§ 4.16 p.m.
§ Order of the Day for the House to be put into Committee read.
§ Moved, That the House do now resolve itself into Committee.—(Lord Mitchison.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The LORD MERTHYR in the Chair.]
§ Clause 1:
§ Regulated tenancies.
§ 1.—(1) The Rent Acts shall apply, subject to the provisions of this section, to every tenancy of a dwelling-house the rateable value 914 of which on the appropriate day did not exceed, in Greater London £400, and elsewhere in Great Britain £200; and references (however expressed) in any enactment to a dwelling-house to which those Acts apply shall be construed accordingly.
THE CHAIRMAN OF COMMITTEES
My Lords, before I call Amendment No. 1 may I point out to the Committee that if this Amendment is passed, Nos. 2 and 3 cannot be called.
LORD HASTINGS moved, in subsection (1), to omit "£400, and elsewhere in Great Britain £200", and to insert instead:
£350, in the Special Review Areas in England and Wales (as defined by section 17(1)(a) and (2), section 25 and the Third Schedule to the Local Government Act 1958) £200, and elsewhere in Great Britain £150;").
§ The noble Lord said: It might be for the convenience of the Committee, and I hope particularly for the noble Lords opposite and the Government, if, before actually dealing with this Amendment, as it is the first Amendment of a rather protracted Committee stage, I should preface my remarks with a brief preamble. I think it would help the Government to appreciate the approach of the Opposition to the whole of this Committee stage and to understand our attitude.
§ Clause 1 sets up the framework of the whole Bill. It is, in fact, the basis of the Bill and therefore the most important clause in it. The Government have done two things in this clause: they have decided on the base upon which the Rent Bill should operate, and they have taken as the foundations for the building which they are going to put upon it the whole of Great Britain. Those are the foundations—what I might describe as the horizontal base for the Bill—and then they have erected on that horizontal base their vertical superstructure and have defined it and circumscribed it. This Amendment deals with the superstructure and not the foundation.
§ We have not put down an Amendment on the coverage of the Bill as far as the geographical case is concerned because we realise that here is a fundamental difference of principle between the Government and the Opposition. The Government believe that it is right to control and regulate rents in the whole 915 of the country. We do not; we should like to limit it, as we said at Second Reading, to London and the major conurbations. This really means the difference between the two sides of the House, between Socialist theory that control is a good thing for its own sake, and Conservative philosophy that that is not so and that control should be limited to the absolute minimum necessary for the community. It is because of this division of principle and philosophy that we have not put down an Amendment on that subject, because we know the Government cannot accept it and they might feel justified in believing that we were putting on a filibuster and moving a wrecking Amendment. I claim that no Amendment on this Marshalled List coming from this side of the House is of that nature. It is our intention to improve the Bill, and we believe there are Amendments here that the Government should be able to accept, and even be grateful for.
§ I thought I should start like that so that the noble Lord may realise that we consider that this first Amendment is put down in an attempt to meet the requirements of necessity and at the same time to bring about greater efficiency, and incidentally greater justice, in the operation of this Bill. I know that in another place Amendments were moved on this particular aspect and rateable values of £250 and £300 were successively turned down by the Government in respect of values referring to London.
§ A certain amount of play was made with figures during our Second Reading; we got a little involved. There is one figure I want to mention, and that is the one used by the noble Lord, Lord Mitchison, and by his right honourable friend previously in another place, that 160,000 houses were outside control at the time of the 1957 Act, just before it (this refers to outside London) and that the same number will be outside control after this Bill is passed. In London the figures were 30,000 and 15,000—a reduction in London.
§ But I really cannot accept that that is a reasonable excuse. After all, we are now in 1965 and not 1957. People are much better off, and it is absurd to say that we can afford to leave out of the regulations of this Bill only 160,000 in the country as a whole. That, according to my calculations, would be 916 about 4 per cent. of privately rented houses, and only 2 per cent. of all rented houses if those owned by local authorities are included. Without affecting the real objective and purpose of this Bill we ought to be able to leave out a far larger number, and I reject the argument put forward by the Government that because so many were left out in 1957 we should leave out about the same number now.
§ May I now turn to the detail of this Amendment and to the London scene? We have put down a rateable value of £350, £50 less than that of the Government, £50 more than the last Amendment moved by the Opposition in another place. Here I think it is necessary to clarify what this rateable value means. A rateable value of £350 means a gross value of just about £440. That is slap in the middle of the bracket pointed out by the Milner Holland Report for a sufficient amount of housing for rent in London. It said between £400 and £500. And remember, the rent is to be related to the gross value and not to the rateable value; and the rateable value of £350 is the equivalent of a gross value, and therefore a notional rent, of £440. I should have thought that splitting the difference of the Milner Holland bracket would be a very reasonable thing to do, and I do not see how the Government can really make a case against it.
§ The noble Lord, Lord Mitchison, on Second Reading, in an interjection said that the majority of rents in London were in fact below the rateable value, and said he would have percentages to prove it. In the first place, I think he must have made an error, because he must have meant gross value and not rateable value. If he would turn to page 356 of the Milner Holland Report, Tables 35 and 36, he will there find set out the ratio of net rent to new gross value, so we are talking about gross value, and he will see there that in respect of uncontrolled houses, unfurnished houses, there were 46 per cent. of singly-occupied houses and purpose-built flats where rent was more than the gross value; and in respect of parts of houses or flats 69 per cent. had a rent exceeding their new gross value. Therefore, I do not know how the noble Lord can justify his remark on Second Reading. In respect of furnished houses, no less than 99 per cent. had rents above gross value.917
§ Therefore, I should like to know why the noble Lord thinks it is necessary to put the figure as high as £400. Indeed, the noble Lord himself said on Second Reading that even if it were reduced to £300 for London it would not make very much difference, but the Government wanted to be on the safe side. I cannot see any justification for going over £350, and I think the few figures I have quoted—and I do not want to bore the Committee with many—is sufficient proof of that. Perhaps the noble Lord can tell us what difference it would make, in terms of the number of houses with a rateable value between £350 and £400.
§ I turn to the central part of the Amendment, where we have put down something new. After getting the Milner Holland Report, we have always said that we should be ready to legislate for security of tenure, which means, of course, having regulated rents as well, and bearing in mind also the possibility, even the probability, that some similar legislation would be required in the large conurbations. We do not want to dispute that. It is very difficult to get reliable figures in the large conurbations. I have included them at the Government's own figure of £200, so T do not think they can possibly complain about that.
§ I now come to the third part of the Amendment, where we want to reduce the rateable value from £200 to £150. That, again, seems an eminently reasonable thing to do. It is surely logical that the rateable values and rents will be higher in the large conurbations, owing to the scarcity of housing to be found in those areas. Where scarcity is much less, or where there is no scarcity at all, it is clear that the rateable values and the rents will be lower. In those areas, of course, is included a very important part of the country which this Bill affects, and that is Scotland. In another place, when this matter was being discussed the Under-Secretary of State for Scotland himself pointed out that the old rateable value limit of control of £90 existing before the 1957 Act would be equivalent to £125 now in Scotland. But he added, "We want to be sure, so we put it up to £200". A jump from £125 to £200 is simply enormous.
§ We have allowed a little scope to the Government in this respect and we have 918 taken the Under-Secretary of State for Scotland at his, word—that the real equivalent rateable value would be £125—and we have made it £150. Even then I do not think a great many houses in Scotland will be excluded. At £200 I believe it was only to be 500 houses, or as some people said, castles. At £150 there would be a few more, but at the same time it would make the operation of the Act much easier in that country. Indeed, one knows well that in urban areas, and particularly in rural areas, the number of occasions on which a house is rated at over £150 is not great. I should prefer to have a figure of £125, because even at that rate you get a good standard of housing outside the conurbations. At over £150 you are getting into the luxury standard—there is no doubt about it.
§ I have put this case at some length. I shall certainly not have to speak for anything like so long in moving any other Amendments. I wanted to emphasise to the Government the importance we attach to this first Amendment, and to stress that we believe that it would be an improvement to the Bill on the grounds of necessity, efficiency and justice. I greatly hope that the Government will see their way to accepting this Amendment, because I think it is eminently reasonable. I have tried to argue it logically and reasonably, yet forcefully, because we believe that the Amendment should be accepted. I beg to move.
Page 1, line 11, leave out from ("London") to end of line and insert the said new words.—(Lord Hastings.)
§ 4.32 p.m.
§ LORD MOLSON
In view of the fact that if this Amendment were accepted my own two Amendments would fall to the ground, perhaps I may speak to this Amendment and comment upon the figures that I have put into my Amendment—that is to say, £300 instead of £400; and £100 instead of £200. I should like to associate myself with what my noble friend Lord Hastings has said about our approach to this Bill. On Second Reading I went out of my way to say that I thought that it was capable of being an extremely good measure if it were sufficiently amended, and in particular I said that I had always liked the idea of having fair rents instead of 919 creeping complete control. Therefore, I have put down Amendments, in the hope that the Government will be willing to narrow the scope of the Bill in order that it will be much easier to administer and will apply to those particular categories of houses to which I think the Government wish to apply it.
I am not wholly without hope that the Government may be prepared to accept some of these Amendments, because of the tone of the speeches made in another place by the Minister. In particular, on June 29, at column 575, he expressed the Government's point of view about somewhat similar Amendments that were moved. He pointed out that the Bill has machinery for lowering the rateable value, and, indeed, of excluding complete areas. He said that the Government were taking power to reduce the scope of the Bill, and he gave an undertaking that in suitable cases they would do so without any avoidable delay. I hope that the Government may be willing to consider the argument that the Bill should now be modified in order not to include the large number of houses which, according to what they themselves have said, they would be quite willing to exclude later.
My noble friend Lord Hastings has moved an Amendment for which I think there is a great deal to be said. I do not wholly agree with the figures that he has put down: I do not think that they go far enough. But we are in this great difficulty that, so far as I can make out, it is not possible for private individuals to find out what would be the number of houses included at different rates of gross valuation. My information (I think it is derived from a Government statement) is that under the Bill, as at present drafted, only 1.7 per cent. of the domestic properties in England and Wales will be above the level which is included in this Bill. I understand that 83.5 per cent. have a rateable value of £100 or less, and that a further 14.8 per cent. fall within the range, £101 to £200, leaving only 1.7 per cent. above the level that is caught by the clauses of this Bill. As a number of that 1.7 per cent. will be in London, it means that only a small proportion of the properties in the rest of England and Wales would be excluded.
I should find it surprising if the Minister could give me the figures here 920 and now, but it would be valuable and helpful if, before the Report stage, the Government would indicate at what level of rateable value different quantities of houses in the country would be included. I should have thought, entirely as a guess, that if something like 75 per cent. of the properties in this country were included in this Bill, that would deal with the cases where there is any danger of hardship and where it is necessary to have control.
That is the general argument that I should like to put forward. As I say, it seems to me that there would be nothing inconsistent with the line taken by the Government in another place if they were prepared to lower the present levels set out in the Bill. It means merely that, instead of going to a height above what they think is necessary, and with a view to using the subsequent clauses to exclude areas and values which they do not think need to be included, they should accept an Amendment at this stage. There is clearly one great advantage in adopting such a course. It is obviously going to be a major administrative task to set up this organisation over the whole of the country; to find the necessary number of experienced and impartial rent officers; to set up and man the rent tribunals, and to deal with the vast number of cases that are liable to be brought before them. I believe that it would make the Bill far more manageable and convenient if, either at this stage or on Report, the Government were prepared to accept an Amendment on the lines of that moved by my noble friend, or the one that I suggest.
§ LORD WOLVERTON
I support this Amendment. I think it is one of paramount importance. I should like to reinforce what my noble friend Lord Molson has just said: that it is bound to be difficult to find enough skilled valuers to do this job. Only recently I retired after nine years as a member of a county council, and I know how difficult it is to fill the present vacancies for local government officers. Such men are in short supply. Other councils have equal difficulty. It is bound to be difficult for councils to find this vast number of men who must be skilled in this operation. I do not think we ought to put on them any more onus than is absolutely necessary. Moreover, while I agree that one 921 must have flexible rent control in big cities like London, in the Midland conurbations, and in the North-East and the North-West, I cannot see that it is necessary to keep so many houses under control in the other areas. That point has already been made by my noble friend Lord Molson. I hope that the Government will give serious consideration to this Amendment, because I think it is one of the most important that we shall be discussing this afternoon.
§ 4.40 p.m.
§ LORD MITCHISON
I should like to express my thanks to the noble Lord, Lord Hastings, for his very clear explanation of the Opposition's attitude to this Bill, and for his undertaking, as I understood it—which I will seek to emulate—to deal with these Amendments as concisely as possible. I must correct one major point, because it appears to go to the root of the Opposition's attitude, and certainly affects our view of the Bill as a whole. The noble Lord told us—perhaps it was the old devil popping out!—that the view of the Socialist Government was "control for control's sake". That is quite untrue of this Bill, and is utterly irrelevant to this Amendment.
§ LORD MITCHISON
I will try not to follow the noble Lord up that byway, but I think what he said was intended to represent the views of the Opposition about the Bill as a whole. We had better get it right. We cannot necessarily get them to understand it, but we can do our best to restate it.
This Bill is not for the purpose of regulating or controlling rents for the sake of regulation and control. It has one object: to provide security of tenure and to do certain things in that connection for a considerable group of people who were deprived of that security by the 1957 Act. I will not be tempted by what the noble Lord, Lord Newton, said last time to express my views of the 1957 Act with a full flourish of vituperative language, but I could easily do so. I think that no single Statute passed under the Tory Administration of thirteen years did more harm, and caused more misery to a large number of people, than that 922 particular measure. I hope that I have complied with Lord Newton's feeling that I have been too gentle about the matter.
§ LORD NEWTON
I never doubted or attempted to cast doubt on the ability of the noble Lord, Lord Mitchison, to use vituperative language: it is on the Record.
§ LORD MITCHISON
I do not find anything to quarrel with in that. However, that is the object of this Bill. Regulation is merely a means for doing it. It is a new means, and, as Lord Molson told us just now, it has great merits as a means, and has never been tried before. Previously we have always had control by arithmetical limits of some sort. That control, so far as it exists, is preserved, but what happened was that the 1957 Act, by reducing the sphere of control very considerably, freed a number of people from control altogether and took power to decontrol further by ministerial order—a point which is sometimes forgotten.
§ LORD MITCHISON
What we are doing at this moment is to provide protection for that group of people. They will not be the same individuals, but the same group of people will receive the protection that was taken away by the 1957 Act. In that sense what we are doing by this Bill is effectively carrying out an Election promise to repeal the 1957 Act.
