THE HOUSING SITUATION

HL Deb 27 July 1966 vol 276 cc785-884

3.4 p.m.

LORD HAWKE rose to call attention to the housing situation; and to move for Papers. The noble Lord said: My Lords, anybody listening at the hustings would imagine that the first task of any Government on being returned to power was to take off its coat, roll up its sleeves and start to lay bricks. In our great war-time Leader, Sir Winston Churchill, we had a card-holding bricklayer. I do not know whether there are any bricklayers among the present Government, but there certainly seem to be some card-holding brick-droppers. But, to be serious, Governments do not build houses: it is builders who do that. Governments can help a little, and Governments can hinder a lot. This Government has done remarkably little to help and quite a lot to hinder the supply.

Of recent years, the construction industry has been under some strain to fulfil all the demands made upon it by the construction requirements of the country, plus the housing programmes; but, like all industries under strain, it has tended to expand and to increase its productivity. Earlier in this year there was, at any rate in my mind, a strong doubt as to whether the industry was capable of undertaking all the public works about which Ministers were so gaily talking, plus the half-million housing targetto be produced by 1970. However, the effects of the squeeze which started in July, 1965, are now beginning to show up, and the latest measures have still further lowered the demand on the industry. Nevertheless, I doubt the ability to produce half a million traditionally built houses by 1970, and I think that the Minister is quite right in deciding to include in that programme 100,000 factory-built houses. But here again I think that will be physically possible only if other construction activity is substantially reduced, in particular the very considerable amount of site works and labour required for the industrial houses, and if there is a redeployment of labour in the industry to provide the labour in the factories which produce the component parts. The present intensive squeeze would appear likely to produce both these conditions.

Is there a need for such a large programme? When one turns to the White Paper (Cmnd. 2838), The Housing Programme 1965 to 1970, dated last November, one is left in little doubt that the author, at any rate, thought so. The White Paper emphasises that a great deal of information is not available, but the needs are given, suggested or guessed (your Lordship's can apply whichever word you wish) at 150,000 a year for new households, 30,000 to replace houses pulled down to provide new roads and so on, making 180,000 annually; and, in addition, a once-for-all figure of 700,000, to cover existing shortages and provide a margin for manœuvre, plus one million to deal with existing slums, and 2 million for near-slums. If we take that figure of 3ç7 million once-for-all houses, pins 180,000 annually, we discover that if our production is 400,000 a year, it will take 17 years to clear off the arrears. If it is 500,000, it will take 11½ years. Meanwhile, of course, further houses will have aged and become obsolete. So I think that we can take it, at all events in the foreseeable future, that there will be a large demand—possibly there for ever.

This fact has been recognised always by Governments. While the Conservative Government were in power, production went steadily up and in 1965, for the first time, there were real hopes of exceeding 400,000 new houses. Then things began to go wrong with the economy, and, ofcourse, this was reflected in housing. In 1965 we did not reach the 400,000 total; 1966 looks like being a little worse, and 1967 worse still. I have no doubt that the noble Lord who is to reply to the debate will produce a more cheerful set of figures, which he has and we have not, showing the latest number of houses started and completed; but I hope he will not claim that the tide has turned. All I can say is that every authority I have consulted—trade associations, financial journals, bankers—all foresee a very difficult time in housing in the near future. And the most vital figure of all—namely, the number of houses unsold—is not known to anybody.

What has gone wrong? Finance, of course, is the governing factor; but I believe that lack of confidence is a good second. The Labour Government have never really understood the paramount importance of confidence in the fields where men have to stake their personal fortunes in the hope of making a profit. Since they came into office, they have literally behaved like a string of destructive bulls which have at last burst their way into the china shop. But whereas the bull is a strong, silent and taciturn animal, Her Majesty's Government are far from being silent or taciturn. In consequence, they have played havoc with business confidence, particularly in housing.

Let us try to put ourselves into the shoes of a builder-developer who builds houses for sale. First of all, he has to keep his organisation together, because if he loses his organisation he has lost his livelihood. Therefore, he must provide continuity of work. He must have land to build on now, next year, the year after and, if possible, beyond that. He has to buy that land in heavy competition with other builders who do precisely the same thing. He has to calculate what price he can afford to pay, having regard to two principal factors: first, the cost of building the type of house that he thinks people will want to buy; and secondly, the size of the mortgage that he thinkshis potential customer is likely to be able to raise. He has then to finance the purchase of the land and the building costs up to the time when he can get his money back, to say nothing of having to try to make sure he will be able to build houses which will not only sell, but also please the more aesthetic tastes. In addition, he has to take all the risks which the ordinary contractor has to take, such as site difficulties, acts of God, strikes, wage increases and tax increases. If he cannot sell his houses, he may or may not go bankrupt—though a great many builders do. But one can be sure that he will not build any more houses until he can sell those already built. Above all, since the present Government have come to power he has felt that in their eyes he is a speculator and is rather a pariah in Socialist thought. He is likely to get all the kicks, and has to look out for the ha' pence himself.

This long chain of decisions and risks which have to be taken before the houses can be built is vastly dependent on confidence: the more uncertainties that are introduced into the chain, the greater the risk, and the more temptation there is to "play it" as safe as possible. Consider the uncertainties that have faced builders recently—uncertainties in some cases created, in some abetted, and in remarkably few cases alleviated by the present Government.

First of all, on land, the advent of the Land Commission has created the most appalling doubts and uncertainties as to the future supply of essential raw material process. Secondly, the price the builder has paid for land has often turned out, in the light of later financial factors to be too high. Sometimes he has had to pay more for his finance than he calculated, and he has found it much more difficult to get that finance. He has had to pay higher wages, higher material costs, than he expected; and now he has to face the selective employment tax, which is perhaps the biggest irony of all to somebody who is manufacturing one of the nation's greatest needs. All this requires more finance. His potential customer has the same difficulties, due to changes in Government talk about mortgages, which has continually put him into uncertainty, too. Mortgages have been available fairly freely for the new houses, but bridging loans have been very short, and this means that it has been difficult for people to change houses all the way down the line.

I am not going to enlarge on the details of all these difficulties, because other noble Lords will be doing so. But I think one can sum up by saying that the builders' difficulties are that houses cost more than intended; that the potential customers have difficulty in raising the money to buy them, and the money has cost more to hire. Hence, builders have been more cautious in planning their future operations; buyers have been more cautious in committing themselves; and I suspect that there are a great many unsold houses about. In fact, the outlook for maintaining the present tempo for private house building is not at all bright unless, in some way, conditions change.

What of the future? The Conservative Government, by leaving things alone, were content to see about two-thirds of the new houses built privately for sale, and about two-fifths built by local authorities to rent. Labour says that the process should be reversed. My Lords, is that a good thing? What are the advantages of private home ownership? First of all, it fulfils one of the basic human desires. Then the amount of income devoted to paying off the mortgage represents the market rate of interest and repayment of the savings of somebody that have been borrowed to take out the mortgage: and the repayments finance the next man's house-buying. Contrast that with the council tenant, who in a new house will hardly ever pay a rent which fully services the money the local authority have borrowed to house him. The shortfall is paid off by the ratepayer, the taxpayer or the tenant of the older house in the pool: in fact, it is not too far-fetched to say that when one sees a large number of new motor cars on a new housing estate the ratepayers, and so on, are subsidising the motor car industry.

Labour have always had reservations about rents being anything like economic, and some small percentage of income is regarded by them as appropriate. Yet what do we find when we examine the practice of building societies? They reckon to let a man have a mortgage of two-and-a-half to three times his gross annual income. This means monthly repayments of up to a quarter of his net income. With average industrial earnings running pretty near £1,000 a year, there is obviously a big scope for home ownership to-day, especially when one remembers how many households have money coming in other than from the husband's earnings. The Minister may hope to call in local authority housing to make up any shortfall in the private sector, but local authorities look like having the same difficulty about obtaining money as the builders, and they are notoriously slow in getting under way.

Why do we not have more home ownership and houses built for sale? The plain answer is, "finance". The banks have cut down bridging loans; insurance companies have cut down their loans; the local authorities have cut their housing loans; and there remain only the building societies, who always produce the bulk of the money anyway. But they can lend only the money they can borrow plus what they have coming in from repayments. If the building societies could borrow more they could lend more, and the demand for loans is intense. The Government have produced a better value National Savings medium and that, I am told, competes strongly with the building societies for the funds of the small savers. The Government are in process of producing a mortgage rebate scheme which will open the possibility of loans to people with an even lower income. But this will increase the demand for loans. Normally a squeeze on supply and a boost to demand spells famine. In fact, money is short all round.

This is all rather depressing, but I am afraid it is only part of the general malaise which is the root of our economic troubles. We want an awful lot of capital goods, and we are not willing to forgo current consumption to pay for them. The results will be fully adumbrated by 40-odd speakers on the morrow. I would say this, though, about savings, which are vital for the housing programme. I confess that I have not read The National Plan, or "Old Brown's Almanac", from cover to cover, but I have browsed through it, and I have not been able to find any reference to savings. I may have missed it. You can only create a brave new world by borrowing people's savings, by taxing the money out of them or by printing it. So I should have thought that the question of savings should be the most vital chapter in the Almanac. It appears to work on the principle that the Lord will provide. That frequently works when it comes to patching up the church roof, but one wonders whether Providence will be as kind to Messrs. Brown and Balogh as it generally is to the vicar and churchwardens.

