district may have become less fashionable. In that period the houses were still probably perfectly decent, but then, as a result of the bombing or of post-war overcrowding, or as the further results of an influx of immigrants in the last decade or so, a further decline in the houses has taken place.

As a new boy in this field, it would be absurd for me to claim as deep a knowledge of housing conditions in this country as I should like to have or as I hope in time to acquire, but recently I have had the opportunity of seeing on the ground some of the conditions that these clauses of the Bill are designed to wipe out. Let me take, as an example, an area not many minutes away from your Lordships' House. There I have lately seen squalor which I found hard to reconcile with our affluent, modern and civilised society—basement areas used as common refuse dumps, roofs used for garbage disposal, entrance halls bearing the marks, if I may use the term, of a common pissoir, with contraceptives strewn in the rickety Dickensian staircases, often with the plaster peeled off and the bare lattice boards exposed; broken window panes, exposed and dangerous electric fittings, and common lavatories and bathrooms of almost indescribable sordidness. I do not wish unduly to labour all this, nor do I wish to portray such conditions as more widespread than they are. But in too many of our larger cities and in too large areas of these cities, such sordid and barbaric conditions are to be met with much too often. To put it no higher than this, such conditions do not do credit to this country. The Government are determined to stamp them out.

It is to deal with this problem that these clauses are designed. They fall 94 into three main groups. Clauses 12 to 14 contain powers which are entirely new and which provide, where necessary, for the enforcement of reasonable standards of management and maintenance. Clause 12 is of particular importance. This is an instrument of control to be used only where the need for it is clearly demonstrable—that is to say, where conditions are such that there has clearly been a failure to maintain reasonable standards of management. In deciding what are reasonable standards of management the local authorities will have the assistance of regulations which the Minister is empowered to prescribe under Clause 13 of the Bill and which will lay down a code of basic essentials for the management and maintenance of houses in multiple occupation. Clause 12 accordingly provides that the local authority, after due notice, and subject to a right of appeal to the magistrates' court, should be empowered, where appropriate, to make an order imposing this code on an individual house. Naturally, where a house has been particularly neglected and when an order is first made, there may be accumulated neglect of years to be put right. Clause 14 enables the local authority in such circumstances to insist on the making good of this neglect.

For their part, Clauses 15 to 18 seek to re-enact in strengthened form the existing powers of local authorities to see that the proper facilities—for cooking, for sanitation, for fire precautions, and so on—are installed in houses in multiple occupation, and are adequate for the numbers of people living in such houses. Clause 19 is also, I think, particularly important. It enables the local authority to make a direction limiting the number of occupants of such a house; and also, where the present number exceeds what they consider to be reasonable, to bring about a progressive reduction. This provision should be of great practical benefit in allowing the local authority to intervene to ensure the longer-term improvement of conditions without making anyone immediately homeless. But with the help of subsidy under the Bill the local authorities concerned should well be able to rehouse one or more families themselves from such a house and so make it possible for the house to be improved for the benefit of the remaining occupants.

95 These clauses, my Lords, have teeth in them—and pretty sharp ones at that! In the first place, the powers conferred on local authorities are much stronger than hitherto. There is for example, the power to enforce a management order In addition, the penalties are tougher For example, penalties of a fine of up to £100, or three months' imprisonment can be imposed for breaches of the management powers or a direction limiting the number of residents: and where works are required to make a house suitable for multiple occupation the local authority may themselves intervene in case of default, carry out the works and recover the costs. I am glad, my Lords, that these teeth are sharp. We are confronted here with a real social evil, and one which may well exacerbate the latent racial tensions in certain areas of our cities. In any event, since the profits from this form of exploitation are high, anything less than substantial penalties would be unlikely to serve the purpose. Your Lordships will, of course, wish to be assured that these new powers which are designed to bite on the exploiting minority will not impose an unfair burden on the owners of unoffending multiple-occupation properties. I think I can give such assurance without hesitation. A glance at Clause 13 will show that the matters to be dealt with in the regulations to be made under that clause concern no more than the basic essentials which the great majority of landlords already take as a matter of course. Similarly, the works which may be required under Clause 15 are no more than are necessary to render a house suitable for occupation by the families and individuals who are in fact occupying it.