Although we think that regulation is a much better way of doing it, and we are pleased to be able to put this Bill before Parliament, it is none the less simply a means, and the object of the Bill is the object that I have described. I make no apology for saying that as clearly as it lies in my power. I do not for one moment expect that noble Lords opposite will cease saying that the object of the Bill is to introduce Socialist regulation or control for its own sake. I think that people believe that kind of thing, and if they say it often enough it becomes almost impossible to persuade them of anything else. But many of those who spoke on Second Reading realised that the Bill had another object, and they gave it an unopposed Second Reading. If it really had as its main object Socialist control for its own sake, 923 I wonder what induced noble Lords opposite to give it an unopposed Second Reading? Of course, it has a broad public purpose.
In order to apply regulation we must begin by seeing that we do not leave out too much. I put it that way for the reason that the Bill contains, and rightly contains, a provision for allowing the release of categories of buildings over a certain rateable value in areas of the country. If in fact, on experience, one discovered that in Greater London, say, the limit of £400 was too high, one could then reduce it to £375, £350, or to whatever figure experience showed was right. But there is no similar provision to that in the 1957 Act for enlarging the remedy which one is invoking in this matter. One cannot start at £300 or £350 now and then, if we find later that we have left out too much, increase the limit. There is no provision without further legislation for increasing the limit. That being so, it seems to me to be every inducement to be careful at the first stage.
I will deal with the figures as carefully as I can. One must be very careful when dealing with housing statistics. I assure Lord Hastings that the percentages I had in mind in the interjection to which he referred were, in fact, percentages of the gross rateable value, and that the information which I then gave him as regards those percentages was correct as I understood it, although it was on the rather small sample. I prefer to put this matter in the way in which I put it on Second Reading; because I believe that it presents the picture the right way. The 1957 control left out about 160,000 houses at the top—that is the pre-1957 control; that is the number left out by the present £200 and £400 limit. Taking London as a special case, fewer houses are left out in London than were left out by the pre-1957 limit. The houses which were left out by the pre-1957 limit numbered, roughly, 30,000, and at present they number about 15,000. On the face of it that looks pretty fair, certainly as regards the rest of the country.
What about the position of London? I would suggest that one has to bear in mind two things about London. First of all, that it is in London where the housing conditions are at the worst and 924 most difficult at the moment, and that a mistake in London might be extremely difficult to rectify if it were a mistake in the direction of leaving out too much. The second point follows from that. The noble Lord, Lord Hastings, said that we need not bother too much about that kind of comparison because we have all since become better off. That really does not help at all. What one is trying to do here by regulation is, in the first place, to get an agreement about what is a fair rent, and, failing that agreement, to get the question of a fair rent referred first to a conciliation officer, called the rent officer, and, secondly, to a rent assessment committee.
Therefore, if you extend control too far, whom exactly are you going to injure? You are certainly not going to injure the people who agree, and would have agreed anyhow, and I hope and believe—and here I hope I have the support of the noble Lords opposite, at any rate after reading the Milner Holland Report—that that will comprise the majority of people in the country. You are not going to inflict any hardship on them. They have their agreements and they would have their agreement under any circumstances.
Then the next case is that of somebody who, for one reason or another, is asking too much. I am not saying that this is a case of innate wickedness. It is nothing of the sort. But, if a person is asking too much by way of rent, we are providing for his demand to be reduced to a fair rent. I do not call this harsh oppression. To reduce what is ex hypothesi unfair to fairness is not exactly crushing the landlord beneath the feet of a wicked Socialist bureaucracy. It is merely getting him to refer his notion of what is fair and what is not fair to the judgment of his fellow men with some experience in this matter. That is all. I cannot say that I think that is oppressive. To suggestions therefore that fixing too high a limit of this sort is really going to do any social or moral injustice to anybody, I am afraid I would simply turn an absolutely unyielding front. It cannot be so, when what you are talking about is the type of regulation I am discussing. You may say that it will not work properly, but that is another question. I think this machinery is as 925 good as human ingenuity can make it. I will not say any more than that; nobody can. But that is all you are doing.
In these circumstances, what are the real arguments for reducing the figures in the Bill? These are figures, of course, about a rateable value; as I understand it, in these cases a net rateable value. The percentages I gave related to a gross value. They are arrived at so as to produce in the country as a whole the same result as existed under the 1957 control. After all, if we did not at any rate try to do that, we should hardly be carrying out the promise we made to repeal the 1957 Act itself. That is exactly what we are doing, and I am sure that noble Lords opposite would not wish us to break our Election pledges on that.
Let us turn to London. I think it was the noble Lord, Lord Molson, who said quite correctly that the actual figures are very small. They are extremely difficult to get at, but take the ones I have given. The difference between 30,000 and 15,000—that is to say, between the number of houses left out at the top before 1957 and the number left out now—is 15,000. That in itself is not very large. But it also includes the other kinds of houses which are held under different tenures than the private lettings which we are now considering. The proportion of private lettings over the country as a whole is about one-quarter of the total, and on that basis you could say 4,000, perhaps, in London. But that is not the whole story. I venture to think that if you were able to work this out, you would find that the proportion of private lettings up at the top of the scale was, if anything, rather smaller. But I do not think I am concerned with that.
I am merely concerned to say to your Lordships that I do not think a large number of houses would be involved by the London figure, which I am taking for this purpose because it is the one that needs a little more defence. Taking a low figure like that, it is small but it is not negligible, and I cannot see why people who are living in a house with a rateable value between £350 and £400 should really be deprived of protection. Of course, it may be said to that, "If you were logi- 926 cal you would have it extending over the whole run of houses without any limit at all". I suppose that would be perfect logic in one sense, but I am not quite certain, because when you get above a certain limit you get to rather peculiar cases, rather exceptional houses. I understand that there are castles in Scotland which were discussed in another place, and no doubt there are similar large houses in London, and it is those which we have tried to keep out. But we see no reason to reduce these figures here.
I turn from that to the Milner Holland Report. I thought the noble Lord, Lord Hastings, quoted the Milner Holland figures, perhaps inadvertently, as rateable value figures, but of course they are rents. What Milner Holland said, at the bottom of page 179—he said it in one or two places—was this:We are satisfied on the evidence before us that there is plenty of good accommodation for rent in London at rentals of £400-£500 per annum and above.This passage was very strongly relied on in another place, and it was said, "If that is the position, why do you want any regulation?" Two answers were made, and I repeat them here. The first of them is this. If you were doing anything fatal and irrevocable by fixing too high a limit, I should see the force of some of the observations that were made. But you are not doing that. You are simply trying to ascertain what is required towards the top of the scale in this case. That is the first point.
The second point is that my right honourable friend the Minister pointed out that there was other evidence that he had had which was not in accord with that particular conclusion in the Milner Holland Report; and I noticed that in your Lordships' House the other day my noble friend Lord Silkin, who has probably as great an experience of this kind of thing as any of us, was also a little critical about this particular limit. All I say to your Lordships is this. If that is the position, why run the risk of leaving out too much when leaving out too little can so easily be remedied afterwards? I cannot see the answer to that.
However, there is yet another way of looking at the matter. I have been trying to ascertain for a number of days past what is the relation between the net rateable values with which we are dealing 927 here and the rents at this sort of level. I confess frankly to your Lordships that I cannot do it, and I do not think that the information is in the possession of any Government Department. It is not at all easy to discover, because you have got to remember that you are dealing with private rented houses only, and you could easily get false figures another way. But I have got this far in the matter. Three times in another place Amendments were moved on behalf of the Opposition, always by the same right honourable Member, Mr. Boyd-Carpenter, and three times he relied on the proposition that if you took a rateable value of, say, £300 the equivalent rental was to be found by multiplying that rateable value of £300 by 2 or more. He took 2, 2⅓ and 2½.
All I can say to your Lordships—and I say it with a full sense of responsibility—is that, so far as I can discover on all the information available, that multiplier is grossly too high. I am not sure what the right multiplier is and I cannot give an answer. At what I might call an informed guess—that is to say, having looked at a whole lot of figures—I am inclined to think it is somewhere about 1¼ or 1½. This makes a very considerable difference, because the argument was put like this: "We are proposing", it was said, "a limit in London of £300. Multiply it by 2 or 2½ and you land in the middle, or thereabouts, of the Milner Holland figures. You get into the safe range". The fallacy was that the multiplier was wrong, and there is no doubt about it.
I looked for the source of the multiplier all through those debates. It is true that at one point Mr. Boyd-Carpenter said that he was "so advised". I do not know who gave him the advice, and he gave no indication. One noble Lord was quite correct in saying that, the way the debates went in another place, this was not pointed out to Mr. Boyd-Carpenter perhaps as clearly or as often as it might have been; but I assure your Lordships that, to the best of my knowledge and belief—and I can go no further than that—a multiplier of that order is far too high, and therefore the arguments which were put forward by the leading speaker for the Opposition in another place were arguments based on a very important but false premise.
928 If that is the case, one begins to think again. I noticed that to-day the noble Lord, Lord Hastings, did not refer to arguments of this kind at all. He may have gathered from the course of the Second Reading debate that they were a little open to suspicion. I therefore looked to see what his arguments really were. I do not want to be rude, but I found it very difficult to discover what was his real reason for wanting to lower the limits, except the perfectly general assertion that regulation over the figures he proposed was not needed. I think one wants more support than that. If I may take the table to which he referred in the Milner Holland Report and relate the net rents there to the gross annual values, the multiplier, I think, would become of the order of 1.4. If it is of the order of 1.4, then your Lordships will see that, on these figures, £300 is not high enough; and I find it very difficult indeed to think that one ought to go as close as that.
The long and the short of it, I believe, is this. This is a Bill to introduce a form of regulation which is not oppressive, which is perfectly reasonable and which is designed to help a group of people who have had a terribly hard time in the London area in recent years. If we are going to apply it at all, then let us see that we apply it fully and see that there is the power to reduce the amount under a later clause by such steps and in such areas as are necessary. It is said that that will increase (I forget the exact words which the noble Lord, Lord Molson, used) the size of the machine. I do not think it will. The figures are small ones, and I have given them. I should have hoped that in this case, rather more than in the cases lower down the scale of values, agreement might be almost always possible.
I believe that housing has this character about it: that a quite small number of hard cases can be terribly cruel to people. Though I should not expect to find many in this group, I do not see why we should take the risk of finding them and making them. The Minister can put things right afterwards if need be. Therefore, I believe that these Amendments are as misconceived as similar Amendments were in another place. I recognise the feeling that makes people put them forward, but I think, on 929 balance, it is the wrong feeling for this kind of regulation, and I therefore cannot accept any of these Amendments.
§ LORD MOLSON
I am sure we are all most grateful to the noble Lord the Parliamentary Secretary for the detailed and full reply that he has given. There is one thing, however, which I do not think ought to pass without notice. It is not very often that, in your Lordships' House, arguments are advanced on behalf of the Government that have not been previously advanced in another place, especially when a Bill has been in Standing Committee upstairs there and has been discussed very fully indeed. The noble Lord, Lord Mitchison, is right so far as I am concerned: I did not use Mr. Boyd-Carpenter's argument that the rents charged are usually twice, or more than twice, the rateable value. I had also done what research I could, and I was unable to find any justification for it. But the extraordinary thing to which I should like to draw your Lordships' attention, and especially that of the Government, is that the Parliamentary Secretary has told us that this argument was advanced no fewer than three times by Mr. Boyd-Carpenter, and on no occasion was it rebutted by the Minister responsible.
§ LORD MITCHISON
I am much obliged to the noble Lord for giving way, but I did not go as far as that. What I said was that, the way the debates went —as I think the noble Lord will find if he looks himself—it was not as definitely and fully answered as it might have been. It was protested against: the Parliamentary Secretary, Mr. MacColl, protested at one point. I noticed that.
§ LORD MOLSON
That very largely confirms what I said. How very satisfactory it is to think that we should have put down these Amendments in your Lordships' House and have obtained an answer from the Government here which was not vouchsafed to another place.
§ LORD HASTINGS
I am also most grateful to the noble Lord for having dealt at such length and in such detail with this very important subject—and I mean that sincerely, because this matter needs a thorough discussion at the beginning of our Committee stage and the noble Lord's reply has set the standard for the whole of our proceedings. He 930 was very persuasive at the beginning of his argument, I will admit. I need not go again over the fundamental difference between us, about "control for control's sake," and so on, but I would point out that our Amendment does nothing to affect adversely the general security of tenure, the security from eviction, because that is, or will be, universal, and applicable to all tenants. It affects only minimally security of tenure in so far as that security is attached to rent regulation. The noble Lord has not said a great deal about that, and we feel that the regulation for the income groups involved is not necessary.
The noble Lord spent no time at all on dealing with the situation outside London—and it is very important. If the Government insist on keeping to their figure of £200 rateable value outside London, I have little doubt that he is going to exacerbate landlord/tenant relations and not improve them—and quite unnecessarily. As I repeat, to take over £150 rateable value outside the big conurbations (and London, of course) is completely unnecessary, and we feel that we must stick to our point on that particular matter.
Turning now to London, the noble Lord, of course, did not reply to my speech at all: he replied to Mr. Boyd-Carpenter in another place, whose arguments I never used once. I relied on the figures in the Milner Holland Report, and I would accept more or less his idea that the rent would be 1½ times. But I will emphasise again: not 1½ times the rateable value, but 1½ times the gross value. That is what the Milner Holland Report says in the table I quoted; and 1½ times the gross value is 1½ times £440, based on a rateable value of £350.
§ LORD MITCHISON
I am much obliged to the noble Lord for giving way. I abhor housing and rating statistics—and I do not believe that he really loves them, either—but the figure for all lettings in the table he has in mind is 1.12. That is the right figure in relation to the net rateable values. I added a quarter to it and so arrived at the 1½. It was only a rough figure.
§ LORD HASTINGS
The noble Lord is talking about averages, and it is very difficult to average things. I was talking about the percentage of housing let at 931 more than the gross value and up to twice the gross value; but there are very few houses of that kind. Therefore, it is roughly between once and twice the gross value. But we are already in a field of rent which is as low as £600, and one can hardly argue that this is an income group which needs protection. Therefore all his arguments against my right honourable friend in another place based on the falsity of the multiplier fall to the ground. We say emphatically that £350 is the right figure to make the operation of the Bill reasonable and to cover all the people who should be covered. After all, it is the Government's intention to deal with the urgent cases first, and there is no reason why they should worry about those in the other range.
The noble Lord said that there is no possibility of increasing the limit and that it is so easy to reduce it. But will this Government that we have ever reduce the limit? I do not think so. Really! we are not prepared to rely on that sort of bait. If the noble Lord is unable to accept this Amendment, I have no alternative but to ask my noble friends to follow me into the Division Lobby.
§ LORD MITCHISON
Before the noble Lord sits down, may I remind him that my right honourable friend the Minister of Housing did promise to look into this matter, in the light of experience, and, if he could, to reduce the limit.
§ 5.12 p.m.