My Lords, what is the remedy? Either curtailment of this vital social necessity of the housing programme, or an abnormal share of available finance. That means, in fact, opting out of the credit squeeze; and if housing opts out, somebody else must be squeezed harder. There is no getting away from that. Her Majesty's Government really must do something to restore the confidence of the builders. They feel that the Government have no confidence in them, and they certainly have no confidence in the Government. They must get the banks moving again to lend money to developers, to builders and to house buyers for bridging loans. The building societies must get more money in, and the local authorities must make the very best useof the limited amounts they can borrow. I am glad to see that Her Majesty's Government have thwarted the new council offices and swimming pools to that end.

In effect, I am asking that housing should be allowed to opt out of the credit squeeze. The Government have said that it is intended that it should do so, but I cannot quite see how they are going to do it. I ask Her Majesty's Government to tell me how they are going to do it—I have given notice to the noble Lord, Lord Kennet, that I want to know—otherwise I fear that the housing programme will be smothered in the dust and flutter of chickens homing to roost. My Lords, I beg to move for Papers.

3.25 p.m.

LORD WADE

My Lords, I am sure we are greatly indebted to the noble Lord, Lord Hawke, for introducing this debate on housing. Of course, housing is always a topical subject, but it is particularly appropriate that we should be debating it to-day, since we are in a position to consider the progress during the first half of this year—which has not been quite as good as I had hoped—and also the prospects for the future, which are not as bright as I would wish.

The need for more housing accommodation, both to rent and to buy, is not in doubt. The target of 500,000 houses a year is not an exaggeration at all. I agree with the noble Lord, Lord Hawke, as to the demands, and as to the continuity of that demand in the future. In some industries, those who are responsible for selling the product have to peer into the future and consider whether there is likely to be some change in fashion or some new technique which may make it more difficult to sell their products. But in the building of houses there should be no such fear. It is scarcely likely that, as a result of some change in fashion, the majority of the population will suddenly change over to living in tents or in the open air—that is scarcely likely in this climate. Therefore, there is really no question about continuing demand, and the future should be assured. But unfortunately it is true that there is the feeling of uncertainty and some lack of confidence, especially among the small builders.

If I devote my remarks mainly to the building of houses for owner-occupation, I hope it will not be taken to imply that I am not concerned about local authority building and building of houses and flats to rent, because there is indeed a great need for more rented accommodation. I think that in the last fifteen years insufficient attention has been paid to this need for rented houses and flats. There is much to be done, and in tackling this I hope that the Government will stand firm on the view that those who can afford to pay a fair and economic rent should do so.

Turning to building houses for owner-occupation, there is a need for houses to buy, as well as to rent. The two are complementary. I am expressing the view of my Liberal colleagues when I emphasise that we must have an increasing number of houses available for owner-occupation, as well as rented accommodation. If houses for owner-occupation are difficult to obtain, this has the effect of adding to the numbers on the local authority housing list, and it adds to the numbers of young couples having to live with their in-laws, which is seldom an ideal state of affairs.

The problem which most would-be owner-occupiers have to face is that of obtaining a mortgage, as the noble Lord, Lord Hawke, has pointed out. In this field the building societies have an important role to play. Here I must declare an interest. I have for a number of years been a vice-president of the Building Societies Association, and recently I have become a director of a building society. To that extent, I have an interest, but the views which I express are entirely my own. The financing of house building and home buying is not a very exciting subject, and I feel almost inclined to apologise for talking about it. But it is, nevertheless, a very important subject, because it affects so many people.

There is a good deal of misunderstanding in the public mind about it. I do not think it is fully appreciated that interest rates charged by building societies are largely determined by Government policy. We read in the Press about meetings of the Building Societies Association Council. One gets the impression that it is a body of tycoons meeting together to decide what interest shall be charged, in some such way as a body of industrialists might create a kind of price fixing arrangement, but that really is not an accurate impression. In fact there is little room formanœuvre and the recommendations which are made are not always followed by the societies. There are arguments both for and against a recommended rate, but the determining factors are, first, the amount which building societies have to pay to those who invest with them, in order to attract savings and, secondly, the amount of tax which the Government extract from the building societies in the form of taxation.

The main competitors of the building societies are, first, the National Savings Movement, and there of course the interest offered is decided in effect by the Government. The other competitors are the local authorities, particularly so far as short-term loans are concerned, and again directly or indirectly the rate of interest offered is decided by Government policy. It is as a result of these considerations that the amount charged to home buyers by the building societies is arrived at, and at the present time it would seem to me that 7¼ per cent. is about the lowest that building societies could possibly charge; and with the bank rate at 7 per cent. and the effective rate to customers of banks running to 8 or 9 per cent., and even higher rates from other institutions, I think it will be difficult for the building societies to maintain the rate as low as 7¼ per cent. This is most unfortunate because some people will find that buying a house is too expensive on account of the high rate of interest.

Now a scheme is being discussed by the Government with the building societies with a view to reducing interest rates. It is intended to bring about some reduction and to benefit those who do not pay tax at the full rate. I hope agreement will be reached and that it will not be deferred as a result of the deflationary decisions of the Government. Perhaps in the course of the debate we shall hear what is happening. There is an element of subsidy in this, and I am not entirely happy about subsidising interest rates, but nevertheless I think it will be of some benefit as long as it does not lead to increased prices, which could wash out all the benefit of any subsidising of interest rates. But one thing is clear: there is no prospect whatever of bringing down interest rates to anything in the region of 3 per cent. That will remain a will-o'-the-wisp for quite a long time.

Even if interest rates were to be reduced, that alone would not provide a solution to the problems of the building societies and the home buyers because it is the availability of funds that is so important. During the last six months there has been a steady inflow into the building societies and I am very glad that should be so. Even then they have been fully stretched because of the intensity of the demand for mortgages. But for the months ahead the outlook is not nearly so encouraging. I think the inflow to the building societies will diminish and that the consequence is bound to be rationing of mortgages.

Much as I wish to see a reduction of interest rates, I am inclined to the view that rationing of mortgages creates greater heartaches than do high interest rates. It can be very disappointing and frustrating for someone wanting to buy a house to find one and then be unable to complete the purchase because no mortgage is available. I think this will happen and it is the direct consequence of the Government's deflationary measures that have recently been announced. I am sure they do not wish that to happen, but I think it is bound to happen. As a rule I hesitate to make any forecast about the future, but I am afraid this rationing of mortgages will be experienced in the coming months. This is bound to affect building because builders have to plan ahead and their planning depends partly on a reasonable assurance of a quick turnover, and if they fear that houses will remain on their hands I think they will tend to lay off and postpone building until the economic climate is rather better.

That is the position. The question is, what are the remedies? I think one must look carefully at any remedies that are offered. The noble Lord, Lord Cohen of Brighton, has put forward certain suggestions. In effect I think his suggestion is that the building societies, in order to have more money available to lend, should run down their reserves or, in expanding, should not be so concerned about building up their reserves.

LORD COHEN OF BRIGHTON

My Lords, if I may interrupt the noble Lord, my proposal was that the Government should guarantee a proportion of the reserves in order to avoid the necessity of adding the full amount of reserves, and if the Government guaranteed a half then the building societies need only put by a half each year and they would have more to lend.

LORD WADE

I am much obliged to the noble Lord. I was just going to say that, in place of the reserves, it was suggested that the building societies should rely on Government guarantees, and I had notified the noble Lord, Lord Cohen of Brighton, that I was going to refer to his interesting suggestions. However, I think there are some serious objections. In the first place, the building societies are required by law to invest their reserves in Government securities and the interest derived from them helps to cover their overheads which, of course, indirectly helps the home buyers. But there are more important reasons for maintaining adequate reserves. Institutions in this country such as banks and building societies have a reputation for being sound. This is partly due to having adequate and substantial reserves, and exceptions are rare. This is as it should be, and I think it would be unwise for any Government to urge building societies to spend even part of their reserves.

Then again, to qualify for trustee status, building societies are required to maintain a certain ratio of reserves. Personally, I think that when the last Administration granted trustee status they made the condition rather too low, but that is my own opinion. It would be unfortunate, and it certainly would not help to encourage an inflow of investment into the building societies, if the societies were to lose their trustee status. But I think perhaps the conclusive argument in my mind is this. If these societies were to rely on Government guarantees instead of the financial soundness and the stability of their reserves, in effect the Government would be taking over some of the risks and responsibilities of the building society movement, and I think some day someone would demand that the societies should be nationalised. Now some noble Lords may think that would be a good idea. Personally I do not think it would be. I do not think it would be of benefit to the country or to home buyers. Therefore, I think one must look elsewhere for a solution.

I want to be as constructive as I can. I certainly will not attempt to cover the whole of the ground; that would be discourteous to the other noble Lords who will be taking part in this debate. May I, however, put forward four considerations? First, if the construction industry is to be forced to contract, I think it would be wise (I believe the noble Lord, Lord Hawke, said this) to cut down on office building and to encourage, so far as possible, the building of houses and flats, both for owner occupation and to rent; and I hope that both the noble Lord, Lord Hilton of Upton, and the noble Lord, Lord Kennet, will indicate that this is Government policy. On that perhaps we shall agree.

On the second point they may agree, but I imagine they will not wish to say so publicly. I believe we should scrap the selective employment tax. There is a strong case for special relief in the case of the construction industry and in the case of building houses and flats of either type. But I think we have seen, from what we have at any rate heard about the discussions in another place, that as soon as you remove one anomaly you create another, and the wisest course would be to abandon the selective employment tax altogether. I think that any arguments for it that were put forward at the beginning have now been exploded and this tax is merely an impediment.