I do not claim that these provisions by themselves can solve the problem posed by these run-down houses in multiple tenancy. This will take time and will demand a sustained effort on the part of everybody, including, of course, and primarily, the local authorities concerned. But I do claim that these clauses will help local authorities in what is a big job. In the first place, they will enable them to do what is above all necessary—namely, to pin responsibility on one person for what are called the "common parts" in such a building. Part of the trouble in the past 96 has been that responsibility for these "common parts"—for the area, the hall, the staircase, and so on—has been ill-determined. Fixing the responsibility squarely on whoever is drawing the profit from the building, as in this case Clause 12 does, should do a lot to help. We also believe that the proposed management orders are likely to have considerable deterrent force, and a few made in a given area may well serve as an example. Moreover, a management order made in time may well save many houses passing the point of no return. There are houses now in deplorable conditions, which could have been, as it were, rescued by local authorities had they had in the past the powers which the Bill now seeks to confer upon them. Again, I should emphasise that there is nothing in these clauses which a reasonable landlord—and the great majority of landlords are reasonable—need fear. But that said, I would not wish to minimise the sharpness of these provisions.

My Lords, I shall deal somewhat cursorily with Part III of the Bill, not because it is unimportant but because I have already been on my feet too long. But I feel that I should draw Clauses 28 to 30 to your attention, since they deal with an important matter—that of improvement grants. We have a very large number of old houses in this country— there are over 3½ million houses which were built before 1881 and over 6 million built before 1915. We cannot, therefore, afford to scrap houses which, though they may lack modern conveniences and amenities, are nevertheless soundly built and capable of improvement. The main purpose of improvement grants is to encourage the face-lifting (I prefer to use, but I cannot find it, a more radical term) of the better type of old property.

Clauses 29 and 30 are rather technical and I will pass over them rapidly. Clause 28, however, is more substantial. Under it, the maximum return normally available to a landlord who improves a house with the aid of grant will be raised from 8 per cent, of his expenditure to 12½ per cent. Let me quote an example to show your Lordships how this would work out. As a landlord I do £200 worth of grant-aided improvement work on a controlled house, and the local authorities contribute 50 per cent, towards its cost. The 97 result of this clause is that I as a landlord shall now be able to charge my tenant £12 10s. more rent a year compared with £8 more as would have been the case previously. I think it is generally agreed that the present limit offers little incentive, since it leaves the landlord out of pocket in the case of property with a remaining life of only some fifteen years, or not much more. We hope that the increased allowance will encourage landlords to modernise their properties, and we feel that the clause adequately safeguards the position of tenants.

Finally, my Lords, you will expect me to say just a few words about Clauses 31 and 32, which deal with the allocation of repairing responsibilities between landlords and tenants when houses are let on short leases. Briefly, these two clauses provide that if a house or flat is let for less than seven years, the landlord will be under an implied obligation to keep the structure in repair and the main service installations in proper working order. Any covenant which purports to oblige the tenant to do any of these things will be invalidated. To the layman the language is rather elusive, and perhaps I should take this opportunity of making it quite clear that it will still be permissible for the landlord to require the tenant to carry out internal decorations. Further, the tenant will still be under a general obligation, to which all tenants are liable at Common Law, to take proper care of the premises; to repair damage for which they, their children or their guests are responsible; and to do those small odd jobs, like mending fuses, at which so many of your Lordships are, I suspect, very adept, but where I always manage to burn my fingers.

Your Lordships will note that contracting out of these provisions will be allowed with the approval of the county courts. This safeguard is necessary because the clauses are, for obvious reasons, drafted mainly with an eye to houses which are let as an investment. Other people do, however, have reasons for wanting to let their own houses for short periods from time to time. Here the situation is generally quite different. The parties to the agreement are usually people of the same outlook and walk of life—for example, Service families—who will have no difficulty in striking a reasonable 98 bargain. It would not be sensible to make this kind of bargain impossible for the future.

What objects have the Government in mind with this clause? They are twofold. The first is to protect short-term tenants against unreasonable demands for repairs. Secondly, the Government do not wish simply to relieve tenants of unreasonable obligations. As part of the general scheme for keeping older houses up to scratch, the Government and the country as a whole have an interest in ensuring that when houses need repairs, repairs get done.

My Lords, I feel I must conclude. Housing still presents this nation with a considerable challenge. Despite very great progress, we are still a long way from achieving what I feel is the aim of all of us. That aim is to make quite certain that every man, woman and child in Great Britain lives in not only a decent, but also a pleasant environment. It will need a lot of time and money, much energy and imagination in administration, and probably a great many more Housing Bills before we achieve that goal. But in moving this Bill, I claim that it takes us at least a measurable step forward. I beg to move.