§ LORD SILKIN
I suppose that the noble Lord intends to divide the Committee, and I do not expect that anything I say will alter his decision. But on what is he dividing the Committee? He is dividing the Committee on the issue of whether, in London, the rateable value should be £350 or £400. Is that an issue on which the Committee is able to form a positive opinion? The issue is so narrow between one and the other that I should have thought the wise thing would be to accept the £400, with the assurance that the matter will be looked at again.
§ BARONESS HORSBRUGH
May I ask the noble Lord whether, if this issue is so narrow—and I agree with him that it is—he can induce his noble friend to accept the Amendment?
§ LORD SILKIN
No, I do not think so; because I am going to give other reasons for the £400. The noble Lord said that this was not needed for the purpose of giving security of tenure to people in the range between £350 and £400 because they are already protected from eviction. But, in fact, all they would be protected from would be eviction without a court order. But, in many cases, the court would have no discretion; so the tenants would not have that security of tenure which I think they ought to have.
I am a little surprised at the nature of these Amendments because we are seeking to protect a class of persons not normally looked after by any section of the community: the middle class. We seek to protect the middle-class person who seeks accommodation in London and in the conurbations outside; who has to live in London because of his job; who is unable or not prepared to buy a house; who very often cannot get a mortgage; who has to have rented accommodation and who, in most cases, because of the scarcity of rented accommodation available, has to get a flat. I would ask the noble Lord to agree, from his own experience, that a middle-class family man seeking a flat in the central part of London—in, say, Kensington, Chelsea, Paddington or Marylebone—would have to pay something in the order of at least £700 to £800 a year. Is not such a person worthy of protection against exploitation? I am not suggesting that there is widespread exploitation; but there is a certain amount of it. And we all know that there is still a shortage of that kind of housing in London, and that there is a danger of exploitation. Why, therefore, should not that kind of person, admittedly with an income of perhaps £2,000 or £2,500 a year gross, have the same sort of protection as will be given to people with a lesser income. I was under the impression that the Party opposite were anxious to protect that kind of person. Evidently they want to throw them to the wolves. We are out to protect them.
If it turns out eventually that the number of dwellings available becomes so great that there is a freedom of choice, and a freedom to negotiate a rent, then the Government have given an undertaking that they will reduce the limit.
933 Until that time comes, and the Government are satisfied that they can reduce, I am sure that the right thing is to stand by the figure in the Bill. I hope that the Opposition will be content to accept the assurance that has been given. I know that the noble Lord is doubtful whether he can really believe the Minister, but I would ask him to accept the assurance that this question will be looked at when the time comes with a view to a reduction in the rateable value.
§ LORD OGMORE
Before the noble Lord, Lord Hastings, speaks again I should like to take up one point which was put by the noble Lord, Lord Silkin, when he said that no one in this country is interested in the middle class. The Liberal Party are most interested in the middle class, as in all other classes; but I support his argument about the young people in London. This is a very real problem. Like him, I do not see why the young couple in London who have to find accommodation in Kensington and other areas should not have equal protection. If we are to have rent control, it should affect people of all types and of all income groups.
I was surprised that the noble Lord, Lord Hastings, should assume that the Labour Government are going to continue in office perpetually; for that is what he seemed to imply. It may be so; but it was surprising to hear it from the Conservative Front Bench. He said that he could never imagine the Labour Government reducing the amount, even if they felt the time had come to do so. That was his implication. But, presumably, they will not be in office for ever; the Conservatives may be in office and the Conservative Government could look at it and make up their minds—or perhaps the Liberals will be in office. They will certainly look at all these problems and make up their minds. I do not want to delay the Committee. I agree with
§ the noble Lord, Lord Silkin, in hoping that the Committee will support the Bill and reject the Amendment.
§ LORD NEWTON
I do not want to make a long intervention, but I feel that some brief reply should come from these Benches in answer to Lord Silkin in his admittedly reasonable plea, to the effect that we on this side were being unreasonable. But it seems to me that the noble Lord, Lord Silkin, was really arguing against his noble friend, Lord Mitchison. The trend of Lord Silkin's argument was that everybody should be protected in London, and that there should be no upper limit to the rateable value.
§ LORD SILKIN
I would go so far as to say that, so long as there is a housing shortage in any category, it ought to be protected. In our opinion, we have at the moment the right range.
§ LORD NEWTON
That seems to me a slight qualification of the general trend of the noble Lord's argument. Obviously you could make out a case for everybody being protected in case someone, however luxurious his dwelling, might be exploited. The noble Lord, Lord Mitchison, faced this and said it would have been logical to have no upper limits, but he thought that was going too far. There is at any rate this agreement between the Government and us, that there ought to be upper limits. The argument is where the upper limits should be. My point is that if we are to have upper limits of rateable value written into the Bill we should try to get them in the right place. That is what is between us.
§ 5.22 p.m.
§ On Question, Whether the said Amendment (No. 1) shall be agreed to?
§ Their Lordships divided: Contents 62; Not-Contents 54.935
|Ailwyn, L.||Carrington, L.||Fortescue, E.|
|Albemarle, E.||Denham, L. [Teller.]||Fraser of Lonsdale, L.|
|Allerton, L.||Derwent, L.||Gage, V.|
|Atholl, D.||Digby, L.||Greenway, L.|
|Auckland, L.||Dilhorne, V.||Grenfell, L.|
|Balerno, L.||Ebbisham, L.||Grimston of Westbury, L.|
|Balfour of Inchrye, L.||Elliot of Harwood, Bs.||Hastings, L.|
|Barnby, L.||Emmet of Amberley, Bs.||Hawke, L.|
|Bessborough, E.||Erroll of Hale, L.||Horsbrugh, Bs.|
|Blackford, L.||Falkland, V.||Hurd, L.|
|Bridgeman, V.||Ferrers, E.||Ilford, L.|
|Brooke of Ystradfellte, Bs.||Forster of Harraby, L.||Jellicoe, E.|
|Killearn, L.||Mowbray and Stourton, L.||Somers, L.|
|Kinnoull, E.||Newton, L.||Strange of Knokin, Bs.|
|Lambert, V.||Poulett, E.||Stuart of Findhorn, V.|
|Lothian, M.||Ridley, V.||Swinton, E.|
|Malmesbury, E.||St. Aldwyn, E. [Teller.]||Ullswater, V.|
|Margadale, L.||St. Helens, L.||Wakefield of Kendal, L.|
|Massereene and Ferrard, V.||St. Oswald, L.||Wolverton, L.|
|Molson, L.||Sandford, L.||Woolton, E.|
|Monson, L.||Selkirk, E.|
|Addison, V.||Henderson, L.||Rhodes, L.|
|Airedale, L.||Henley, L.||Segal, L.|
|Archibald, L.||Hilton of Upton, L.||Shackleton, L.|
|Attlee, E.||Hobson, L.||Shepherd, L.|
|Beswick, L. [Teller.]||Hughes, L.||Silkin, L.|
|Bowles, L. [Teller.]||Kirkwood, L.||Simey, L.|
|Brockway, L.||Latham, L.||Sinha, L.|
|Burton of Coventry, Bs.||Leatherland, L.||Snow, L.|
|Byers, L.||Listowel, E.||Sorensen, L.|
|Champion, L.||Lloyd of Hampstead, L.||Stonham, L.|
|Chorley, L.||Longford, E. (L. Privy Seal.)||Taylor, L.|
|Cohen of Brighton, L.||Merrivale, L.||Wade, L.|
|Colwyn, L.||Mitchison, L.||Walston, L.|
|Douglas of Barloch, L.||Morris of Kenwood, L.||Wells-Pestell, L.|
|Gaitskell, Bs.||Morrison, L.||Williams, L.|
|Gardiner, L. (L. Chancellor.)||Ogmore, L.||Williamson, L.|
|Haire of Whiteabbey, L.||Phillips, Bs.||Winterbottom, L.|
|Hampton, L.||Plummer, Bs.||Wynne-Jones, L.|
On Question, Amendment agreed to.
§ Resolved in the Affirmative, and the said Amendment agreed to accordingly.
§ On Question, Whether Clause 1, as amended, shall be agreed to?
§ LORD HASTINGS
I have one or two points to put to the noble Lord, because this is a complicated clause. First of all, in line 3, are the words, "on the appropriate day". What is going to happen at the next quinquennial valuation? I take it that it is the intention of the Government that the limits, which we have now amended, will remain for all time and that a dwelling would not come out of regulation simply as a result of its rateable value being increased in the quinquennial valuation. That would be a protection, from the point of view of the Bill, against the process of inflation.
But suppose that on the appropriate day a house in the country with a rateable value of £140, so coming within the limit of £150 now fixed, is improved—and it is easy to spend £500 or £1,000 on improvements, for example, on central heating—and the rateable value goes up to, say, £170. Will the revised rateable valuation resulting from these improvements automatically release from rent regulation, if the new valuation is higher than the limit? I think that it is important that we should know this now, 936 because if this is not so, it could prove discouraging to landlords wishing to improve their houses.
On page 2, subsections (4) and (5) are very involved and I should like to be clear in my own mind about what is a statutory tenancy. In the past, we have been used to referring to a statutory tenancy as a tenancy of rateable value limited to £40 in London and £30 in the country. Now we find that "statutory tenancy" is going to be used in a different sense. It would appear that immediately the Bill comes into force a contractual tenancy would become a regulated one. I am not sure from subsection (5) whether, after it becomes regulated and there is a change of tenancy or the lease falls in and the sitting tenant gets a new lease, that would be a statutory tenancy. I wonder whether the noble Lord could elucidate this obscure point, because in Clauses 3 to 7 we find the word "statutory" used in a sense to which we are not accustomed and it is not always easy to know what is meant.
§ LORD MOLSON
There is one other point I should like the Parliamentary Secretary to deal with, which is connected with the point made by my noble friend Lord Hastings. It is this matter of "on the appropriate day". My noble friend referred to the possibility of there being 937 improvements made to a house which would result in increasing its rateable value in between the quinquennial valuations. We know that there is likely to be a Bill consolidating all the Rent Acts and it may be that this Bill will be caught up in that consolidation; therefore, it may be a long time before there is a complete change in the law. I take it that that would mean that when the new quinquennial period arises, when there is a complete reassessment of rateable values throughout the country, even though the rateable value of a house had gone above these limits it would still remain within the purview of the Rent Acts because it would have had its rateable valuation on the appropriate day. That seems to me to be undesirable. We do not want undue rigidity in this matter. When a new rateable valuation is arrived at in the next quinquennial valuation, it is desirable that the question of what should or should not be controlled under the Rent Acts should depend upon the new valuation.
§ LORD MITCHISON
I am asked two questions. The first is what is "the appropriate day" or, if I may put it another way round, "the rateable value of which on the appropriate day did not exceed" the limits laid down in the Bill. The appropriate day is defined in Clause 40(3) and I venture to think that the definition is pretty clear. It has to cover various cases, but where there is a dwelling house on the valuation list on March 23, 1965, then the appropriate day is that day. Broadly speaking, if it appears on the valuation list or roll after that, it is the day on which it first appears.
§ LORD HASTINGS
Before the noble Lord leaves that point, I know what the appropriate day is under the Bill. What I want to know is the effect of this definition in regard to improvements which may have been carried out after the appropriate day and resulting in the rateable value going over the ceiling.
§ LORD MITCHISON
All I am trying to answer, and I repeat it, is the meaning of the words "appropriate day" in the third line of subsection (1) of Clause 1 of the Bill. In normal cases of the house existing now the appropriate day is March 23, 1965. As I read the Bill, that is not affected by improvements or 938 changes. But there is also the case where there is a new house which did not appear on the valuation roll, and then it is the date on which it so appears. That is the way in which I read the subsection. I may point out that, while we know what we are putting forward, in the last resort the construction of a clause of this sort is a matter for the courts. But that is what I understand it to mean.
The second point is: what is a statutory tenancy? A statutory tenancy is also defined. It is the last definition in subsection (1) of Clause 45 of the Bill, and it has the same meaning as in the Act of 1954, or, as the case may be, the Scottish Act of 1954. I must admit that if your Lordships are intensely curious about the Scottish Act of 1954 I should have to ask my noble friend to expound it, which no doubt he would do. But, so far as the English Act is concerned, this is the ordinary statutory meaning, and there is nothing peculiar about it. I notice that in the textbook that I have on the Rent Acts there are about twenty pages dealing with statutory tenancies. They are not contractual tenencies. I do not know whether there is anything more the noble Lord would like me to say in that respect.
§ LORD HASTINGS
The noble Lord has done his best, but I am not very much the wiser. We may be able to elucidate it if we go on to other clauses.
§ LORD MITCHISON
I can only say that I hope when it is read it will read better than it sounds. If I can pick it up in the shortest and simplest language, "appropriate day" has the meaning in the subsection I have indicated, and "statutory tenancy" has the meaning at the end of the other subsection to which I have referred.
§ Clause 1, as amended, agreed to.
§ Clause 2 agreed to.
§ Clause 3:
§ Limit on contractual rent.
(3) Where no rent for the dwelling-house is registered under this Act (whether or not Part II of this Act is in operation in the area in which the dwelling-house is situated) the said limit shall, subject to any adjustment under section 4 of this Act, be—
(a) if not more than three years before the regulated tenancy began the dwelling-house was the subject of another regulated tenancy, the rent payable under that other tenancy (or, if there was more than one, the last of them) for the last rental period thereof;
§ 5.44 p.m.
§ LORD HASTINGS moved, in subsection (3)(a), to leave out "three years" and insert "one year". The noble Lord said: We come now to this confusing matter of regulated tenancies and the tenancies changing. I take it that the sitting tenant at the time when the Act comes into force will be enjoying a contractual tenancy. Subsection (3)(a) envisages the situation where a lease comes to an end, the tenant wishes to continue and he gets a statutory tenancy; or he may leave at any time he likes and the new tenant will get a statutory tenancy and the rent will be based on that of the previous tenancy, referred to here as a "regulated tenancy". That must be after the Act comes into operation, because there is no such thing before it comes into force. Therefore we are dealing with the second tenant or a continuing tenant on a new lease.
§ It is laid down that for three years after that change of tenancy it will not be possible to alter the rent unless you go to the rent officer and get a new rent registered. According to this, you cannot even agree upon a higher rent. I think the Government would like to see agreed rents as much as possible. You can get a higher rent only if you go to the rent officer. If this is so, why for a period of three years after the Act comes into force should there be this freeze on the second tenancy? Does this mean that you are not going to have a rent officer available for more than three years after the Act has come into force? Surely that is not the intention of the Government. It is not what the noble Lord's right honourable friend the Minister said in another place. If these rent officers are going to be functioning in the reasonably near future, it cannot be necessary for a second tenancy like this to be frozen for three years.