The last two proposals are primarily directed to the Chancellor of the Exchequer. I cannot expect to get on immediate "Yes" from the Government Front Bench to-day, but I hope that my views may percolate through to the right quarter. Building societies' surpluses—that is to say, the difference between what they collect and what they pay out—are subject to corporation tax. I do not think there is any logical reason for imposing this corporation tax, and if this tax were cancelled, as I think it should be, it could be made conditional upon helping home buyers by reducing the interest rates or, alternatively, making the rates more attractive to small savers and so helping the inflow into the building societies. I think the latter is the more immediate need. It is most important to attract small savers to increase the funds flowing into the societies and to lessen the extent to which mortgages will be rationed in the coming months. This is not an inflationary proposal, because I do not think that buying one's own home is an inflationary activity.

Finally, I think attention should be paid to bridging finance. Building firms must maintain continuity. It is very important to have help from the banks. Many building firms require assistance from the time they start building an estate to the time they finish selling the houses. Again, an owner-occupier who wishes to move may be unable to complete the purchase of his house until he has sold the house in which he is living. There is very often a chain reaction if one completion is held up. Very often if one purchaser is unable to complete because he cannot get temporary bridging finance from the bank, a number of completions could fall through. If as a result of the credit squeeze this temporary finance is not available it will have far-reaching consequences. Therefore, if it were within my power I would give a directive to the banks not to apply the credit squeeze to this temporary bridging finance. We have not had any clear definition of a "shake-out". It may be just an euphemism for unemployment, but if it means, as it should mean, mobility, then surely it is important that those who are willing and able to move from one job to another should be able to move from one house to another and should not have difficulties placed in their way.

So I come back to my original point. The need for housing is very great. The number of 500,000 per year is not an over-estimate, but I am very much afraid that we shall fall short of that figure. This is not an academic point. To have a home of one's own choice, however small and modest, can bring great joy, but to seek for a house in vain may spell real tragedy, and I hope we shall keep these tragedies to the minimum.

3.45 p.m.

EARL JELLICOE

My Lords, I, too, am grateful to my noble friend Lord Hawke for opening this discussion this afternoon and for doing so across so wide a canvas. I think myself that this is a subject to which we in this House still perhaps give too little attention: we have not had a full housing debate since we discussed Lord Wade's Motion last year. I feel this because, to me at least, housing represents the last frontier of the widespread physical want which our society still has to push back. Far too many of our fellow citizens are still poorly housed, and far too many are abominably housed judged by any human criteria. Whatever we may feel about the actions or inactions of this Government or that Government in the last half century or so, be it Labour, Conservative or Liberal, I think we all know that the real roots of the problem here lie far deeper than Government action or inaction. They lie in the legacy of obsolete mid-Victorian housing which still hangs around this nation's neck; they lie in all the social and demographic changes of the last decade or so which have sharply increased the nation's demand for housing and also sharpened, rightly and understandably, its appetite for high housing standards.

I suspect that some of us, myself included, may have some fairly hard things to say about this Government's housing record. What we say might tend to be rather harder and harsher because of the very rosy housing prospectuses which the present Government, on two occasions in the last two years, have flourished before the electorate. Yet, I think that, whatever we might feel or say, we must if we are honest recognise that this Government, like any Government, in the matter of housing are grappling with a really vast and difficult problem. It arouses deep passions. There is a crust of habit and custom, much of it bad, which is difficult to break through in this field. It involves a whole complex of financial and legal problems; and not least it is one of the areas of our national life where the legislator and the administrator above all still picks his way through an extraordinary maze of uncertainty. We still do not yet properly know many basic facts which affect this problem.

Be this as it may, I would claim that the legacy which the Conservative Government bequeathed to the present Government was one of substantial and accumulating achievement. I will not dwell on that. I will only pause to remark that it needed something of a genius to produce fewer than 400,000 houses last year. I do not wish to overplay what is sometimes called "the numbers game in this debate. We all recognise that there is much more in housing policy than merely creating the conditions in which a certain gross quantity of houses is produced each year. Nevertheless, numbers are important here. We all agree—I certainly agree—with the noble Lord, Lord Wade, that the sooner we can produce 400,000 houses a year in this country the better, and the sooner we can move towards the next target of 500,000 better still.

The Government, of course, have in some ways gone rather further than this. In the White Paper produced only last November they recognise that the expansion of the housing programme must be, to use the words of the White Paper, "steady and continuous". I would assume that this statement was more than the pious aspirations of some quill driver in the Ministry of Housing and Local Government, and that it must have embodied, at least at that date, the firm plan and the firm policy of a Minister who had by then been settled firmly in the saddle for more than a year. Yet what in fact have we seen? Each month since and including that November, the month of the White Paper, the number of houses completed has been less than in the equivalent month of the year before, and, given the ripeness of the grapes, 1965 was not a particularly good vintage year.

But the figures for new starts are more significant and more sad. So far, in the first quarter of 1966 over 13,000 fewer dwellings have been started than in the corresponding quarter of 1965. The private sector is far worse off: 11,500 down, with the hopes of 11,500 households, perhaps some 40,000 people, dis- appointed. But to me, more striking and even more surprising, is that the figures for starts in the public sector are nearly 2,000 down. In paragraph 14 of the White Paper it was stated: Public authorities will build substantially more houses next year than this. I should like to ask noble Lords who will be replying: does this still hold good? I hope it does. And what about the overall figure for the year? As Mr. Crossman said in another place on March I: This year we shall build 400,000. By mid-June, Ministers were a little cagier. The Joint Parliamentary Secretary, Mr. Mellish, told the House: My right honourable friend is not prepared at this stage to forecast the number of completions this year."—[OFFICIAL REPORT, Commons, Vol. 729 (No. 31), col. 260: 14/6/66]. But a week later his colleague in the Ministry of Public Building and Works, Mr. Boyden, told my right honourable friend Mr. Geoffrey Rippon, that he (Mr. Rippon) was wrong in thinking that the 400,000 target would not be reached. He said: No, Sir; there is a very considerable likelihood that it would be reached. But the day before, the Ministry of Housing and Local Government said that it was probably true that the target could not be reached. These statements and counter-statements present, at least on the face of it, a rather startling picture of ministerial muddle.

It would be interesting to learn from noble Lords opposite whether they in fact consider that 400,000 houses will be attained this year. I think it would allay a good deal of doubt. It would be even more interesting to know if they could tell us whether the National Plan target, 500,000 houses by 1970, is still intact. This figure of 500,000 houses sounds most impressive. Two years ago, at least, it was judged to be well within the capacity of our construction industry. And this is, or was, a Government target in a real and special sense.

I would remind your Lordships that the Prime Minister, speaking at Bradford on March 27 of this year, said of the 500,000 houses by 1970: This is not a lightly given promise. It is a pledge. We shall achieve the 500,000 target, and we shall not allow any development, any circumstances, however adverse, to deflect us from our aims. It would seem that in his choice of language the Prime Minister had a sure, prophetic sense. But Prime Ministers do not give pledges lightly; and therefore, can the noble Lord confirm, quite categorically, that, despite the present somewhat adverse economic circumstances, that pledge still stands?

That is the bare statistical background, and I find the statistics both dry and rather sad. But we must look behind them for the causes of this trouble. I would entirely agree with my noble friend Lord Hawke that one of the prime causes here is lack of confidence. In that White Paper again, we read in paragraph 5 that if the housing plan is to succeed it must command the confidence of all concerned in house building. I would hold the first ingredient for such confidence to be a firm belief that the Government of the day is firmly committed to a rising programme of construction.

As the present Foreign Secretary put it three years ago in another place, the industry needs—and I quote his words: a steady programme which will not be chopped down every time the Government run into some kind of financial difficulty."—[OFFICIAL REPORT. Commons, col. 678, 13/11/63] Mr. Stewart in fact last year opposed the broad chops across a wide field of public construction. I wonder what he has felt about the chops announced last week. In any event, the result is that our construction industry, the industry which builds the nation's houses, expanded by a mere 2.5 per cent. last year compared with a steady average expansion rate of 7 per cent. for the five previous years.

Of course I realise, as do we all, only too well, that we are in economic difficulties, and that we have been in economic difficulties for almost two years. I also realise that, however high a priority one is prepared, for social reasons, to accord to housing, no Government can, or really should, seek to insulate housing and the consumer industry from all the slings and arrows of our outrageous economy. It seems that at present our housing figures are falling further and further behind target. But if they are, then I should not count Mr. Prentice and Mr. Crossman to be the real villains of the piece. The real and root cause is, of course, the total failure of the Government's economic policies. Yet, although I would readily concede that bad housing policies are not in themselves the basic cause of our present housing discontents, I suggest—and I do so most emphatically—that a difficult situation in housing (it would have been bound to be difficult, given the economic situation) has been aggravated by mistakes and failings in its own special field.

There have been some symptoms, as I judge them to be—the noble Lords opposite may be able to allay my doubts when they reply—of what I would term straight administrative incompetence. There is the cross-talk or the double-talk to which I have referred, about the missing 400,000. There is the great brick muddle. But there are other signs and symptoms that in this field there is some lack of administrative grasp. For example—it is perhaps a more important example than it seems; there are many who regard it as an example—there has been the failure somewhere in Whitehall to get dimensional co-ordination finally settled.

More serious, perhaps, are the delays in handling ordinary planning matters. A year ago, so Mr. Crossman has informed another place, it took on the average some 33 weeks for the Ministry to give its decision on ordinary planning inquiries. Now the period has gone up to 44 weeks. These, of course, are only symptoms. They may be unfair examples, but they seem to me possibly to represent the tip of the iceberg. I am not in any way seeking to be discourteous to the noble Lord, Lord Kennet, but it seems tome that Mr. Crossman's now bloated province, containing two Ministers and four Under-Secretaries, might not pass Mr. Healey's cost-effective exam.