§ The reason why I have put one year in this Amendment is to make quite sure that it is not an unnecessary freeze, and that the case can be taken to the rent 940 officer within a reasonable period. This means that, even if the sitting tenant goes within a month of this Bill becoming law, it should be possible to get the rent reduced, if the landlord or the tenant wishes to do so, a year later, and they will not have to wait three years. This seems to me to be a fairly reasonable point to make. I beg to move.
Page 3, line 16, leave out ("three years") and insert ("one year").—(Lord Hastings.)
§ THE MINISTER WITHOUT PORT-FOLIO (LORD CHAMPION)
As I think the noble Lord said, the effect of this Amendment would be to reduce to one year from three years the period between regulated tenancies beyond which the rent payable under the earlier tenancy would not constitute a rent limit for the second tenancy. This is the point the noble Lord is arguing. As I am sure he has recognised, the theory behind this subsection is this. After the initial period of rent freeze has ended, with the coming into force of Part II of the Bill (and the period of the freeze will be as short as is practicable; as the noble Lord said, the Minister of Housing and Local Government has promised to get his machinery for this into operation as soon as it is humanly possible to do it), it will be open to the landlord of any regulated tenancy to refer the tenancy to a rent officer to fix a fair rent. A fair rent, so fixed, cannot be challenged by either of the parties acting alone for a period of three years, except on the ground of a change in circumstances which invalidates the fairness of the rent previously fixed. I am sure the noble understands that.
This is designed to prevent constant references to the rent officer of tenancy agreements for which fair rents have been properly settled. Three years seems to us to be a reasonable period to elapse before a right of review is given. If the landlord of a regulated tenancy does not refer the rent to a rent officer, it seems a fair assumption that he is satisfied with the amount so obtained, and the rent can, therefore, be allowed to stand for three years as the limit of any tenancy of any accommodation, subject, of course, to the variation that can be made to meet changes of circumstances, such as repairing liabilities, the cost of services 941 et cetera. It is open to the landlord, if no fair rent has been registered, to ask for a fair rent to be fixed, if need be, by asking for a certificate of fair rent under Schedule 4.
We do not think that three years is an unreasonable period in this connection. Three years is the period fixed for a tenant who is in occupation before a change can be asked for. This is reasonable. It would seem to us to be equally reasonable, having regard to the fact that the rent is a regulated one, for the period of fixing the rent for a subsequent tenancy to be based upon that which had existed before the tenancy changed. Three years seems to us to be a reasonable period in both cases, and I hope that the noble Lord will agree not to persist in his Amendment.
§ LORD HASTINGS
I am a little puzzled by what the noble Lord has tried to explain to me, clearly and very patiently. My understanding of this clause, which is entitled "Limit on contractual rent", is that it is dealing with the position before any rent has been registered. I entirely agree that three years is a reasonable period between the last registration and the next registration, except for special reasons. But this appears to be dealing with the period of freeze before the machinery is set up and the rent officer is available. It seems to me that it should be possible for a landlord, on getting a new tenant into his house before any rent is registered for that house, to go to the rent officer in less than three years. That is my understanding of the clause—of course I may have misread it—and it seems to me that the noble Lord's argument dealt largely with the period between one registration and another. I am dealing with the period before any registration. It seemed to me that the period of three years was unreasonably long.
§ LORD CHAMPION
A contractual period of a regulated tenancy. I am not sure that this applies to the period of only the rent freeze. It is not intended 942 to do that. It is intended to cover the changes of tenancy which can take place, and quite clearly may take place, in this period.
§ LORD MOLSON
Does this three-year period prevent the raising of the rent under the procedure for a regulated rent at the time when it begins?
§ LORD LLOYD OF HAMPSTEAD
I should have thought that it was clear that under this clause the landlord will be entitled, as soon as the other part of the Act comes into operation, to apply to the rent officer. This is dealing merely with the situation before the rent tribunal system is set up. This enables a rent to be fixed in the preliminary stages by reference to the contractual rent.
§ LORD HASTINGS
That is exactly what I said. We go back to subsection (5) of Clause 1, referring to a contractual tenancy and a contractual period, which I have understood to mean the sitting tenant under a lease. The difficulty in interpretation is tremendous. I have no intention of pressing this Amendment, but I would ask the noble Lord to look at the clause again to see whether perhaps my reading of it, and the reading of the noble Lord who has just intervened, is not the correct one, and that it deals only with the preliminary period. If it does that, I feel that one year, or perhaps, if necessary, two years, would be ample, but that three years is too long. Three years is the right period between registrations.
§ LORD LLOYD OF HAMPSTEAD
Of course, one might add that this three years is not a three-years freeze, because as soon as the machinery is set up an application can be made to the rent officer. It tells you merely that it is in relation to such a tenancy that you fix the rent.
§ LORD HASTINGS
That is my point, because I want the rent officer system to be set up so that it can be referred to him in less than three years. That is why I put down one year.
§ LORD MOLSON
It is helpful to have an intervention from the Back Benches, especially from so weighty an authority, but we shall require an authoritative answer from the Front Bench. It is not made any simpler by the fact that the 943 noble Lord, Lord Mitchison, shook his head, while the noble Lord, Lord Champion, nodded his head.
§ LORD CHAMPION
But some people mean different things by different nods! The fact is that the maximum specified by this subsection, which may vary up or down in accordance with the provisions of Clause 4, is as follows. In the case of the tenancy subsisting when the Bill comes into operation, it then becomes a regulated tenancy—the rent payable under the terms of the tenancy as they stood immediately before the Bill came into operation. In other words, it will be frozen. In the case of a dwelling-house which is let for the first time on a regulated tenancy, by a tenancy which begins after the Bill comes into operation, the rent agreed between the landlord and the tenant will be the rent on that letting.
I know that this matter is frightfully complicated, and if I understood it I could explain it better. But such explanation as I have received convinces me that we are right in taking the three years, as against the one year proposed by the noble Lord opposite. I will carefully consider what he has said, and if by any chance it should appear before the Report stage that it is advisable to do something about it, we will. But I am not making any firm promise on this, because we feel—and those who have looked into this very carefully are sure—that the three years, as against the one year, would be the right period, even with the change of tenancy for which this clause provides.
I am deeply in sympathy with the noble Lord, Lord Champion, because he has got enmeshed in a lawyers' jungle. He has given the impression, and the general public could get the impression, that the Minister may take three years to set up his scheme, and that is a very bad impression to give. I suggest that he should look into the question seriously, if only for the purpose of giving more confidence to the public in the scheme he is setting up.
§ LORD CHAMPION
The only thing I would say in answer is that I think there have been fairly clear undertakings that it will take nothing like three years to set up the scheme. It will come into operation in a period of something like 944 six months. This will depend on the administrative arrangements. But it will certainly not be three years. It would amaze me if such a period were taken to set up a scheme.
§ LORD HASTINGS
No doubt the noble Lord and his advisers will read carefully in the OFFICIAL REPORT what has been said, and I would be grateful if he could let me know by correspondence whether or not my interpretation of this clause is right. If it is not, then three years is all right. If it is, then I think a period of one year is sufficient. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ On Question, Whether Clause 3 shall be agreed to?
§ LORD HASTINGS
I am afraid I have not quite finished on this clause. It appears to me that in subsection (3)(b) no allowance is made for a new tenancy in a house which is empty at the time the Act comes into force. I do not know what the position will be if, quite coincidentally, a landlord has many empty houses at the time when this Bill comes into force. On what is the rent of the tenant to be based when that house is let?
§ LORD MITCHISON
This is a clause imposing limits on the contractual rent. It is not a clause which lays down the contractual rent in any sense. It simply says that in various circumstances the rent must not exceed so-and-so. If one looks at this, Clause 1 obviously applies, because that is perfectly general. The clause states:would exceed the limit the amount of the excess shall … he irrecoverable …That is, as it were, the teeth in the whole Bill. Then subsection (2) says:Where a rent for the dwelling-house is registered under this Act the said limit shall be the rent so registered".There may or may not be a registered rent in the case of an empty house. It depends entirely how and when and in what circumstances it has become empty. The third case is—and this was the one that I think caused a little trouble last time—that where there is no registered rent, the limit shall be either (a) or (b). These are still limits and (a) is the case of a regulated tenancy preceded, at an 945 interval of less than three years, by another regulated tenancy. In that case it is the other regulated tenancy—the first of them in time—which gives the limit and then in any other case (this is still, however, only applicable to a case where there is no registered rent) the limit is the rent payable under the terms of the lease or agreement creating the tenancy subject to variation by another agreement.
I hope I have made it fairly clear. I think the point about the clause is that it does not really lay down anything; it simply sets limits, and though those limits are in some cases dependent upon the terms of the machinery of the Bill, and in others dependent upon agreement, that is all they are.
Lastly, may I say just one general thing about clauses with limits. I do not think there are any holes in this one. but if there is a clause imposing limits and one finds a case which resembles the limited cases but is not one of them, then obviously the limit does not apply.
§ LORD HASTINGS
After reading out the clause in extenso, the noble Lord, I think replied to my question in his last sentence; and he said that there would be no limit. The house is vacant at the time the Bill comes into force and therefore there is no previous regulated tenancy; then a tenant comes in. and I cannot see on what basis the rent is to be limited.
§ LORD MITCHISON
Let me give the noble Lord the simplest instance. Under subsection (2) let us assume that the rent for the dwelling-house is registered under this Act, and that a week or a year afterwards the tenant goes out, for whatever reason, leaving the house empty. In such a case there is still a registered rent.
§ LORD MITCHISON
I thought the noble Lord said that it could never apply to an empty house. There can have been no registered rent when the Act came into operation—the house was empty at the time. Consequently, there has been, and there is, no registered rent at all, and therefore I agree that in those circumstances subsection (2) does not apply.
946 Further, since no rent for the dwelling-house is registered, subsection (3) does not apply, but subsection (1) does, and subsection (1) is the case, called, shortly, the machinery case, where people can go and agree a rent and go to the rent officer or, if need be, to the rent assessment committee, and the whole machinery is set in operation. The point, if I may say so with respect, is that this Bill attaches to houses. That is to say, it may be a matter of agreement between people; but provided that the houses are of a kind covered by the Bill, then, through the machinery of the Bill, they are subject to regulation. It does not follow of course, that they will always need to be regulated. The empty house may be omitted as long as it is empty, but not when it is full.
§ LORD HASTINGS
I think I understand now. If a landlord has a vacant house, he fixes a rent with his tenant, and then, when the rent is registered and it happens to be lower, because the tenant disagrees, the landlord cannot get the rent he had formerly agreed upon. That is the effect of subsections (1) and (2) together. It is very difficult to understand, but I follow it now. I thank the noble Lord very much.
§ Clause 3 agreed to.
§ Clause 4:
§ Adjustment, before registration of limit imposed by section 3
(5) If an improvement has been effected in the dwelling-house and the improvement was completed after the commencement of this Act and after the time as from which the rent for the previous tenancy was agreed or, as the case may be, the previous terms were agreed, the said limit shall be increased by twelve and a half per cent. per annum of the amount expended on the improvement by the landlord or any superior landlord or any person from whom the landlord or any superior landlord derives title.
LORD NEWTON moved, in subsection (5), to leave out the first "and" and insert "or". The noble Lord said: I only hope that this Amendment does not land us in quite such difficulties as the last Amendment moved by my noble friend Lord Hastings. This relates to Clause 4, which deals with the assessment of rents in respect of improvements. Subsection (5) of this clause starts in this way:
If an improvement has been effected in the dwelling-house and the improvement was
completed after the commencement of this Act and after the time as from which the rent for the previous tenancy was agreed or, as the case may be, the previous terms were agreed, the said limit shall be increased by twelve and half per cent. per anum of the amount expended on the improvement …".
I may be wrong about this, and I may not be capable of understanding the proper meaning of this subsection, but it appears to me to imply that the landlord will get no increase at all in respect of an improvement which was completed between the date on which the last tenancy agreement was made and the commencement of the operation of this Act. In other words, if we consider a house which has been undergoing an improvement and the improvement was completed to-day, my interpretation of this subsection is that the landlord would not in due course get any increase in his rent because the Act had not commenced. On the other hand, if the Act had commenced yesterday and the improvement were completed to-day then it appears to me that the landlord would get his increase. If my interpretation is right, it seems to me to be a little unfair that because a useful and valuable improvement was effected to a house before the operation of the Bill the landlord should not get the benefit from it in regard to the rent.
§ LORD CHAMPION
This is an Amendment which I think I understand, and I hope and think I understand the reply to it. The effect of this Amendment would be to allow the landlord, prior to the registration of a fair rent, to agree with the tenant an increase of the frozen rent to take account of an improvement to the dwelling-house provided that the improvement was completed either after the coming into operation of the Bill or after the time as from which the rent of the previous tenancy was agreed (where the recoverable rent is fixed by reference to the rent under a previous regulated tenancy) or after the time as from which the previous terms were agreed (in the case where the recoverable rent is fixed by reference to the rent payable under the terms of the subsisting tenancy as varied, in the case of a tenancy which began before the commencement of the Bill, by any agreement made before that date).
948 Clause 4(5) as drafted provides that, in order to agree such a rent increase, the improvement must be one which has been effected after the coming into operation of the Bill, and after the time as from which the rent of the previous tenancy, or, as the case may be, the previous terms, were agreed. The noble Lord seemed to be urging in support of the Amendment that Clause 4(5) as drafted prevents a landlord from agreeing a rent increase on account of an improvement if the improvement is one which was completed before the coming into operation of the Bill, but the landlord, for one reason or another, had not agreed an increase of rent with the tenant which reflected the value of that improvement. I think that, so far, I am right.
As against this, we think it can be urged that a rent freeze must necessarily be based on the supposition that at the date it commences—in this case on the coming into operation of the Bill—the landlord will, by and large, be obtaining the full economic rent for that property. The Bill has, as everybody knows, received a fair amount of publicity while passing through the other House and coming to ours. It will be known to landlords what the Bill contains and how it will work. I cannot imagine that landlords will fail to take account of the fact that they ought to be charging the full permissible economic rent, which will include improvements, on the day the Bill actually comes into operation.
In connection with this whole business of charging additional rent for improvements, Section 5 of the Rent Act 1957 should be taken into consideration, because this makes a similar provision and does not allow for improvements that took place before the operation of that particular section. The Opposition at that time took the view that the landlord of a controlled tenancy who had failed to increase the standard rent in respect of an improvement which he had completed before the coming into operation of the Act should not be able to increase the rent limit under the Act to take account of that improvement.
There is also this factor in this Amendment: the acceptance of it would allow a landlord in some cases to agree with the tenant a double increase for an improvement. For example, a landlord might complete an improvement before 949 the coming into operation of the Bill and agree with his tenant that the rent should be increased to take account of the improvement from a subsequent date being a date which falls after the coming into operation of the Bill. In such a case it would be open to the landlord, were the Amendment moved by the noble Lord, Lord Newton, to be accepted, to seek to persuade the tenant to agree to a further increase of not more than 12½ per cent. of the amount he had spent on the improvement to be added to the rent already agreed as reflecting the value of the property as improved. It seems to us here that there is a possibility of a double increase for the same improvement. This clearly must be avoided. There is also the point I made at the outset, which I think the more important one, that landlords will already have taken advantage of the previous Acts, where they apply, to ensure that the maximum legal rent permissible, including that for the improvement that has been made, will be the rent on the day to which this particular clause applies.
I approach this Bill purely from the point of view: is it fair or is it not fair? In many respects, I think it is a very fair Bill. My brief on this particular Amendment, drafted by eminent lawyers, says this appears to be a drafting Amendment, in which case I think it is somewhat mistaken. Leaving aside this question of possible double increase, surely it is unfair, if an improvement has been started and the corresponding increase in rent has not been agreed, that the landlord should be precluded from obtaining that through the passage of this Bill. I should have thought it would be perfectly possible to draft some clause to meet that point while, at the same time, excluding the possibility of double increase, which, of course, would not be fair.
§ LORD NEWTON
I am bound to say I had not envisaged the possibility of a very cunning landlord managing to get a double increase as the result of this Amendment, but I am prepared to accept from the noble Lord that it is a possibility. Of course, if it is a possibility it is one which should be avoided. I should like to read rather carefully exactly what the noble Lord said. I think it is satisfactory. If I understood 950 him aright, the main argument was this: that as soon as a fair rent is registered for the house in question that fair rent will take account of any improvements made to the house in the past, no matter when they were made. It seems to me on the face of it to be reasonable, but of course it reinforces the need to make absolutely certain that the machinery for registration of rents comes into operation as soon as possible. Otherwise, I think it would be unfair to the landlord who has made an improvement in good faith and has to wait a long time before he gets the benefit of a higher rent. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 6.17 p.m.
§ LORD MOLSON moved, in subsection (5), to leave out "twelve and a half" and insert "twenty". The noble Lord said: Your Lordships will be glad to know that this Amendment is not a matter of drafting. There are no technicalities about it at all. It is based upon a general consideration which I have urged upon previous Ministers of Housing and Local Government. It results from experience that I had when I was on the rural housing sub-committee of the Central Housing Advisory Committee. When you have a controlled rent, it often is the case that it is for an old house without modern conveniences. Ministers of all political complexions have wanted to give inducement to landlords to improve cottages of that kind. Under the first legislation a controlled rent could be increased only by 8 per cent. of the cost of the improvement, and in subsequent legislation that 8 per cent. was increased to 12½ per cent. I am proposing that it should be raised to 20 per cent.
§ In the case of some of these controlled tenancies it is very difficult to induce a landlord to spend money upon carrying out these improvements. He regards the investment as being an unprofitable one. The rent charged is not an economic rent which enables him out of his income easily to maintain the cottage and to carry out necessary repairs. A considerable number of those who own cottages of this kind are people of very limited means. To ask such a man to find the money, often to borrow the money, in order to put in modern improvements, and then allow him to increase the controlled rent only 951 by 12½ per cent., which means it is eight years before he gets back his expenditure upon the house, is not an inducement to a rich man, and it is frequently not enough to enable a poor man to do it.
§ It is of the utmost importance that we should get the bad houses in the country improved. It has been found that the improvement is not taking place fast enough. It is not always possible to let one of these cottages which has been improved in that way continuously all the time. I believe it would be a valuable inducement to landlords to carry out these improvements if they were able to get a return of 20 per cent. instead of 12½ per cent. It would not alter the conditions already existing in the Rent Acts, in that the consent of the tenant would be required. I have urged this Amendment upon previous Ministers, and I hope that this Government may be prepared to regard this as a practical measure of speeding up the improvement of housing, especially in the countryside. I beg to move.
Page 4, line 19, leave out ("twelve and half") and insert ("twenty").—(Lord Molson.)
§ 6.20 p.m.
§ LORD WOLVERTON
I should like to say a little on this Amendment. My noble friend Lord Molson has much more experience than I have on this, but of course there is the other side of the question which must be put. It is not always the case of a landlord not being prepared to make the improvements, but whether the tenant can afford the extra rent for the improvements. Sometimes the higher the interest required for the landlord to get his money back quickly the less likelihood there is of getting the improvements done. Recently I was told by a public health officer in my own area of Newmarket that he had done a survey on a large number of houses which were not individually owned but owned by one owner, with a view to trying to get the houses modernised. It was found that a few of the tenants could not afford it. Sometimes the improvements cost as much as the original rent.
While I think my noble friend has a good point in saying that probably to-day 12½ per cent., although a high interest rate, is not quite enough—it ought to be 952 14 or 15 per cent.—20 per cent. is a little high. If you take the minimum improvement of say £800, for a bath and a lavatory—it may cost a good deal more than that—at 12½ per cent. that is £96 He would get half of his £800, he would get £400, which is the limit under the improvement Act; so that would be an extra rent of £48 if he gets half of the improvement grant. I do not want to make it too high, but, as my noble friend Lord Molson says, to make it enough to give encouragement to the landlord to do these improvements. A great deal has been done, but there is a great deal more, especially in towns, to do. It is not only that the landlord is not willing to try to do the improvements. He could borrow the money. Often he can borrow it from his local authority; but the other half has to be paid fairly quickly. It is the tenant who cannot afford the improvement. The tenant may be an old-age pensioner. An improvement, at a high capital cost to-day, may cost him nearly double his rent. I should like to hear what the Government have to say on that. I would support my noble friend Lord Molson, because I think 12½ per cent. at the high interest rate of these days is not sufficient an incentive. I would put it at 14 or 15 per cent.
§ LORD COHEN of BRIGHTON
It seems to me that there might have been some logic in this Amendment when we had the old Rent Restriction Act. Then you could argue that the rents were so low that there had to be some kind of incentive for the landlord to improve his property, otherwise he was not getting anything like enough. But under this Bill all that has gone, and he will be getting a fair rent. To suggest a figure of 20 per cent. for any improvement is quite ludicrous. Any ordinary landlord, if he owns the freehold of the property, can borrow the money if the property is being improved, for 6 or 7 per cent. Then it is suggested that the unfortunate tenant must pay a further 13 per cent, which is a really ludicrous increase in the rent, in order to get certain repairs carried out. Imagine, £500 worth of repairs being carried out and an additional £2 a week having to be paid for them. It is not at all conceivable. I imagine that what would happen is that you would not get the property improved, because the increase was so extremely high, so completely out of relation to the general 953 value of money that the tenant would not be willing for the repairs to be carried out because of the additional rent he would have to pay. So this Amendment defeats its own purpose. It just makes it impossible for the repairs to be carried out. I deal with property at 6 or 7 per cent. Twenty per cent. makes my blood run cold. I hope that the Committee will defeat this proposal.
§ LORD CHAMPION
I do not like to disagree with my noble friend, but we are here dealing with the period before a fair rent is registered, that is, while it is frozen. We think that Clause 4 rightly provides for this period. The noble Lord, Lord Molson, has rightly told us that the Housing Act 1961 raised the figure to 12½ per cent. from the amount that existed before; so that the figure of 12½ per cent. has been looked at by Parliament comparatively recently.
I am bound to feel that there was quite a lot in the points that were made by the noble Lord, Lord Wolverton, about the difficulty, perhaps, of paying 20 per cent. Here, we do recognise, as I think we are bound to do, that a difficulty exists about getting old houses improved. Wherever you go I think that you will find houses which clearly could be improved provided it was absolutely sure that the landlord, on the one hand, could get a return on the property. Of course, on the other hand, we have always to remember the tenant in this connection. It is not only the noble Lord who has thought of the difficulties of improving property. The Milner Holland Report has summarised the legislation in this respect, and pointed to the fact that the amount of improvement work that has been done up to now is distinctly disappointing. Although I believe that the noble Lord has put down his Amendment chiefly to air this point, in passing I must mention that his Amendment would affect the rent limit only during the period before a fair rent had been registered, because this is the only situation covered by Clause 4. It would be for that extremely limited period.
As I understand it, the Milner Holland Committee, and others who have considered this, have thought that the cost of these improvements and of assistance by the Government should take another form—namely, through the Finance Bill. 954 We think that further thought will have to be given to incentives to the landlords to carry out improvements. We need not, and we do not, accept that a simple increase in the return which the landlord can demand is the only or the best way of stimulating more work of this kind. A reform of the taxation scheme in relation to such expenditure must be considered. The Government are not yet ready to bring forward new proposals covering improvement work to houses; but in the meantime, and before they are, we rather think that it would be unwise to attempt to alter the 12½ per cent. in this Bill for this limited period for which this particular clause operates.
I rather hope that with that explanation the noble Lord will be willing to withdraw his Amendment, because of the limited period involved plus the fact that we are not wholly satisfied—and clearly the noble Lord, Lord Wolverton, was not satisfied—with putting a figure of this sort in the Bill. I hope that the noble Lord will withdraw his Amendment, although I and the Government recognise that he has a point here so far as some means of securing improvement to property is concerned.
I rather hope that my noble friend will follow the advice given by Lord Champion. It is, or course, extremely difficult to apply common standards to places of very different types ranging from Islington to the depths of the country. As an agricultural landlord, I have been listening with amazement to some of the assertions made about the rent necessary to induce a landlord to improve his property. When one is dealing with very small rents such as we have in the country, an advance of a few shilling a week is neither here nor there. I feel that there may be other ways of inducing people to improve their property. There are, of course, advantages to be got from the Finance Acts in the way of eventually getting return on your capital. Those advantages are much more effective in getting an improvement to the sort of property with which I am familiar.
§ LORD MOLSON
I am most grateful to the noble Lord, Lord Champion, for the sympathetic way in which he replied to my speech when moving this Amendment. I am extremely glad to know that the Government recognise the great difficulty in which landlords find themselves 955 in finding the money necessary for carrying out improvements. I entirely agree that there are many ways of doing it. I am glad to know that the Government are looking at the whole problem of taxation. The Milner Holland Report has drawn attention to the financial difficulties which arise in the matter. My purpose in putting down the Amendment was to draw attention to this matter, and I am more than satisfied with the reply the noble Lord has given. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 6.33 p.m.
LORD HASTINGS moved, in subsection (7), after the first "shall" to insert:
if not resolved by agreement in writing between the landlord and the tenant.").
The noble Lord said: This Amendment is quite straightforward and explains itself, though, curiously enough, a similar Amendment caused a great deal of discussion in another place. Subsection (7) of Clause 4 states that
Any question whether … shall be determined by the county court or, in Scotland, the sheriff …
There is no indication there that this question of rent, following upon the other subsections taking into consideration improvements, service provided, and so on, can and should be agreed between the landlord and the tenant. This is all the more peculiar when one looks at subsection (5) of Clause 6 where one sees exactly similar wording beginning:
Any question whether …
… shall be determined by agreement in writing between the landlord and the tenant or by the county court …
In another place it was argued that no question could arise if there had been agreement, but one cannot use that argument in respect of subsection (7) if one does not use it also in respect of subsection (5) of Clause 6. The words "any question whether" are indistinguishable. It seems to me only logical, and purely in the interests of clarification, that one should make it quite clear that the normal process will be by agreement between landlord and tenant. Therefore, I suggested putting in these words
if not resolved by agreement in writing between the landlord and the tenant".
I see no reason why the Government should not accept a simple clarification of that nature. If they do not do so, there may be quite unnecessary trouble about this relatively small point.
Page 4, line 30, after ("shall") insert the said words.—(Lord Hastings.)
§ LORD MITCHISON
I agree that this is a small point, and one would wish to have it clear if clarification were required. But I am afraid that I agree with what my right honourable and learned friend the Attorney General said in another place, that the Bill is already perfectly clear, and in fact this Amendment might complicate matters a little.
May I put the complication very simply? The Amendment is to provide that any question, if not resolved by agreement in writing between landlord and tenant, shall be determined by the county court. But suppose they agree and do not put it in writing, what is the answer to that? I am content to follow the precedent set when the noble and learned Viscount, Lord Dilhorne, was Attorney General. He put in the Rent Act 1957, in Schedule 4, paragraph 5(5) these words:Any question whether compensation is payable under this paragraph or as to the amount of any such compensation shall be determined by the county court.No one suggested that that could preclude an agreement. The fallacy is that when it gets to be referred to the court there must be "a question". If the parties have agreed there is no question to be resolved. That is the difficulty.
I have a couple more instances of the same form of words, but it is a quite usual one and does not seem in the least ambiguous. The Amendment would introduce a difficulty about a verbal agreement, as distinct from one in writing. I entirely agree with Lord Hastings that it is quite easy to look through an Act and find this kind of thing dealt with in different ways in different sections. Provided that they are a distance apart, I do not think that any harm is done. Personally, I prefer this form to the one which is sought to be substituted for it. We must remember all the time that we are dealing only with the comparatively narrow period before registration. Therefore, although this is the kind of thing 957 about which one would like to be conciliatory, I do not think that it would be right to accept the Amendment. I hope the noble Lord will feel able to withdraw it.
§ LORD HASTINGS
I accept what the noble Lord has said, but he has not explained why it is put differently on the following page. What is the reason for insisting on determination by agreement in writing in one case and not in the other? I do not mind which way it is done, but I should have thought that it ought to be done in the same way.
§ LORD MITCHISON
This is a slightly different point. The point the noble Lord is putting to me is whether in Clause 6 one is justified in insisting on an agreement in writing when one does not do so in Clause 4.
§ LORD MITCHISON
It must depend on the subject under consideration. Clause 4 relates to a short period; it is a transitional sort of clause, referring to a period before registration. That in itself would seem to me to be the reason. All I am concerned about is that I want the Bill to be clear. If it is clear, I see no reason for altering it, unless you are going to make it clearer. I am bound to say that I do not think this Amendment would make it clearer. If it is intended, as I think the noble Lord's last intervention suggested, to ensure that any verbal agreement must go to the county court, then I think that is wrong. I have not looked sufficiently at Clause 6 with this in mind to comment at great length on this point, but perhaps by the time we get to the Question, "That Clause 6 stand part" I shall have an answer.
§ LORD HASTINGS
Perhaps I should have brought it up on the Question that the clause shall stand part, but as it was rather relevant to this Amendment I thought I should mention it. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 4 agreed to.
§ Clause 5 [Limit of rent during statutory periods]:
§ On Question, Whether Clause 5 shall stand part of the Bill?958
§ LORD HASTINGS
I am sorry to keep bringing up these points. I do not really understand why Clause 5 is necessary and why, because it refers to a statutory period, it is any different from Clause 3, "Limit on contractual rent." I should have thought the matter was looked after by Clause 3. There is always confusion between this wretched use of the words "statutory" and "contractual".