But more serious than these signs of administrative imprecision have been the mistakes in the field of policy. It is their cumulative effect which has shaken the confidence of all concerned in house building. There is the matter of the selective employment tax. I agree with the noble Lord, Lord Wade, that as that Bill is at present drafted the construction industry will bear the full incidence of this tax. Personally, I find the line between manufacturing and service industries as drawn in the Bill quite arbitrary and shot through with every sort of anomaly. But if one is going to draw a line, I find it very hard to understand how an industry which builds not only our houses, but also our bridges, roads, docks, our steelworks and our power stations, can be classified as a service industry. In any event, the incidence of this tax, if it is applied, will be very heavy indeed, some £80 million in a full year—greater, we are told, than any wage award ever made in the history of this industry. And we are told that this will add some £150 to the price of an ordinary council house. This seems a very odd way of winning the confidence of all concerned in house building.

Yet this is not all. In the original Bill the direct labour departments of local authorities were placed in the Bill's neutral zone, and the private house builder, quite rightly, regarded this as a foul (to use a word which has become only too common to us in the last few weeks). Under pressure the Government have agreed to remove new building by direct labour departments from this favoured category. But that concession affects only some 10 per cent. of the output of the direct labour department. The 90 per cent. devoted to maintenance work will escape. There is no similar escape, I understand, for the small private builder, or the large one for that matter, and this has not escaped his notice.

Your Lordships will recall that last autumn the Ministry of Housing and Local Government issued a now famous circular, Circular 50/65, which abolished the rule that one out of every three local authority projects should be put out to competition, the so-called one-in-three rule. This circular reversed the principle laid down by that famous "Right-wing" character, Mr. Aneurin Bevan, in 1946 that direct labour departments should operate in competition with the private sector. These matters have greatly disturbed the building industry. Given the fact that it is claimed, and I think it is true, that its productivity is higher than that of direct labour departments, they have concluded, not surprisingly, that Whitehall's actions, on both the selective employment tax and as represented by the circular, have been actuated by a certain bias against the private sector. This again is hardly the way to win the confidence of all concerned in house building.

Then there is the proposed Land Commission. Well, we could argue its pros and cons indefinitely, and we may have a chance of arguing them fairly shortly, so I do not propose to do so now. I would only say, with my noble friend Lord Hawke, that this Bill is a major factor underlying the lack of confidence of all concerned in house building in the Government's policies. It has certainly caused the smaller builder to postpone work until he knows where he is going to stand. And even if he reads the Bill he will not, I am sure, be very much the wiser because many parts, especially the Schedule, are incomprehensible, save to the computer mind. Here again this is hardly the way to win the confidence of all concerned in house building. I would ask the Government not to underestimate the dangers here. They might have noticed that in the issue of the trade magazine Building for June 10 there was the clear-cut statement that: The construction and building supply industries are facing a crisis of confidence, the gravity of which should not be underestimated. I trust that the Government are not underestimating its gravity. One can perhaps exaggerate the effect of all this on the larger builder, who has reserves of land and finance, but the effect on the smaller builder working to much narrower margins is very serious. The fact remains that at the moment 60 per cent. of the houses constructed in this country by private house builders are built by the smaller man. Therefore, there is no chance at present, as I see it, of reaching this elusive 500,000 unless the Government can carry the smaller builder with them. That is not the present position, not by a long chalk.

To summarise what I have said, if the Government attach the importance which they say they do to commanding or regaining the confidence which they had two years ago from this industry, I would suggest three simple and straightforward things which they should do. First, they should scrap, or at least greatly simplify, the Land Commission Bill. Secondly—I agree with the noble Lord, Lord Wade—they should scrap the selective employment tax. Thirdly, they should withdraw the one-in-three circular.

Those are negative recommendations, and, like the two noble Lords who have spoken. I should like to conclude by sketching out one or two positive suggestions. Much ground has already been covered, and I will not repeat what was suggested by those two speakers, but I will mention two or three things which I hope the Government will consider. I hope they will give earnest attention to every possibility of streamlining our planning procedures; I have already referred to the sort of delays which have occurred. I am certain that we should move increasingly towards regional planning boards. I am certain that there are devices open to the Government by which delays could be cut. Furthermore, I feel that the ordinary planning appeal procedure could well be decentralised, perhaps again on a regional basis, with independent tribunals. In the public sector I would hope that they would make every effort to be quite certain that subsidy is in fact only paid to those who are in need. This can be done by making rent rebate claims compulsory on local authorities. Another way would be by limiting, by Statute if necessary, the amount by which a local authority was able to subsidise its housing account. That could be done by imposing some limitation on its rate fund contribution, but I advance that only as a suggestion.

Finally, I hope that the Government can give a real boost to the third arm in housing, the housing society and the housing association movement. I must straight away confess an interest here, as the very new President of the National Federation of Housing Societies. I confess to a keen personal interest in this subject which I derive in almost direct descent from my noble friend, Lord Brooke of Cumnor, whom we were so glad to welcome here yesterday, and whom I am so glad to see attending our debate this afternoon. But I believe that in this field there are great and increasing opportunities, not only to help those in special need such as the elderly, not only to increase the attack on the "twilight" areas by what can be done to improve housing—especially where local authorities already have their hands completely full in slum clearance—but, also, in that important middle ground to which the noble Lord, Lord Wade, referred, housing for rent.

I believe that there are many people in this country who either do not qualify for, or do not wish to be accommo- dated in, council housing, and who at the same time are neither ready nor willing for home ownership. For them, either by cost-rent schemes or by co-ownership schemes, the housing society movement provides a very useful middle way. Great progress has been made in this, but I believe it could be helped if the Government made a clear-cut declaration of their support for this movement. I know that the Minister has on a number of occasions referred in general terms to this, but I find it significant that in the White Paper on Housing there is only one glancing reference to the housing society and housing association movement. I believe that if the Government's interest was reflected in further action this could be helpful.

I think that a review of the procedures and the financial aids, for which housing associations might be eligible in the "twilight" conversion schemes, would be helpful. I also assume that the Government will see that the cost-rent schemes are eligible for the 4 per cent. special interest rate, if this is in fact introduced, and that the co-ownership schemes are eligible for the mortgage option schemes. This would maintain their relative positions vis-à-vis public sector housing, on the one hand, and owner-occupation, on the other.

I have deliberately left vast areas of this huge field uncovered, but in conclusion I believe that the situation with which we are faced at the moment is one of very special concern for the Government themselves, for was not housing the Prime Minister's own chosen electoral battleground? Did not the Labour Party go to the country only four months ago stating that their first priority was housing? But let the Government take comfort. It is not too late yet for them to mend their ways, provided they are prepared to jettison some of their pet schemes—and the two previous speakers and I myself have suggested some good candidates. Provided they are prepared to do this, confidence among all those concerned in house building can still be restored. It is not yet too late for the houses to start flowing back again into the housing returns. And yet those who are waiting for houses should also not lose heart. I think that the present Government have shown in a number of ways that they are not cabined and confined by any undue attachment to past principles, prejudices and convictions, and they make a virtue of pragmatism. I hope that in tackling the housing problem from now on they will, in fact, make a virtue of that pragmatism

4.15 p.m.

LORD HILTON OF UPTON

My Lords, I am sure the whole House is very grateful to the noble Lord, Lord Hawke, for introducing this debate this afternoon, because we are all united about the importance of this subject of housing. We in the Labour Party regard it as of paramount importance. The noble Earl has just referred to housing having priority in the Labour Party's last General Election programme, and I would say that housing still has top priority in the Labour Government's programme. I hope that, either now or a little later, my right honourable friend the Prime Minister will make this perfectly clear again in another place.

Personally, I feel very strongly about housing. I doubt whether there is any other Member in any part of your Lordships' House who has had, as I have had, the ordeal of being on a housing list, waiting years and years for a house which never came. So I know from practical experience some of the heartbreak of people who are desperately in need of a house. The Labour Party and I believe that it is the right of every family in this country to have a decent house, either to own or to rent, in which to live. So we are indeed grateful to the noble Lord, Lord Hawke, for raising this matter this afternoon.

I will resist the temptation to indulge in recriminations about thirteen years of Tory Government and their housing record, because that will not produce one more house and production is what we are all anxious to achieve. I must say that the noble Lord, Lord Hawke, appeared to be quite a prophet of gloom, and was very pessimistic about the future prospects of housing in this country. But I should like to say that the Labour Party, with our belief in planning, being not just an optimistic Party but a realistic one, believe that our target of 500,000 houses a year by 1970 can and will be achieved, despite all the difficulties. I would be the first to admit that there are difficulties, but I hope to convince your Lordships—if not the noble Lord, Lord Hawke—that by our policy of planning this target will be achieved.

The noble Lord, Lord Hawke, and the noble Earl, Lord Jellicoe, referred to a lack of confidence in the building industry. It may appear to some that there is a lack of confidence, but to try to allay it my right honourable friend the Minister of Housing has called, for next Tuesday, a special meeting of all those interested in house building, to consider the problems. I am sure the whole House hopes that, if there is any lack of confidence—and I would not admit that at the present time there is—that meeting will clear up any difficulties.

Your Lordships are all aware of the Government's White Paper on Housing, which describes quite plainly how the Government propose to give greater priority to housing than it has had for many years, within a national housing plan embracing both the public and the private sectors. The first objective is an output of 500,000 houses a year by 1970. This is a marked increase over what has gone before, and can be achieved only if there is a steady and continuous growth in accordance with clear priorities. All concerned with housing, in both public and private sectors will need to understand what is expected of them, and this is one of the reasons why my right honourable friend has called this meeting. A proper balance will have to be struck between the two sectors. This is something on which the Government have to exercise their judgment having regard to social needs.