§ LORD MITCHISON
I should have thought that Clause 3 was a narrower net than this one, and that Clause 5 covered the whole subject. I think that is the simplest explanation.
§ Clause 5 agreed to.
§ Clause 6 [Variation, before registration, of rent recoverable during statutory periods]:
§ LORD MITCHISON moved, in subsection (7)(a), to leave out "an improvement" and insert "a" [grant]. The noble Lord said: This is a matter of little importance, but of a little character. This Amendment and Nos. 9 and 10 go together, and they are all directed to the case of schemes made under the Airports Authority Act, 1965. The schemes are for the purpose of protecting houses from noise and vibration, and they are authorised by a Statutory Instrument from the Minister of Aviation. Improvements so made would, of course, constitute improvements within the meaning of the Rent Bill, and in the case of a dwelling-house which was subject to a regulated tenancy in its statutory form the landlord would be entitled to increase the rent by 12½ per cent. of what he paid for doing the work. But in the case of most improvements, the tenant can apply to the county court for an order cancelling, or reducing, the rent increase on the ground that the improvement is unnecessary, or that too much was spent on it. This Amendment (I hope that this will not surprise and shock noble Lords opposite) comes from a Labour Government to protect the landlord, because we think that there is sufficient safeguard as regards reasonableness and cost where the scheme has to be put forward by the responsible Minister. For those reasons we require these alterations in this Bill. I beg to move.
Page 6, line 15, leave out ("an improvement") and insert ("a")—(Lord Mitchison.)
§ LORD NEWTON
I should like to thank the noble Lord for his explanation of these Amendments, and to say that naturally we are glad to agree with them. I do not quite know why the noble Lord thought we should be shocked or surprised at these Amendments coming from a Labour Government. I hope he will realise that although in my speech on Second Reading I talked, I thought rather disparagingly, about the mythology connected with the whole history of rent control in this country, I hope I have never said anything, either to-day or on Second Reading, which suggested that I subscribed to that mythology, on one side or the other.
§ LORD MITCHISON
I say at once that I have much too much respect and liking for the noble Lord, Lord Newton, to wish to say anything that might offend him in a matter of this sort. My remarks were not altogether serious, but it does not matter very much, one way or the other.
Page 6, line 18, leave out first ("or").—(Lord Mitchison.)
§ On Question, Whether Clause 6, as amended, shall stand part of the Bill?
§ LORD MITCHISON
The point we are now considering is subsection (5) of Clause 6, and what is involved in that subsection is any question of whether, or by what amount, the recoverable rent for any statutory period is increased or decreased to take account of charges in the provision of services by the landlord, or the use of furniture and so on, and the provision is that the matter shall be determined by agreement in writing or referred to the county court. In this case the contractual 960 tenancy is at an end, and the landlord can recover from the tenant the maximum recoverable rent whether he agrees to pay it or not. In these circumstances express provision has to be made for the alteration of the recoverable rent by agreement between the parties. It is a special case, and I may add that I think it is right in this case, though not in the other, to make it essential that the agreement should be in writing. It is a far more complicated matter and covering a different state of affairs.
§ LORD HASTINGS
I am grateful for the explanation. I shall look forward to reading it more carefully to-morrow in the OFFICIAL REPORT.
§ Clause 6, as amended, agreed to.
§ Clause 7 [Effect of registration on rent recoverable for statutory periods]:
LORD MITCHISON moved, in paragraph (b), to omit "four weeks from" and to substitute:
the date on which the rent was registered nor earlier than four weeks before".
The noble Lord said: Clause 7 at present provides that where an increased rent is registered under the rent-fixing machinery—that is to say, by the rent assessment committee or by agreement with the rent officer—in the case of a statutory tenancy, the landlord must serve a notice of increase on the tenant giving him four weeks' notice of the increase. Where the rent is decreased the lower rent will come into effect from the date of the application for registration, failing a decision otherwise from the rent officer or the rent assessment committee. In another place the Opposition argued at two stages in the progress of the Bill that as a matter of fairness, so that there was no delay in making a decrease effective, a landlord should not have to wait four weeks for an increase to come into effect.
§ The four weeks' advance notice comes from the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, and that had a rather different intention. When this matter was considered in another place in Committee, the Joint Parliamentary Secretary accepted that there was a case for saying that this increase ought to be made payable forthwith, because the tenant has had a chance to prepare to pay for the increase, and on Report stage he undertook to arrange 961 with my noble friends to put down an Amendment in this House to meet the point. This is the Amendment in question, and it has the same effect as the Amendment which the Opposition moved, and lost, on a Division in Committee in the House of Commons. It provides that where an increased rent is fixed on registration, in the case of a statutory tenancy, the increase may take effect not earlier than the date of registration or not earlier than four weeks before the service of notice of increase, whichever date is later. It is a bit of a "teaser", but the Amendment in fact carries out the pledge which was given in the Commons, and therefore, meets the views of the Opposition on this point. In that way they are more successful here than they were below. I beg to move.
Page 6, line 36, leave out from ("than") to first ("the") in line 37 and insert the said new words.—(Lord Mitchison.)
§ LORD NEWTON
We are very much obliged to the noble Lord for this Amendment, which is entirely acceptable. Until it appeared on the Order Paper, we had thought that we might try to put down a similar Amendment ourselves, but we have been saved the necessity of doing that and also the necessity, no doubt, of having to be told by the noble Lord that our drafting did not achieve the purpose we hoped it would.
§ Clause 7, as amended, agreed to.
§ Clause 8 agreed to.
§ Clause 9 [Notices of increase]:
§ 6.51 p.m.
§ On Question, Whether Clause 9 shall stand part of the Bill?
§ LORD HASTINGS
This, again, is rather complicated. It appears that, during a contractual period, a landlord can serve a notice of an increase in rent relating to the tenancy which is going to follow—in other words, a statutory tenancy; but if he does that then, by virtue of subsection (3), that contractual period will immediately come to an end and the statutory period will begin operating. It is a bit difficult to understand the objective behind this. Can the noble Lord explain exactly what this clause is meant to do, and why?
§ LORD MITCHISON
Yes. If I may say so, I quite understand the apparent difficulty of the matter, but I do not think it is a very serious one. First of all, the notice of increase must be in the prescribed form. Obviously, the notice will have to take effect at some time. It is the notice taking effect which, as I understand it, will turn the contractual tenancy into a statutory one. What is being considered is not a change of tenant at all, but the transition from a contractual period to a statutory period.
Then, subsection (3), which is a rather special case, states:Where a notice of increase is served during a contractual period of a regulated tenancy and the tenancy could, by a notice to quit served by the landlord at the same time, have been brought to an end before the date specified in the notice of increase, the notice of increase shall operate to convert the tenancy into a statutory tenancy as from that date"—that is, the date specified in the notice of increase. I can only say to your Lordships that I really do not think there is any catch in this. There may be some general point about notices to quit, but I think this particular clause is a reasonable provision.
§ LORD HASTINGS
Does this really mean, then, that any notice to increase rent changes the form of tenancy? Because that is what the noble Lord said: that it does not mean you are changing the tenant, but if you increase your rent it is going to become a statutory period and not a contractual one. Yet Clause 1(4)(b) says quite clearly that a statutory tenancy arises on the termination of such a tenancy as is mentioned in paragraph (a)—which, in other words, is the sitting tenancy.
§ LORD MITCHISON
This is really, as I understand it, applying to a regulated tenancy what is the ordinary practice with regard to controlled tenancies. Suppose a man is paying a given rent and (assuming you are entitled to do it) you serve him notice to increase the rent. That, in effect, is terminating the existing tenancy and starting a new one. It is a little bit of a lawyer's notion, but that is it. Where this is done by virtue of a Statute, you will get as the result what is commonly called a statutory tenancy within the meaning of "statutory tenancy" on page 30—that is to say, that at the end of Clause 44(1), which I have 963 already mentioned. It is a regulated tenancy.
§ Clause 9 agreed to.
§ Clause 10 [Statutory tenancies of formerly requisitioned houses]:
§ 6.56 p.m.
§ On Question, Whether Clause 10 shall stand part of the Bill?
§ LORD HASTINGS
This deals with the question of formerly requisitioned houses and their transition to regulated tenancies. The Protection from Eviction Act protected them beyond the period previously laid down, and eventually they will be treated as regulated tenancies. The landlord will then be entitled to receive from his sitting tenant the amount which he previously received from the sitting tenant plus the local authority. What I am not quite clear about—I think it relates to subsection (2)—is as to how he would stand in respect of any improvements carried out in the intervening period, when it was known that these tenancies were going to come out of statutory control, the old control, and into the regulated tenancy, and when it would be in the interests, perhaps, of the tenants and the landlords to make improvements in anticipation. I am wondering if there is any provision there for such an arrangement, by agreement or otherwise, where improvements can be carried out and the rent recovered.
§ LORD MITCHISON
I do not think that this clause specifically refers to improvements or any other particular point. What it does, as I understand it, is to continue a statutory tenancy—that is, the statutory tenancy of a requisitioned house under the appropriate Act—and prevent it from lapsing, as it otherwise would. This is subsection (1). Subsection (2) is really an amending subsection to apply to a particular group of tenancies references to the last contractual period; and if one looks at Clauses 5 and 6, one finds references to "the last contractual period". All that this says is that, having those references, you must in this case read them as though they were references to the "last rental period beginning before that date". Then there is a provision as to the rent recoverable, which I think does not affect the amount; it affects the channels through which it goes. Then there is another ancillary provision in subsection (3).
964 I think this is really, in substance, a clause to continue tenancies of requisitioned houses which would otherwise lapse, unless expressly continued, and to provide, in subsection (2), what is really a drafting adaptation—it is a little more than that—for the cases covered by Clauses 5 and 6. I cannot say any more than that. I say quite frankly and "off the cuff" to your Lordships that I do not think there is a catch anywhere. If there is, I shall take care to let the noble Lord know.
§ Clause 10 agreed to.
§ Clause 11:
§ Power to convert existing controlled tenancies into regulated tenancies
(3) The Minister may by order provide as respects any area in England and Wales or in Scotland that where the rateable value on a date specified in the order of a dwelling-house in that area exceeded such amount as may be so specified and the dwelling-house is subject to an existing controlled tenancy the existing controlled tenancy shall be treated as a regulated tenancy.
(6) A notice of increase served under section 7 of this Act in respect of an existing controlled tenancy which by virtue of an order under this section is treated as a regulated tenancy shall only be valid if the rent specified in it does not exceed by more than fifteen per cent. of the controlled rent payable for the rental period beginning twelve months before the notice takes effect, except so far as the increase relates to such part of the rent registered under this Act as may in pursuance of the order be distinguished in the register as attributable to the provision of additional or improved services or furniture or the carrying out of an improvement; and in ascertaining for the purposes of this subsection the amount of the rent payable for any rental period, any amount payable in respect of rates borne by the landlord or a superior landlord shall be disregarded.
§ 7.0 p.m.
§ LORD HASTINGS moved, in subsection (3), after "dwelling-house," where that word first occurs, to insert "as is mentioned in the preceding subsection". The noble Lord said: I am not entirely sure whether there is substance in my Amendment or whether it is a matter of drafting. I want to be certain that the Minister has the power to do what I believe he intends to do, and, if he has not, I want to be certain that he has the power to do what I want him to do. My Amendment would make 965 it quite clear that the Minister could make an order to convert an existing controlled tenancy into a regulated tenancy without at the same time affecting other regulated tenancies which are more strongly controlled at the moment. My fear on reading this subsection is that in order to convert an existing controlled tenancy into a regulated tenancy it will be necessary for the Minister to lower the rateable value limits to such an extent that all regulated tenancies would be affected. I want to be sure that he can start converting the existing controlled tenancies into regulated tenancies before he has finished taking the regulated tenancies out of regulation.
I am not quite sure, because of the way in which it is phrased, whether that is the intention or the legal interpretation or not. My Amendment will make it quite clear that this subsection, and the Minister's powers thereto, relate solely to the conversion of existing controlled tenancies, irrespective of what may be happening to regulated tenancies in a higher rateable value limit. I hope I have made myself clear. Of course, Amendment No. 13 goes with this one. I beg to move.
Page 7, line 41, after ("dwelling-house") insert ("as is mentioned in the preceding subsection").—(Lord Hastings.)
§ LORD CHAMPION
It is clear that we should also discuss Amendment No. 13 with this one. When we first saw this Amendment on the Marshalled List we were at a loss to know what it could possibly mean. I am sure the noble Lord will understand that I am not being disparaging. There is a difficulty here because the drafting seems to be faulty. Were the Amendments accepted, Clause 11(3) would read as follows:The Minister may by order provide as respects any area in England and Wales or in Scotland that where the rateable value on a date specified in the order of a dwelling-house as is mentioned in the preceding subsection in that area exceeded such amount as may be so specified the existing controlled tenancy shall be treated as a regulated tenancy.In the preceding subsection, namely, subsection (2), there is no reference to a "dwelling-house". Here, clearly, the drafting was faulty. The preceding subsection defines the expression "existing controlled tenancy". I am sure, now 966 that this has been pointed out to the noble Lord, that it will be clear that it was impossible for us, from the Amendment put down, really to see what the noble Lord was driving at.
But so far as the clause itself is concerned, generally, as it says, it is a clause which merely gives the power to convert an existing controlled tenancy into a regulated tenancy. The whole of Clause 11 is devoted to that sole purpose. If the noble Lord feels that there is something more in this point perhaps he will take another look at it. I must leave it to him to so decide. The Amendment as it appears is clearly unacceptable to the Committee and to the Government.
§ LORD MITCHISON
May I add a word? I am not sure, but I think that what was troubling the noble Lord was the fear that if this clause were operated and if existing controlled tenancies were to be turned into regulated tenancies it might, in some way, have to be accomplished by a general measure of decontrol.
§ LORD MITCHISON
I rather thought that was the point the noble Lord was making. There is no connection between the two at all. Clause 11 does not require the Minister, in order to convert an existing controlled tenancy into a regulated tenancy, to control or to decontrol anything. The clause simply concerns conversion, and the two things are quite separate. I took the opportunity of verifying this point. There is no doubt about it.
§ LORD HASTINGS
I am glad to have had that explanation. I now realise the error in my drafting, because "dwelling-house" is not mentioned in the preceding subsection. I was referring to the definition of "dwelling-house" as it exists in controlled tenancies. But my worry here, as the noble Lord, Lord Mitchison has said, was that this could not be carried out without affecting the regulated tenancies. I wanted to make sure that the Minister did not delay all the action under Clause 11 simply because regulated tenancies were of a higher rateable value and could not be decontrolled at the moment. Evidently the Parliamentary and legal drafting is accurate; but in my own layman's view, 967 it seemed to be faulty. I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
LORD CHAMPION moved to add to subsection (3):
except in the case mentioned in subsection (7) of this section".
§ The noble Lord said: This is simply a paving Amendment to the Government Amendment No. 16, and I am sure the Committee would like to discuss them together. The Rent Acts 1920 to 1939 have always applied to tenancies of premises used for both business and residential purposes (often called in this context "mixed premises"), provided the premises are within the relevant rateable value limits. Part II of the Landlord and Tenant Act, 1954, provides a code of protection for tenancies of premises occupied by the tenant for the purposes of business carried on by him or for those and other purposes including residential purposes. In order to avoid overlap between the two codes of protection it is provided in the Act of 1954 that Part II shall not apply to a tenancy which is controlled under the Rent Acts.
§ Many tenancies of "mixed premises" were decontrolled as a result of the reduction in the rateable value limits for rent control by the Rent Act 1957. Of these tenancies, many had become statutory tenancies under the Rent Acts and a statutory tenancy, not being a tenancy in the true sense of the word but simply a personal right of occupation given by the Rent Act of 1920, is not a "tenancy" for the purposes of Part II of the Act of 1954. In order to ensure that statutory tenancies of "mixed premises", upon being decontrolled under the Rent Acts, should obtain the benefit of the protection of Part II of the Act of 1954, the transitional provisions on decontrol in the Rent Act 1957 deemed such statutory tenancies to be tenancies to which Part II of the Act of 1954 applied.
§ It has been decided not to bring into rent regulation tenancies of "mixed premises", but to leave them with their protection under Part II of the Landlord and Tenant Act, 1954. It follows that wherever the Bill provides that existing controlled tenancies may become regulated tenancies and statutory tenancies of "mixed premises" may be affected, 968 it is necessary to have a provision deeming these statutory tenancies to be tenancies to which Part II of the Act of 1954 applies, so that they may pass into the code of protection provided by that Act and not into rent regulation. This has been done in Clause 13(5) in the case where on a second transmission on death, a statutory tenancy becomes a regulated tenancy, and the present Amendment enables an order made under Clause 11 to convert existing controlled tenancies into regulated tenancies also to provide that statutory tenancies of "mixed premises" affected by the order shall become protected under Part II of the Act of 1954 instead of becoming regulated tenancies.
§ Why have I read out that lot? I can only tell your Lordships that it is just to ensure that if any of you are deeply interested in this subject and have lawyers' minds, you can between now and Report stage consider it very carefully; and if you feel justified, you will put down Amendments for that stage. I beg to move.
Page 7, line 45, at end insert the said words. —(Lord Champion.)
§ LORD NEWTON
When I first read and then re-read Amendment No. 16 I could not understand what it did. Being a humble man, I thought it was probably due to some failing in my mental powers. Having heard the explanation of the noble Lord, Lord Champion, I now feel that possibly I am not quite so much to blame as I had at first thought. I should like to be able to compliment the noble Lord on having given us an explanation of the Amendment which was in fact substantially clear. I think I have grasped what it is all about, and, if I have, I think that what the Government want to do is acceptable. I am not a lawyer and I do not know how many lawyers are present in the Chamber at this time, but I would say to the noble Lord, in the friendliest possible way, that we are legislators and that, as such, mercifully, we are not required to have a legal training.
THE CHAIRMAN OF COMMITTEES
Before I call Amendment No. 15, may I inform the Committee that the noble 969 Duke, the Duke of Atholl, wishes to move it in a slightly amended form, so that it would read:Page 8, line 15, after first ("rent") insert ("or by seven shillings and sixpence per week, whichever is the greater.")
§ 7.14 p.m.
THE DUKE OF ATHOLL moved, in subsection (6), after "controlled rent", to insert:
or by seven shillings and sixpence per week, whichever is the greater,".
§ The noble Duke said: I must apologise to your Lordships for having put this Amendment down wrongly. I am sure that any noble Lord who has studied the Bill would have realised that I meant 7s. 6d. per week, but the Amendment does not say so and until this point the reference has been only to percentages, so that there was no need to put in a time. The object of the Amendment is to make sure that rents which are to be raised to what is now to be called the regulated rent can be so raised by a reasonable amount. If I talk about Scotland rather than England, it is not because I do not realise that this Amendment will apply not only in Scotland but because, on the whole, the rents in Scotland are much lower than those in England. Whereas a 15 per cent. increase per annum in England might be a very reasonable amount, in Scotland in many cases, with the very low rents there, 15 per cent. would be under 1s. 6d. That does not seem to me to be an adequate amount by which rents should be increased.
§ Perhaps I may go briefly into the history of rent control in Scotland. It is somewhat different from what it has been in England and, from the point of view of the landlord, even less satisfactory. From the point of view of the tenant I think that although rents have been kept low, as a result of their extreme lowness improvements and repairs to houses have often been neglected. If you paid £20 rent for your house in 1914, you were protected. Any house in Scotland with a rent of under £30 was protected in 1914. Out of that £20 the owner would pay rates of £2 15s. That was the average amount; it varied from city to city and county to county. That left the landlord a net amount of £17 5s.
§ In 1920, under the Act of that year, these rents were raised by 40 per cent. including an allowance for owners' rates. 970 This had the effect of raising the gross amount of a £20 house in 1914 to £29 10s. Out of this would have to come owner's rates of £6 5s. 6d., taking an average, as it also raised the amount of owner's rates, leaving the landlord with £23 4s. 8d. By 1939, owing to the increase in owner's rates, the amount the landlord actually received was £19 18s. 3d. In 1956 this had dropped still further to £15 12s. 3d. In 1957 owners' rates, as such, were abolished, and what had previously been the figure for owner's rates was deducted from the rent; and you were allowed to raise rents by 25 per cent. This had the effect of raising the figure for this type of house to £22 19s. 9d.—call it £23. So in the period between 1914 and 1964—because the figure has not altered since—the amount of increase in respect of this house which the landlord actually received, after deducting owner's rates, had risen from £17 5s. to £23. As a matter of interest, during the same period the joiners' jobbing rate went up from s. 0½d. to 11s. 8d. per hour. This makes clear how impossible it has been for landlords in Scotland to keep their controlled tenanted houses in good repair, unless of course they did it largely out of their own pockets. Incidentally, for the English equivalent to the £20 Scottish house in 1914 the rent now would be £67.
§ That was the average over the whole of Scotland. Sometimes, owing to the incidence of very high owners' rates, it would be even worse. At Armadale a £20-gross house in 1914 would have had a rent of £18 7s. 6d. and in 1964 its rent would be £13 2s. 7d. That shows quite an appreciable decrease since 1914. In Lanarkshire, the 1914 rent would have been £16 10s., and in 1964 it would have been £16 10s.—exactly the same. In the city of Glasgow, in 1914 it would have been £17 5s., and in 1964 £21 8s. 6d. A 15 per cent. increase on rents of this kind would produce about £3 a year, or rather less than 1s. 2d. per week. This seems to me an inadequate amount for the actual rent ever to catch up with the regulated rent, because, presumably, as things become more and more expensive regulated rents would be allowed to rise, and at an increase of 1s. 2d. a week it is going to take, even in present circumstances, a fairly long time for the actual rent to catch up with the regulated 971 rent, even if the regulated rent remains constant.
§ Perhaps I can give your Lordships some actual examples of rents in Scotland. For a house in Dundee with three bedrooms, kitchen and w.c., the rent in 1914 was 3s. 2d. a week, after deducting owner's rates, and in 1964 it was 6s. 2d. The 15 per cent. increase, which would be allowed under this Bill as it stands, on that rent would amount to 7½d. per week and the landlord would be allowed to raise the rent by 7½d. per week every year. For a more modern house built in 1936, with three bedrooms, kitchen and bathroom, in 1936, after deducting owner's rates, the rent was £24 16s. 3d., and in 1964 £25 17s. 6d. The landlord would be allowed to increase the rent by s. 6d. per week. I can produce many other examples, but I feel that it would only bore your Lordships if I did so.
§ I would also point out that council house rents, which in Scotland are extremely low, have been allowed to increase much more substantially than private rents. I am not saying that such increases are wrong; in fact, I think they are absolutely right; but I think it unfair that landlords should not be allowed to increase their rents by an amount which the councils appear to regard as reasonable. The average weekly controlled rent of council houses in Scotland in 1956 was 5s. 9d., and in 1964 14s. 2d.—or an increase of about 150 per cent. in eight years. I think that the percentage rise allowed under the Bill is unfair, because it will act most slowly on the lowest rented houses and these are the houses in which the tenants have had the benefit of these low rents for the longest. Therefore, I hope that the Government will consider providing for some cash sum as well as this 15 per cent., so that only if the 15 per cent. came to more than the cash sum, which I have suggested should be 7s. 6d. per week, would the 15 per cent. apply.
§ I would also point out that controlled rents in Scotland are approximately 55 per cent. of the gross annual value. Obviously this is a very wide average and the figure varies from place to place and from one type of house to another. At the 15 per cent. increase it would take six years to reach the gross annual value, 972 and that is presuming that in the quinquennial valuation the gross annual value was left constant, which seems to me an unlikely event. For decontrolled houses of the same type the rents are about 122 per cent. of the gross annual value. I hope that the Government will be able to hold out some promise on this question. I do not necessarily think that 7s. 6d. per week is the right amount. I suggested that amount to indicate the lines on which my thoughts were running. I beg to move.
Page 8, line 15, after first ("rent") insert the said words.—(The Duke of Atholl.)
§ BARONESS ELLIOT OF HARWOOD
I wonder if I could add a word in support of the noble Duke's Amendment. It is one of the curious anomalies between the two countries that rents in Scotland have always been much lower than those in England. In most cases, it is not because the houses are any worse, but I think that this has been one of the causes, certainly in the big cities—and I am thinking particularly of Glasgow, which I know so well—of the great increase in the amount of property which could have been kept in good repair but is becoming slum property. In Scotland, when a landlord puts property into good repair, which most landlords are anxious to do, he has to do it from his own pocket and he does not get a return, except the satisfaction that the person living in his house is living in a very good house—a charitable attitude if he can afford it, but not practical if he cannot afford it.
I agree with the noble Duke that it is impossible to say that 7s. 6d. a week is the right figure to put in the Bill. Recently the noble Lord, Lord Cohen of Brighton, in an admirable maiden speech, stressed the fact that rents were much lower in Scotland and that it was much more difficult there to keep property and also to build new houses from which one could get a good return. The noble Lord, Lord Hughes, who is well cognisant of these facts because of his long experience in local authority work, knows that what we are saying is true. I do not want to make any special pleading for Scotland, but I want to stress that with such a big discrepancy between Scotland and England there should be some recognition of this, so that something can be done to help landlords, who at the 973 present moment find that it is impossible to keep their properties in repair unless they do so out of their own pockets.
§ 7.28 p.m.
§ THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES)
When this Amendment was put down by the noble Duke, my noble friends anticipated that he might be speaking largely in terms of Scottish rents, and for that reason I was delegated to reply to this Amendment. The noble Duke has made his points with such perfection that I find myself, as I did on another Bill recently, feeling that I am being grossly unfair when I come to say that I am sorry, but I cannot advise the Committee to accept this Amendment. When there is added to this the fact, which must appeal to all Scots, that the noble Duke's arithmetic is impeccable—he has got the answers to all his sums perfectly right—and there is added the final difficulty, that he has been joined by the noble Baroness, Lady Elliot of Harwood, I find myself in an almost indefensible position. Fortunately, I am able to put in the word "almost".
Although both (if I were to follow Lord Saltoun's advice, this is what I would call them) noble Lords have spoken on this from a Scottish point of view, they have recognised that this applies throughout the whole country. It is principally for that reason that the Government cannot accept the Amendment. The Amendment, while perhaps having some relevance if related solely to rents in Scotland, would have an unfortunately regressive effect in England and Wales, in that the figures of increase would apply most hardly on the occupants of the poorer classes of property. That figure, of course, would apply in either country, but it would apply South of the Border, as well as North of the Border. When we remember that in many cases these very much older and poorer, and therefore much more cheaply rented, houses in both countries are often occupied by old people with fixed incomes, an increase of 7s. 6d. a week, or anything approaching it (though I recognise that the noble Duke and the noble Lady did not tie themselves to this figure, but were seeking merely to get the Government to accept the principle) could be a significant increase in the weekly budget of people of that kind.
974 For this reason, we do not think that there is ground for discriminating against such people by providing that what they shall pay is, in percentage terms, a much larger increase than the occupants of better quality houses are paying. By and large, the rent of these poor houses at low levels remains low because it is, in comparison with the others, a fair enough figure for the quality of the housing provided. That is where I am comparing a poor house in one country with a better house in the same country. I know that the argument falls to the ground when you compare rents in England with rents in Scotland, because a comparatively poor house in England and Wales may be being rented at a figure which approximates to a rent being charged in Scotland for a house of much better quality.
I agree with the noble Lady when she says that she does not think there is all that difference between a reasonably good house in Scotland and a reasonably good house in England and Wales. But when we get to the other end, I think perhaps the noble Lady would agree with me when I say that what we have occupied in Scotland as poor houses, houses of poor or low quality, generally tend to be much worse than anything found South of the Border. There can be exceptions to this, I know; but I am talking in general terms.
Even in Scotland, accepting the correctness of the noble Duke's sums, the Government still cannot accept this position related to almost any figure which would serve the noble Duke's purpose over the whole range. It could, in fact, have the effect in the case of those least able to bear the burden of the figure of 7s. 6d., of doubling, or in some cases of very poor houses trebling, the rent which is paid. That, in the Government's view, could have an effect on the domestic budgets of people less able to bear it which the Government would not be justified in imposing when there had been no alteration in the tenancy and when there was no alteration in the quality or condition of the house.
Perhaps I may put one other point, which I think is in the Government's favour, in this matter. Accepting all the arguments that are advanced about the 975 slowness by which, with 15 per cent. increases, we should proceed from a controlled rent to a fair rent, I would remind the noble Duke that when he was quoting his figures he got to the last increase of 25 per cent. which was permitted, and then said, "and that remains the position, because there has been no increase since then.". That increase of 25 per cent. went on for a period of some six or seven years. What the Government are doing in this Bill would permit, during a period of that time, an increase in rents four times as great as the previous Government thought it politic to make. That, I would suggest to your Lordships, is a considerably different approach from the one which has been taken; and it recognises, to a certain extent, that to arrive at a fair rent we must proceed by bigger steps than have been contemplated up to the period of 1956, 1957 or 1958.
To substitute for a percentage, which by and large is fair to all people, an alternative figure of a certain sum of money would be quite reasonable in regard to the better-type houses and to the tenant with a better kind of income, but it would be grossly unfair to those in poorer houses and with lower incomes. It is for these reasons, both in Scotland and South of the Border, that the Government cannot advise your Lordships to accept this Amendment.