The Government realise—and it has been said two or three times already this afternoon—that there is a large and increasing demand for houses for owner-occupation which must be catered for in the housing plan, and my right honourable friend the Minister of Housing and Local Government hopes to meet this need, which we in the Government fully appreciate. I know that the noble Lord, Lord Hawke, considers that the prospects are not very bright, but I hope that at the end of the day he will agree that the situation is not quite as dreary as he at the moment thinks it is.

LORD HAWKE

My Lords, before the noble Lord leaves that point, may I ask him who has got the Treasury brief—himself or Lord Kennet? Because the Treasury brief is the ace of spades. It is all very well to say how many houses you are going to build, but until the Treasury allow you to have the money they will not get built.

LORD HILTON OF UPTON

I cannot speak for my noble friend Lord Kennet, but I can assure the noble Lord that I have not the brief to which he is referring. Although we appreciate the need to which I have just referred, we have to confess that the greatest need is for more houses to rent, especially in the bigger towns, with their problems of slums, over-crowding and obsolescence. The families in the really bad conditions are often precisely those who cannot afford to buy a home of their own at to-day's prices and who, in many cases, cannot even afford an economic rent. Their needs can be met only by the public sector building through local authorities.

I have referred to the problem in some of the bigger towns, but there is also a problem in rural areas, as some of your Lordships will appreciate. There can be no doubt that the housing problems of the rural areas, however, are relatively less acute than those of the larger towns and cities, with their massive concentration of slums and high degree of overcrowding, but I repeat that many of the rural areas have their housing problems. Only last Saturday evening I was visiting a village in my old constituency in Norfolk, and there I saw some of the worst houses that it is possible to see, whether it be in town or village—and this is not just an isolated case. We have our problems in the rural areas as well as in the towns and cities.

Now the Government came to the conclusion that the aim over the next five years must be to build up the public sector programme to the point where it will be providing roughly a half of the target of 500,000 houses in 1970—to a figure of 250,000. The proposed overall building programme was discussed with the builders and building societies before the White Paper was issued, and, subject to there being flexible targets and certain tolerances, they accepted the Government's intention.

The White Paper summarises the essential requirements for carrying out the programme it outlines. A good deal of progress has already been made in implementing these. Less essential building will be controlled by the provision in the Building Control Bill, currently in your Lordships' House. "Little Neddies" have been set up for the building and construction industries. A Working Party on land and planning procedures, including representatives of the builders, building societies and local authorities, is considering questions of land supply. There was a very useful discussion of builders' problems at a recent meeting which the Minister of Housing and Local Government chaired, and which the Minister of Land and Natural Resources attended. There is a second Working Party, including representatives of the builders, material producers, building societies and local authorities, to deal with questions arising on forward programmes and on the balance between the public and the private sectors.

I want to say a word about housing subsidies, to which, again, the noble Earl referred. The Government intend to reintroduce the Housing Subsidies Bill, which did not complete its passage through the last Parliament, as soon as possible. The Bill was designed to achieve four objectives: (1) to give greater help to local authorities to enable them to increase their programme of building to let; (2) to encourage building to the standards appropriate to the latter half of the twentieth century; (3) to give most help to those authorities whose need is greatest because their costs are high or because their programmes are large in relation to their existing stock of houses; (4) to relieve them of uncertainty about interest rates, which stands in the way of that long-term planning which improved productivity requires. My Lords, the drive for industrial building is continuing. Three-year programmes have been settled for 130 local authorities with top priority housing needs.

I should like to say a few words about the housing figures for Great Britain for the first five months of this year. In the public sector, public authorities started 15,400 houses in May. This is 100 up on April, but 1,800 down on May of last year. In the first five months of the year these authorities started 69,500, compared with 75,500 for the first five months of 1965. During the second half of last year authorities held back their tenders so as to qualify for the more generous new subsidies. It takes something like six months for approvals to become "starts", so "starts" were down in the first part of the year; but the flood of approvals which followed the announcement of the new subsidies at the end of November should lead to an increase in the "starts" over the rest of this year. As to completions, public authorities completed 14,800 houses in May. This is 1,600 up on April, and 1,000 up on May last year. In the first five months they completed 67,900 houses, compared with 66,900 over the same period last year. This improvement is not as good as might have been hoped for. Part of the explanation may lie in a lengthening of construction periods, and the aim is to reduce these by increaseing use of industrial methods, by giving local authorities three-year programmes, and by encouraging them to use well-tried dwelling-types and to let larger contracts.

Private "starts" have been running at the annual rate of about 200,000. Private builders started 18,700 houses in May—2,200 down on April and 600 down on May last year. But in the first five months of this year they started 84,600, compared with 98,100 in the corresponding period last year. Private builders completed 17,000 houses in May. This is 600 fewer than in April, but 200 up on May of last year. In the first five months of the year they have completed 81,500, compared with 86,400 in the first five months of last year.

On the question of prospects for the rest of the year, so far as the public sector is concerned, the pattern over the country varies very considerably, with great activity in the northern part of the country, particularly in the West Midlands, and strong demand from authorities in the southern counties and the South-Eastern counties. So far this year, however, tender approvals in Scotland, the Greater London Area, the East Midlands and East Anglia are below expectations. The priority authorities, 130 in number, have their settled three-year programmes, and a great deal is expected of them. They are mostly authorities in conurbations where the greatest problems of slums and obsolescence are to be found. They have been given programmes limited only by their capacity to build. Three-year pro- grammes are now being negotiated with other authorities whose needs are not quite so great and who are building over one hundred houses a year. The Government are committed to a steadily rising programme of building by public authorities. Despite the disappointments of the first six months, the prospects of improving this year on last year's achievements are still good. As far as the private sector is concerned, the reasons for the decline are complex. The smaller builders, in particular, who build a large proportion of private houses, tend not to complete houses unless they are certain they can sell them, and not to start houses until they have a certain sale for a completed or near completed house. Their activities are thus keyed to effective demand.

My Lords, a word on local authority lending. A year ago local authority lending had to be severely cut back. The authorities were allowed to lend in 1965–66 only the average amount that they had lent over the three previous years. As a result, many authorities, including the Greater London Council, stopped lending altogether, apart from meeting existing commitments. This had a serious effect on the housing market because local authorities tend, more than building societies, to lend on older houses. People living in old houses who wanted to move to a new one found that they could not sell because the buyer could not get a mortgage. In April this year the authorities were told that they could lend up to £130 million in the present financial year. There is a time lag between commitment and advance, so this money is only now beginning to enter the housing market. This £130 million should be a great help to the market over the next nine months.

There is much more that can be said on this most important subject; but we have still a very long list of speakers and I am sure they are going to say all that needs saying. I repeat that the noble Lord, Lord Hawke, in opening this debate presented a pretty gloomy picture of the prospects for housing in the future. Despite this, I am convinced that this Government, with their belief in planning and putting planning into effect, will by 1970 achieve their target of building 500,000 houses a year.

4.35 p.m.

THE LORD BISHOP OF CHESTER

My Lords, I should like from these Benches to express our gratitude to the noble Lord, Lord Hawke, for introducing this debate and also for the very measured and moderate way in which noble Lords have spoken about a matter of such cardinal importance. I do not myself possess the technical experience and knowledge of this very complicated problem, and therefore I hope you will forgive me if I speak from a rather different angle about this matter of the housing situation, one which I believe to be extremely relevant to the discussion in which we are taking part this afternoon.

It is, I think, incontrovertible that of all the material elements which contribute to the welfare of society there is none more important than the provision of good housing. If it is true that the family is the nucleus of society, then it is essential that the family should have a place in which it can thrive; if it is true that the welfare of society depends on the happiness of the individuals, then there is nothing which contributes more to the happiness of individuals than the happiness of their homes; if it is true that the future of the nation depends upon a well-educated youth, well-trained and understanding its moral responsibilities, then there is no place where young people can learn these lessons better than in a good home. Therefore it is good housing which makes as great a contribution as any other element in society to the things which we wish to see established in our midst.

We know the dangers which come from bad housing and we have seen them. Still, there are many things which are symptomatic of the dangers which are present at the present time. For instance, the figures for the year ending March, 1963, which are the last figures available, for children who came into the care of local authority children's departments as the result of their families being homeless, was 3,610. There is evidence also in places where rents are very high, such as in the South-East, that there is a great deal of sharing of homes; and statistics go to assure us that the sharing of a home is one of the most fertile factors in the break-up of home life. These are only symptomatic of what is going on in our midst at the present time as a result of the shortage of proper houses. It is again, I think, undeniable that there is a very serious shortage, especially of the right houses available at the right time in the right places for the right price. And there are the obvious reasons why this is so. We know the demand for the replacement of slums and houses which have outlived their usefulness; we know the pressure of the growing population.

But there are also more subtle reasons, which have grown up perhaps quite recently as a result of social pressures and changes. Thus, for instance, there is the demand created not only by the increase of individuals but by the increase of households which require separate homes. It was, comparatively recently, fashionable to criticise young people as being heartless when they wanted to throw out the older people so that they could find their own homes or that they should go into old people's homes. Now there is a change in emphasis, largely as a result of the affluence of society: very often, older people do not want to live with the younger members of their family. They want to have their homes. Therefore there is this demand by reason of the increase of households, as well as that created by the increase of population.

There are two matters which I think need some examination in this question of the shortage created by such circumstances. One is to ask whether there is not, in fact, a certain amount of under-occupation of existing houses. This is a matter which I am sure noble Lords would wish should be approached with great delicacy and sympathy. It sometimes happens that a couple have gone into a large house and brought up their children, and the children have married and gone off. Quite understandably, the parents are very reluctant to leave the house in which they have lived for so long a time. Yet it may well be that one couple are living in a house much larger than their needs require while a younger family, with a large number of children, may be prevented from getting proper accommodation. As I say, this is not a matter in which anyone would wish compulsory powers to be exercised, but I think it should be brought to the attention of those concerned. Possibly some powers of persuasion could be brought to bear upon those living in houses larger than their needs require and in accommodation which could be made available to families whose need is greater.

There is, also, I think need for some investigation into the balance of housing permissions as between one part of the country and another. In this matter I speak with no expert knowledge, and I may be completely wrong; but I am under the impression that in those places which possibly are more pleasant to live in, and where people want to live, there is a disproportionate amount of permission for housing compared with larger cities. I, for instance live in the delightful city of Chester, where, I am told, there is no great problem at the present time about fulfilling the necessary housing programme; whereas very near to us there are great cities which have very big problems. I think this an element in the situation which needs some examination in order that the balance may be kept right.

Noble Lords have spoken in this debate about the highly complex and technical matters connected with the provision of houses, and I should like just to touch upon one matter which was mentioned by the noble Earl. Lord Jellicoe: the importance of giving every encouragement to housing associations. The record of housing associations in this country is indeed a fine one, and the name of Jellicoe is one which is greatly honoured in it, as one remembers the contribution by Father Basil Jellicoe, in the early days, in the St. Pancras housing estate. There are a very large number of small housing associations throughout the length and breadth of the country which are making small but very significant contributions to this problem, and I am proud to think that the Churches are taking a notable part in this work, to such an extent that a British Houses Council Trust, in connection with the British Council of Churches, has recently been set up to assist those who, on a local basis, wish to give encouragement to this work.

I think it must be stressed, however, that many of these small associations are frustrated by the red tape with which they find themselves surrounded when they want to get on with the work. I was told of a case, which I believe to be typical, of a housing association that wished to convert one house into four separate places and provide for very needy families. It was four months after permission had been given to make the improvements before the association received the necessary financial aid. If there are to be frustrations and discouragements of this kind, it is possible that this very valuable source of expert voluntary help may dry up because those concerned do not feel that they are receiving the encouragement which they need.

There is a matter of a larger issue in the housing situation to which I would once again draw the attention of your Lordships. I refer to the vital importance of providing the necessary social amenities in those places where new towns and new housing estates are being set up. I know that a great deal of care and thought is given to these matters by those responsible for building the new towns. I have read the interesting report, published last year by a committee of the Ministry of Housing and Local Government, entitled The First Hundred Families which gave valuable advice as to what should be done in the beginning on a new housing estate when the first residents come to live there. Even so, we are still making grave mistakes, and we must accept the fact that it is not enough merely to build houses in which people can live. Those houses will be in a community, and unless we make it possible for the people living in them to build not only their own family life but also a life in the community in which they find themselves, we shall largely have defeated the objective at which we aim.

Those who come to live in these new housing estates come from communities, from places in which they have naturally taken their part and in which they have found a source of personal satisfaction. They have been uprooted, and find themselves in a completely new situation; and it is a very skilful and delicate matter for people with no previous experience or insight to create a new community life ab initio, in such circumstances. Therefore they must be given the means to enable them to accomplish this and to encourage them to do so. They must be given churches and places where they can meet socially.

Here I should like to pay tribute to the authorities who, so far as my experience goes, have always given every encouragement and help to churches to find suitable sites and to get on with their work. The people must be given shops and places of entertainment, and facilities for sport. Yet, as I have said, I am afraid that we are still making grave mistakes. I think of a certain place, within my own diocese, of which I have recently had experience and where, after many years of planning, houses suddenly began to be built with a rapidity that was quite bewildering: almost before one knew where one was, there were thousands of people coming into the area. In the early days, I believe, there was only one telephone booth, which was generaly broken up over the weekends by hooligans. The streets were unadopted and so, I was told, it was not possible to impose a speed limit on vehicles in streets where children where playing.

Early on, there was only one school, and it was necessary to search around the periphery in order to find suitable places where the children could be taught. Most significant of all, I think, was the lack of people within the community with some sense of authority and leadership. was grateful to the authorities for making available a house in which I was able to put a young clergyman, who was one of the first people to live in the area and so could go around as an "older inhabitant" and welcome new arrivals as they came in. I think he was the only person of that calibre and character in the place. The schoolmaster did not live there in the early stages; nor was there a doctor living on the site. There was no member of the learned professions, such as a solicitor, or anybody to whom people could go for advice; and the whole burden fell on this young clergyman, who discharged it very courageously.

The sort of problems with which he was faced were those created when men went into Manchester to work, leaving early in the morning and coming back late in the evening. In this sort of situation, of which they had had no previous experience, the women found themselves lost. I am sure that those who are responsible are aware of these problems. We hope that they have been investigated, and perhaps solved. Pos- silbly they will be in the future; but they have not altogether satisfactorily been dealt with in the immediate past, and it is a matter on which we should still keep a watchful eye.

We are grateful for having had this opportunity to discuss this matter from so many points of view. I hope that we shall keep two points before us in further debate. First, I welcome the statement by the noble Lord who spoke from the Government Front Bench that this matter of housing is not going to be subjected to economic pressure and stricture; for it is one upon which the health of our society depends and upon which we dare not retrench. In these days, the whole subject of housing is so complicated that it cannot be left to individuals to find their own houses. They must have the help of the Government and of the public authorities. And we dare not economise on this. Also, I would ask (although this debate has been very moderate in its tone) that we shall continue to try to lift housing outside the realm of Party political controversy. If we do not do so, we shall run the risk to which the Milner Holland Report drew attention: that the whole matter may be vitiated if it becomes the sport of political prejudice.

4.52 p.m.

LORD MITCHISON

My Lords, with the noble sentiments that we have just heard from the right reverend Prelate I find myself in very general agreement. I can assure him that the troubles of new towns, at least in the case of one that I watched for many years, do not necessarily last. I am not sure that I agree with the right reverend Prelate about taking this matter out of Party politics at this stage. We have heard from the Benches opposite distinctly political speeches. I am grateful to the noble Lord, Lord Hawke, for having introduced this subject, for the simple reason that this is a subject on which the Government has about the best record and the previous Government's about the worst, and if we are going to be lectured about what we have and have not done, it is just as well to reply in kind, though I do not want to take long about it.

I would ask noble Lords to remember one simple thing. Last year's statistics show that the total of houses completed in 1965 and the total of houses under construction both constituted records. Under successive Conservative Governments the total number of houses built went up and went down. It always went down when there was a slump or an economic crisis—one understands that—but it did not rise steadily or anything like steadily, and it was only recently that the total passed the 300,000 mark. But that is not by any means the whole story. I listened to the noble Lord, Lord Hawke, to-day, hoping that he would tell us what he had in mind we should do. All he said was to leave things alone. This was Conservative policy.

LORD HAWKE

My Lords, I gave a very positive programme. I said, first regain the confidence of the builders, and secondly, exempt housing from the credit squeeze, because if we do not do that we shall not get any houses.

LORD MITCHISON

My Lords, let me deal with the first point. How does the noble Lord or anybody else know that the confidence of the builders has been lost? This is the kind of nonsense one hears from people who have no better argument. I prefer the view of my right honourable friends in another place who, as responsible Ministers, have had to deal with the builders, and they do not present this picture at all. I simply do not believe it.

We have been told that we have lost the confidence of the country. Would somebody like to applaud?—well, perhaps not. But look at the Gallup and National Opinion Polls. Then we are told that we have lost the confidence of the builders. This depends on what is meant. If the noble Lords opposite and their Party colleagues in another place go on telling the builders all the time that the Government are doing the most dreadful things to them and they ought not to have any confidence in the Government, undoubtedly it has some effect; and the position of the responsible authorities who want to get more houses and the right houses in the right place at the right time is made more difficult, because what our opponents are doing is, for Party purposes, to reduce the output of the builders. We are told that the builders will not do it because they have no confidence. I think, with great respect, that this is nonsense.

When we look at the programme of successive Conservative Governments, we see that it is not only a question of housing but, even more important, of the distribution of housing. We had an admirable speech on behalf of private builders from the noble Lord, Lord Hawke. I wondered when he was going to get to the local authorities. He did, after talking about private builders for a considerable time, but did not say much about them and went back to the private builders again. We want all the agencies we can get for building houses and that is what the Government have said repeatedly. It is the local authorities who, in present circumstances, are the primary providers of houses to let for the ordinary working man. The building societies meet a great deal of the demand, but I am sure that my noble friend Lord Cohen of Brighton would agree that there is a considerable number of people earning their bread and butter in this country and citizens of it who cannot afford to buy a house or to borrow from a building society. It is too much for them. And council housing was started to meet just that need.

Let me remind your Lordships that in 1951 about seven local authority houses were being built in proportion to one private builder's house. By the time the Tories had finished, about two private builder's houses were being built in proportion to one local authority house. What is the reason for that? Is it that there was no need for local authority houses? Is it the case that the people who could not afford to buy through building societies or from private builders or developers ought not to have a house? I should have thought that it was Tory doctrine that those who needed them most should surely get houses.

LORD WOLVERTON

My Lords, may I remind the noble Lord that up to 1951 there was a licensing system and private builders could get only one in four? So that it is not fair to say what he has been saying. A large number of people who wanted to build houses had to rent houses built by local authorities because they could not get licences to build.