§ BARONESS ELLIOT OF HARWOOD
May I ask one question before the noble Lord sits down? I am not suggesting that the rents of very poor houses should be raised, unless the landlord is prepared to put them into better condition. The real difficulty here is that, where one knows there are poor houses and people. old-age pensioners, on a fixed income, say, one wants to help them, but it is not possible; and they will have to continue to their dying day in these houses unless some help is given to the landlord, or to the tenant when the houses have been improved.
That is what has led to these terrible slum dwellings in a great many cities in Scotland. It is impossible for landlords to spend money on a property to put it in the condition which the noble Lord opposite, and we on this side, feel it should be for people to live in. Unless there is some breakthrough on this matter, 976 we shall not get exactly what the noble Lord wants and what we all want: that houses should be improved, but still let at reasonable rents—and I do not suggest anything else. Unless there is some method of difference between what exists North of the Border and South of the Border, I doubt whether this can be done.
§ LORD WOLVERTON
I should like to support the noble Duke in this Amendment. I cannot see why there should be such a big difference between North and South of the Border. Take the painting of a cottage. To-day it costs something like £40 to have a cottage painted outside by a contractor, and that would probably cover two years' rent. As this Bill is dealing with a fair rent, and we are setting up these rent officers, it seems to me, from what the noble Duke has said—and the noble Lord, Lord Hughes, has confirmed that the figures are correct—that there is far too big a difference between North and South of the Border. If the houses are kept up in a decent state, and can be improved, a 15 per cent. increase does not seem to be anything like enough. If they cannot afford the extra rent out of their old-age pensions, they can always get a supplementary allowance from the National Assistance Board, who take rent into consideration. i know that many of them do not like going to the National Assistance Board; but they can do so, and many of them do. It seems to me wrong to keep North of the Border at such a disadvantage to South of the Border in regard to properties which we all want to see kept up in a decent state and let at low rents (in many cases they are not occupied by old-age pensioners, but by people who earn good wages), and I think that something on the lines suggested by the noble Duke ought to be done.
§ LORD HUGHES
If I could answer these two points, I would remind your Lordships that we have had rent control since 1920—that is, for 45 years. During that period there has not at any time been any attempt by Parliament to set up a different standard or form of rent control for Scotland from that for the rest of the country.
THE DUKE OF ATHOLL
Surely rent control in Scotland was much more severe during the years between 1914 and 1939 than it was in England. I 977 thought that was when this big differential started in the level of rents between the two countries.
§ LORD HUGHES
The effects were intensified, as we all know, and as the noble Duke has said, because of the effects of the rents system which have complicated the position South of the Border. But under these proposed increases of 15 per cent. each year we shall reach in a comparatively short time (when one compares that with the 45 years which has elapsed since rent control was first imposed by Parliament) a position where fair rents in Scotland will be the same as fair rents in England, as reflected by what the assessors decide are gross annual values. That, I think, is a tremendous improvement from the landlords' point of view on what has taken place up to the present time.
The noble Duke said that he did not wish to bore the House with more figures, and I did not want to complicate the situation by bringing in my own set. But I think it would meet this point if I said that the figures which have been given on the rents being charged would enable gross annual value to be reached in from three to five and a half years. If the gross annual value is increased in a year or two, you have to add something to that to reach that new figure. But it means that within a comparatively short period the enormous differences between the controlled or fair rents in Scotland and the controlled or fair rents in England will disappear.
THE DUKE OF ATHOLL
But if the noble Lord, Lord Hughes, does not dispute my figure that the average rent of the rent-controlled house in Scotland is 55 per cent. of the gross annual value, it means, since 15 per cent. of that 55 per cent., if my mathematics are right, conies to about 8 per cent. of the gross value, that to catch up the remaining 45 per cent. is going to take six years. We have a quinquennial valuation every five years. The likelihood seems to be that in the next quinquennial valuation—again this is a global figure—the gross annual values will go up 30 per cent., and if we go on as we are now we shall be no nearer reaching the gross annual value at the end of five years than we are now.
I should like to support what my noble friend Lord Wolverton said about the old-age pensioners. Of course, we all 978 realise that there are cases of hardship, but I should have thought that the National Assistance Board was designed to cover exactly this point. I really cannot see that that is a great consideration. As for the other tenants, if they have been sufficiently lucky to live in those lowly rented houses for so many years—I do not say I think they will be delighted to pay a bigger rent, but they ought to be prepared to pay a rent which is rather more commensurate with what it costs the landlord to keep these houses in reasonable repair. After all, they are protected at the top by the fact that the landlord cannot go over the fair rent to be decided by these committees. I cannot see at all that the noble Lord's arguments are very good, but perhaps before I do anything further he might say how he arrives at this period of from three to five and half years within which the rents will go up to a figure equal to the gross annual value, because I think this is a basic point. How long is it going to take to get rents anywhere near the gross annual value?
§ LORD HUGHES
I did not have to do what the noble Duke has done, and work out the sums for myself. I had them worked out for me within the Scottish Office. For instance, if we take the group with the gross annual value of less than £15, the amount of annual increase would bring that rent from its present controlled rent to a gross annual value in three years. When we reach the £21 to £25 gross annual value group, it would take four and half years to reach the gross annual value; and in the £41 and over group it would take five and half years to reach the gross annual value.
I have already accepted the noble Duke's point, that before that period has elapsed a new gross annual value will have been fixed, which presumably will be greater than the present one; and that five years after that there will be yet another one, which may well be higher than the one which is yet to be fixed at the next quinquennial review. What I am quite certain about is that the gross annual value is not going to be increased by something which approximates to 75 per cent. every five years, which is the figure by which it would have to be increased in order to stop the 15 per cent. per annum catching up on it. So it will merely defer the catching up of the fair 979 rent by a little longer, and instead of being achieved in from three to five and a half years it may take from five to eight years, or something of that order. But certainly before the second quinquennial review is reached, the 15 per cent. increases are bound to take the figures up to the gross annual value; and if the fair rent is calculated as being something higher than the gross annual value, the 15 per cent. would continue to be added.
§ 7.48 p.m.
§ LORD NEWTON
As my noble friend Lord Wolverton was brave enough to intervene in a debate which otherwise was entirely dominated by those who live North of the Border, perhaps I may be equally brave for a moment or two. I am bound to say that I thought my noble friend the Duke of Atholl, and my noble friend who supported him, made out a most convincing case for including some weekly figure as an alternative to the percentage. My noble friend said that he was not particularly wedded to 7s. 6d., and I do not suppose anybody is. I was astonished to hear my noble friend's account of how minute the increase may be to the rents of houses in Scotland if the annual increment is on the basis of 15 per cent. I should have thought that any cases of hardship would be properly taken care of by the National Assistance Board which, as he said, exists precisely for that purpose, among others.
It seemed to me, listening to the general argument of the noble Lord, Lord Hughes, that one was bound to deduce from it that in his view those who cannot afford to pay an increase of 7s. 6d. per week will probably never be able to afford the fair rent when rents come to be registered. What this clause does is to provide for the transition of controlled rents to regulated rents. If he is maintaining that a figure of around 7s. 6d. per week is much too large for people to be able to afford, is it likely that they will ever be able to afford the regulated rent when it has been fixed by the rent officer or the rent assessment committee, unless he is going to assume that the registered rent is not going to be a fair rent (as we have been given to understand that rents will be)—in other words, 980 is to remain artificially low. Perhaps we may be told about that.
The noble Lord also took the point that he dislikes the fact that this Amendment applies to the whole of England and Wales and Scotland. I was not quite sure why he was objecting to that fact. I do not know what my noble friend the Duke of Atholl feels about this, but no doubt he would be willing to consider, at a later stage, putting down an Amendment which deals either specifically with Scotland or with England and Wales. It does not seem to me to be a point that we could not get over.
§ LORD HUGHES
The noble Lord has invited me to say whether I felt that people would ever be able to pay a rent increase of 7s. 6d. a week, if my arguments were valid. I do not say that is the position; but what I do recognise, and I am quite certain that at least some noble Lords opposite will also recognise, is that what is an impossible burden for anyone on a comparatively small income to bear when it is suddenly thrust upon them, as an increase to be faced as from next week or next month, becomes one to which they can be accustomed if it is taken in bites. Seven and sixpence per week might be virtually impossible and might cause people to take action to avoid it by trying to get into an even worse house—an action which they would not feel impelled to take if they were asked to reach the 7s. 6d. by stages of 1s. 6d. or 2s. or 2s. 6d. per week. At the end of the day they are absorbing the same total figure, but it has been possible to adjust their circumstances to it over a period.
I readily admit that in the case of those who are in a position to receive National Assistance—and old-age pensioners form an obvious class—there need be no particular hardship to them, because probably they could get the whole amount of the increase refunded by the Assistance Board. But unfortunately that fact has not got over, particularly in Scotland, to old-age pensioners as a class. In far too many cases they still regard the Assistance Board as being the parish council and National Assistance as a form of Poor Law relief which they consider they ought not to take. We all know that is quite wrong, but it is a fact of life with which we have to deal. In the result, although 981 the noble Duke referred to increases of rent which have taken place at a very much greater level with local authorities, it is possible to look at almost every case and find that old-age pensioners have been excepted from the severity of the increase. In fact, of course, the people concerned have not derived any benefit from that: it is the Government who have benefited because they have not had to pay it out in assistance, but the local authorities have recognised that in far too high a percentage of cases the people were not going to the Assistance Board and that the extra rents would have come out of the money they had available for food.
I think it would be quite wrong if I were to create the impression that I was asking you to believe that everyone in low-rented houses was far less likely to be of the low income group than the old-age pensioners. That is not the case. But it is the Government's view, which I think cannot be disputed, that in advancing rents by 15 per cent. per annum we are going much faster towards a fair rent than anything that has been attempted by a previous Government.
§ LORD NEWTON
Obviously this is a matter we could go on discussing all night, but I do not want to prolong the discussion unduly. I do not know whether it is for me to offer any advice to my noble friend, but. I think he would be perfectly justified in saying that he will not pursue this matter any further this evening and will withdraw his Amendment but that he might well take the matter up at a later stage.
THE DUKE OF ATHOLL
I think there is another good reason why I should not pursue it further this evening, and that is that I drafted it badly and I should like noble Lords to know what they are dividing on. I would ask the noble Lord, Lord Hughes, whether he would be happier if I were to put some percentage limit at the top of the increase—say 40 per cent.—so that if the increase was over 7s. 6d., 15 per cent. would apply, but if it was under 7s. 6d. there would be a maximum of 7s. 6d., or 40 per cent., increase. I think I have expressed this badly and I should need to think of words in order to put it in the Bill. But it seems to me there is a good case here for allowing house rents in Scotland to rise 982 by more than 15 per cent. and I do not accept Lord Hughes's figures that they would reach the gross annual value in between three-and-a-half and five years. In many cases I think it would take six years to reach even the present gross annual values. But, having warned the noble Lord that I propose to deal with this matter on the Report stage, I should now like your Lordships' leave to withdraw this Amendment.
§ Amendment, by leave, withdrawn.
§ Amendment moved—
Page 8, line 28, at end insert—
("() The provision to be made by an order under this section with respect to an existing controlled tenancy which is one to which Part II of the Landlord and Tenant Act 1954 would have applied but for paragraph (c) of section 43(1) of that Act (or would have so applied had it been a tenancy within the meaning of that Act) shall be that the existing controlled tenancy shall be treated for the purposes of that Act as a tenancy continuing by virtue of section 24 thereof after the expiry of a term of years certain.")—(Lord Champion.)
§ On Question, Whether Clause 11 shall stand part of the Bill?
§ THE EARL OF KINNOULL
I wonder whether I might raise one point at this stage. While I am sure everyone welcomes the power that this clause gives to the Minister to convert controlled tenancies into regulated tenancies, many people, including the professional bodies, feel that some time limit should be put into this clause so that the Minister has, say, three years to put it into effect. Many people feel that the rents under controlled tenancies are already eight years behind the principle of fair rent as it is described in this Bill, and every year this gap widens. No hardship at all will be caused by putting in a time limit in this clause because, as has been said, there is a cushioning effect on the amount of increase which will be put on in any one year.
The only argument I can see that the Government may use against the proposal of a time limit is that the Minister will be unable to organise the machinery that he has to set up under this Bill in the time available, and the question of his priorities. My answer to this would simply be that the Minister should have 983 a time limit. It would get him on his toes, and I suggest that a practical time limit would be three years. I hope the Government will give sympathetic consideration to this suggestion.
§ LORD MITCHISON
I think I caught the noble Lord's point correctly. What he is asking for is some time limit to be put into this clause at some stage. I do not think one can do that. It has been made perfectly clear in another place and, I hope, here that we are going to get on with this as fast as we can. After all, is it likely that we are going to do anything else? This is one of our major measures and we believe it meets, to some extent at any rate, a really urgent need which ought to have been met long ago.
We are not going to delay in the matter at all. In giving the noble Earl and noble Lords generally that assurance, I am merely repeating what my right honourable friend the Minister has said in another place more than once. But when it comes to setting a timetable I think that is more difficult. Moreover, this is one of the things in the timetable which would not necessarily come first. The first thing we shall want will be to get out of what I may call the "frozen period" into the regulating period. That is our first job. We shall need the machinery set up first. This should take a little time. If I may say so, I think it would be a mistake to try to put an exact time on what is necessarily a subsequent part of the chain of events which we hope to produce under this Bill.
§ LORD HASTINGS
I quite agree with what the noble Lord, Lord Mitchison, said. I think it is virtually impossible to put in a time limit. On the other hand, I think my noble friend Lord Kinnoull brought up a most important point. We do want to be quite certain that it is the intention of the Government not merely to regulate all those tenancies at the moment outside control but also to bring into regulation the existing controlled tenancies. We are anxious to know that it is the Government's firm intention to push ahead as fast as possible so that they will get around to bringing the existing controlled tenancies into regulation and not dilly-dally on the way and merely concern themselves chiefly 984 or solely with the regulation of tenancies which are at the moment not controlled.
§ LORD MITCHISON
First things first. We believe that the best solution we can see of the landlord and tenant problem in connection with these groups of houses is regulated tenancies. But I do not think that the noble Lord can expect me to give him an undertaking that either at any time or generally we shall necessarily decontrol everything—
§ LORD MITCHISON
Regulate—convert from control into regulation everything. All I can say is that I cannot for myself (and I am sure I am speaking for the Minister, too) see a final solution in changes in the arithmetical form of control that controlled tenancies represent. We look for a solution in regulated tenancies, and therefore the more we can convert to them the better we shall be pleased. I think that is the best way to leave it at the moment and the fairest to all concerned.
§ Clause 11 agreed to.
§ House resumed.