LORD MITCHISON

My Lords, it was the effect of the policy of successive Tory Governments—though perhaps they did not have a policy—to reduce the number of local authority houses built in proportion to those built by private builders and it is about this result I am talking. I do not want to quarrel with the noble Lord. If he says that they did not mean it, all right. If he says that they did mean it, equally all right. But that is the result of their policy.

There were one or two other measures that came in as well. There was the 1957 Rent Act. The noble Lord, Lord Brooke of Cumnor, and I have discussed this matter in another place from time to time, and I am not going to enter into any violent diatribe about it. I would simply say that since the passing of the 1957 Rent Act the number of houses to let in the major towns has steadily decreased. What has happened is that houses that were formerly let have been sold. This again reduces the number of houses to let. I am not saying that they are the only things needed, but I believe that the Government are right at the moment in saying, as they have said for a couple of years past, that that is the major need, taking the country as a whole, and not considering ideological prejudices about local authorities, private builders or anything else. What matters is the country's need.

In addition to that, of course, there are other needs which can and should be filled; and the owner-occupier's need to have a house of his own is a very real one. We have not neglected this. We were the first Party to introduce, in Aneurin Bevan's time, the arrangements for improving houses—for getting rid of the but and ben house that we had in some parts of the country, and notably in parts of Wales. We have in one Parliament after another, whenever we have had the chance, done our best to encourage the owner-occupier. He is not the tame pet of the Tory Party; he is a citizen of this country for whom we feel at least an equal responsibility.

So much for the number and types of houses. But we have had one thing under this Government which has been a real advantage. We have had a Housing Minister with vision, and he has done some extremely useful things which I would commend to your Lordships' attention. I will not mention all of them, because there have been a great many. First of all, let me turn to the land. Between the end of 1964 and the end of 1965 the cost of housing went up by about 10 per cent., and only 4 per cent. of that was due to construction costs. The rest of it represented land costs. We all know that—haphazard, if you like, over the country, and not the same in one part as in another—there have been these staggering rises. And the wrecking of the planning arrangements originally introduced by my noble friend Lord Silkin, and replaced by the Tory Party, resulted in local authorities finding it extremely difficult to get land at a reasonable price for their housing needs. And not only local authorities, but builders, too.

When we turn to the Land Commission, if this Commission is going to do what it is intended to do, it should at least be able to make land available for housing, whether to local authorities or for private development. I believe that this is a major need in the housing field. I am not going to discuss this in detail—we shall have the Bill later—but that is obviously the purpose.

Now I come to New Towns. We started the New Towns after the war. I think, looking back, that we perhaps put too many of them too close to London. Well, the present Minister is in the course of adding a further range of New Towns a little further away. And that is not the only thing. In addition to this, the Scottish New Towns have had a good deal of development. One does not want to go into this in detail, but at the end of the day one has to bear in mind that the contribution that New Towns make is an important one from the social and economic point of view. But it may not tot up in numbers in any one year to as much as one would hope.

What happened under the Tory Administration? There was a period when they refused to build New Towns. Then some light, or the Opposition, induced them to amend their ways and they started to build them again. It is right to carry that on. It fits in with the economic intention to stop the drift to the South-East, and to get more done, not only in the development districts, but in the North of England and in Scotland as a whole. I believe that you must fit your housing problem into your economic needs. It is true that there is a vitally important social side, but it will not be as important socially, or for any other reason, unless you can see that the New Town does not become a mere dormitory, but becomes a place where people can have both their job and their home life. In that way you make it a real community. You cannot make a proper community out of a suburb from which people go popping into the middle of London to do their work; nor can you out of a New Town which is somewhere from which people do the same thing. One has to remember that housing is not just a question of the number of houses. As the right reverend Prelate said a little earlier, it is a question of getting them at the right time and in the right place. To have a New Towns policy is, I believe, making a really valuable contribution.

I must not take up too much time tone tends to do so in housing debates; I have done it in the past, and I must not repeat myself), but there is one other point I should like to mention. What about the amount of building you can do, looked at as a building question? The noble Lord, Lord Hawke, said quite rightly that there was a correlation between the amount of labour and housing and the labour in other forms of construction. You must not press it too far, because if you consider what men are doing when they are building a large concrete factory and when they are building a council house you realise they are not the same thing, and they will not be altogether the same men. But there is a broad connection.

I was interested in some figures that I saw in the table on page 85 of the Monthly Digest about new orders obtained by contractors in the public sector. The total of new orders as between 1964 and 1965 fell from 715 to 691. But the total of new orders as to housing only, which is part of that figure, rose from 465 to 510. I conclude from this that more steps are being taken to strengthen or keep the housing force.

Then there is the question of methods. Industrialised house building seems to all those who know about it (not me; I do not know) to have very real possibilities, and we are aiming at a target of 40 per cent. of local authority housing by this means in a year or two. All I can say is that we are going steadily and swiftly towards it. I believe that this is a real change which should add materially to the housing results without drawing too much on the demand for manpower.

I want to end up by saying this. It astonishes me to hear noble Lords opposite saying that the right way to remedy the housing situation is to get rid of the selective employment tax. With great respect, what do they expect to put in its place? This tax will raise between £200 and £300 million. The Chancellor of the Exchequer was unable to think of an acceptable alternative. But there are alternatives. Perhaps noble Lords would like more income tax, more purchase tax or more surtax. Those who say that the selective employment tax should be dropped ought to explain what they will put in its place, or to explain why it is wholly unnecessary.

I understand that at this season of the year, particularly when the Finance Bill is going through, the reluctance of the average Briton to be taxed reaches monumental proportions, particularly if he (if I may put it in this way) is a building society. After every Finance Bill, the building societies say, "We are taxed too much". Nevertheless, they do pretty well. Be that as it may, it is all very well to take fiscal matters and financial matters, and to say this, that and the other is wrong. If that is the kind of answer that is required, I should very much like to know what view noble Lords have about the housing subsidy. It was £24 when the last Government went out it is now to be £67. Which figure do they think is right—£24 or £67?

Noble Lords will have heard the right reverend Prelate say—and how right he was!—that housing in this country is something which must have Government and local authority help if people are to be housed properly. Housing is like education used to be. At the beginning of the nineteenth century, we had private schools all over the country. In the last resort they could not do the job, and we had to have public education, like every other civilised country. Just the same is true of housing to-day. It is no longer a matter of two or three people: one to build a house, the second a developer, and the third the buyer of the house, or the building society. This is a public service and a public responsibility, and the sooner we in this House realise that this is what we have to face up to, the better we shall do the duty that I hope we can do.

5.12 p.m.

VISCOUNT GAGE

My Lords, I must apologise for appearing as a sort of spoilsport, because I want to revert to the question of housing societies and housing associations, which do not fit readily into the pattern of what is sometimes rather euphemistically described as the cut-and-thrust of Party debate. In a way, those of us who are interested in this movement might feel that it was a very good thing that these societies and associations should not be a matter of Party controversy. But it has this disadvantage: that in the average housing debate, particularly in another place, they are hardly mentioned. In your Lordships House the situation would appear to be rather different, because already we have had two speeches on the subject this afternoon. Your Lordships are getting a reputation for being progressive, sometimes in rather controversial directions. This is a direction of progress which I very much welcome. But I think it is a pity that so little is known about the operation of these societies (if it is not a breach of privilege to say so about another place), because I believe that if more were known it would be discovered that what my noble friend Lord Jellicoe described as the third arm in housing had certain advantages over private enterprise or public enterprise building.

I would remind your Lordships that both housing associations and housing societies, though they cater for a whole range of different types of tenant, have this in common: they all depend largely upon voluntary labour, and they all work for a profit, the maximum being laid down by the Treasury. The housing societies enjoy no subsidy, but they have access, through the Housing Corporation set up by the Act of 1964, to that fund of £300 million from which they can borrow. I understand that in the last two years they have spent about £22½ million in erecting some 6,640 units of housing, chiefly cost-rent, but a proportion of cooperatives, and are considering a further £15 million of such work.

Taking into account the newness of the venture, in view of the fact that the time has been difficult and the costs of materials and money high, and that many of these societies produce flats which are an expensive type of construction, I think your Lordships will agree that that is fairly good going. Unless they run into unforeseeable difficulties—which is always possible in these days—they should continue, I imagine, to use this £300 million at a steady and, perhaps, quicker rate than they have achieved hitherto. Naturally enough, without subsidy they cannot hope to compete with subsidised local authority building, and I suppose they cannot at the present moment produce a flat for much less than £5 a week; and that only in rather favourable areas.

Housing associations present a much more complicated picture, because although they administer about 120,000 houses at present, these include a great variety—some old, some new; some subsidised and some not; some charitable and some not. Equally, the tenants are very diversified, ranging from those who live in converted historic houses divided up into 40 or 50 flats, and where the tenants (very respectable tenants; perhaps some of your Lordships, for all I know, among them) pay perhaps £10 or £15 a week inclusive, ranging right down in the economic scale to homes where everybody is on National Assistance.

Again, as in the case of the housing societies, the associations cannot hope to compete with local authorities in the matter of new building, except where they receive a subsidy. In practice, this means almost entirely building for the elderly. In this field, progress has been made. We are housing now perhaps 15,000 old people, and we are housing a further 1,000 people each year. I hope that this number will be increased. So even going on as we are, I suppose that in the next two or three years we shall be able to claim that, between the housing societies and the housing associations, we shall be providing about 250,000 houses, a total which, compared to the numbers provided by other agencies, is, I agree, very small. Nevertheless, it is something and, as I have already said, there seems to be some quite substantial argument for suggesting to the House and the Government that this contribution ought to be made a great deal larger.

Perhaps I may be permitted to develop one or two of these reasons. In the first place, as was pointed out to-day and in the White Paper, private enterprise has long ceased to build houses to let at low rent. But what is more important is that the stocks of low-rent houses are rapidly diminishing. They are going into the auction, and I do not think it is an exaggeration to say that in a few years' time anybody who requires accommodation at anything under £200 per year will find it almost impossible to discover it in private hands. I am not sure that in certain places this is not already true. The old Victorian notion that bricks and mortar were a good solid investment has been proved to be an absolute snare and delusion, due partly to the high cost of maintenance and partly to restrictive legislation. I have no doubt it is inevitable that because of certain glaring cases all landlords, from John o' Groat's to Land's End, should have to be tarred with the same brush. They certainly have been, and I cannot see any Government ever putting them into a position where they can provide this low-rent accommodation again. So that really means that we are getting to the position where the local authorities will soon have a complete monopoly of all low-rent accommodation.

I have been a member of local authorities for many years and I believe I have some knowledge of their virtues and limitations, but I do not like monopolies and I do not think it is right that local authorities should have this complete monopoly of low rental accommodation. If that is a sound view—and a good number of people agree withit—the only alternative that I can see to this local government monopoly in the future will be the housing society or the housing association. That view was clearly held by the Milner Holland Committee in 1965, though their terms of reference did not permit them to develop that argument. So on that ground alone I think there is a strong argument for encouraging the work of these societies.

I would also suggest that they have certain advantages over local authority building. Because they cater for allsorts of people they do not carry with them that class cachet which certainly in many parts of the country is inseparable from the council housing estate and which sometimes has the effect of lowering values in surrounding property. The other day we had an interesting discussion on the independent schools, and some noble Lords and Ladies opposite were so insistent on the evils of class divisiveness that they were moved to make certain recommendations which I thought were fairly totalitarian. But if there is this stigma to be attached to class divisiveness they might turn their attention to the council house position, about which a book has recently been written.

Again, having a more flexible approach, housing associations do not have to divide up humanity in quite the same way as the local authorities, so that the able-bodied, those in need of care and attention and those in need of medical care come under three authorities. As we all know, unfortunately we tend to slide from one category to another, and I think it is an inconvenience to have them so divided by Statute. Again, the housing society and the housing association can make some contribution in that respect.

Lastly, I think the housing association and housing society tends to be cheaper to administer than local authority schemes, because so much is done by unpaid volunteers. Having been for some time connected with this movement, it has fallen to my lot to visit some of the associations, and I am nearly always impressed with the quality of the people who are running them. They are professional people—architects, surveyors, school masters, ministers of religion and many other able people who would find it difficult to work full time in local government but who do find it possible to work in this particular form of social service and to lend their professional skills. At the time when local authorities have so much on their plate, and at a time when a committee is sitting, to put it bluntly, to see how best to improve the quality of representatives in local government, I do not see how we can afford to disregard this type of worker.

From what I have seen, a well-administered housing association, with its variety of income and age groups, can provide about as good a solution to the housing problems of the less well to do as any group so far devised, and for that reason I should like to see a considerable extension in their operation. Whether that is going to happen seems to me to depend a great deal on luck, the chances being as to whether some Minister of Housing and Local Government really shares the sort of views I have been putting forward.

I think there is some significance here in the fact that the two Ministers who have done most to help in this direction, mainly my noble friend Lord Brooke of Cumnor and Sir Keith Joseph, were both in a private capacity members of the management committee of a housing association. Of course it is not for me in his presence to analyse the motives which led my noble friend to promote the course of these associations in Parliament, but he certainly did so, for which we are grateful. I think I am right in saying that he had the management of a housing association himself, and I should not be surprised if the two things did not go together, because I have noticed that many people in local authorities are very much affected in their attitude towards these associations by the amount of knowledge they have of them. The present Minister of Housing and Local Government has certainly expressed enthusiasm and encouragement for these associations, and his Parliamentary Secretary, Mr. Mellish, gave us an encouraging address at our annual meeting last year, but I sometimes wish he could make that encouragement a little more noticeable, because certainly in this last White Paper, to which my noble friend Lord Jellicoe referred, I think there is only one small mention of the housing association in a remote part of that White Paper. That is not, perhaps, a very great encouragement to those who freely spend their time trying to make these schemes operative.

I would go one step further. The present Minister seems to be of an inquiring frame of mind. In fact, he has set up a whole range of commissions, working parties and departmental inquiries into a number of matters coming under his Department, and I have been wondering whether he would at least consider setting up an inquiry into the working of housing associations and their relationship with the Housing Corporation, with a view, perhaps, to making it easier for them to do their work. It is true that progress has been made. When I first became associated with this movement we had 200 housing associations affiliated to the Federation; now there are 1,400. But I think the progress is too much like Pilgrim's Progress. The tasks which face these people are really quite difficult, and I think they ought to be made easier.

Again, I would call in aid the Milner Holland Report, which has several times been quoted this afternoon. This is just one sentence from page 146 of their Report: It seems to us that if non-profit-making housing associations are to make an effective contribution to the most urgent needs—and it is widely accepted that they should—then a rationalisation of the fiscal and legal provisions governing their activity is urgently needed at present these seem to have the effect of discouraging the very associations which are equipped to give effective help in the area in which it is most needed. We are urged to-day to be constructive, and that is what I am trying to be. I submit that it would be a constructive suggestion to make that the Government should investigate the position of this third force, the part they are playing now and the part they could play, and the part that the Milner Holland Committee certainly thought they should play.

5.30 p.m.

LORD COHEN OF BRIGHTON

My Lords, this could well be one of those most interesting debates in the House which deserves a great deal of publicity, but unfortunately it is possibly not so exciting as some of the debates we have had recently, and so whilst the speeches may be full of good matter I am very worried whether in fact we shall obtain the value from this debate that one would wish; because, after all, housing is so vitally important. If we realise what it means to the majority of our people we know that housing is one of the most important matters that the Government of the country can deal with, and I think this Parliament and this Government have really understood this.

May I begin by saying two things? First of all I want to declare an interest, because, as I think is known, I am the chairman of a building society. Secondly, I want to thank the noble Lord, Lord Wade, for his courtesy in informing me not only that he was going to speak, which I already knew, but that he was going to refer to me and give me an opportunity later of dealing with those comments.

It seems to me that to-day we have dealt with housing rather in isolation; that is to say, some speakers have spoken of one kind of housing and some of another. And yet housing is comprehensive. Housing obviously must include local authority housing, private enterprise housing, and the very important part that my noble friend Lord Gage has raised, the question of housing societies and housing associations, and we cannot consider them in isolation. The two main ones must be considered together, with a little help, and it will not be a great deal of help I am sorry to say, from the housing associations and the housing societies.

In considering that we must consider how the policy of this Government has worked so far. We have heard figures this afternoon, and one can prove anything from figures. What is interesting and what has struck me—and I say this not as one who has something to do with building societies but as one who has been a member of a local authority for a good many years—is the decision of the Government that the proportion of houses that are being built should be somewhat changed so that there is a greater number of local authority houses than we have had in previous years. All of us must know of the many many hundreds, thousands, tens of thousands, of families who cannot buy their own homes.

As has been said earlier in the debate, building societies demand that a purchaser should pay only a quarter of his income in his building society repayments. As your Lordships must be aware, I am sure, houses for sale to-day, particularly in the South-East, are costing anything from £4,000 to £5,000 for the usual three-bed roomed house. This means that buying a house is outside the reach of the families who are most in need, the young couples with one or two children who cannot qualify for a building society loan, and who, because of the many people on the corporation housing list, cannot get on to that list. As your Lordships know, some local authorities are demanding three years residential qualification. Some authorities are even more difficult than that. And most authorities are saying, "We will only make our houses available for people earning up to £14 or £15 a week". If you earn between £15 and £20 you cannot get a building society mortgage. So a very large number of people are being excluded from the opportunity of buying a home. This situation will be dealt with only by the building of more local authority housing, and of course by the new method of a lower rate of interest so far as corporation housing is concerned.

Having said that, I must say something controversial which may well not be agreed to by a number of my friends. I think the time has long passed when we should realise that local corporation houses should be let at economic rents, but it is important that there should be first-class rent rebate schemes. I think the position of local housing calls for a certain amount of unfortunate comment from the ordinary ratepayer. Provided that we have a really good rent rebate scheme, there will be every encouragement to local authorities to build more houses than they are doing at the moment.

However, be that as it may, the Government are encouraging local authorities to increase the number of local authority houses. We heard figures to-day of the housing starts and the housing completions, and what impresses me in looking at these figures, what I think is really worth emphasising, is the fact that for the first five months of this year the number of completions, so far as local authority houses are concerned, is up on last year. I think that is very important indeed, and I hope and believe that is going to be improved as time goes on.

We face the question whether in fact we are going to maintain the drive of the housing industry Ito come to 400,000 houses rising to 500,000 a year, which the Government have said must be reached. It has been suggested that the building industry has lost a certain amount of confidence in the Government and the Government have not done anything to restore that confidence. I do not think that statement can be justified, for I was present at a meeting which the Minister had with the National Federation of House Builders and the building societies and other organisations associated with housing, when a comprehensive housing plan was placed before them whereby step by step, year by year, we could get up to the figure of 500,000 houses a year. In that statement it was suggested, first, that we should say roughly 225,000 a year by private enterprise, give or take 25,000 or 50,000, and roughly, in the end, 250,000 houses a year by local authorities, again give or take 25,000 or 50,000.

LORD HAWKE

My Lords, if I may interrupt the noble Lord, he is talking of a very interesting meeting and I have not seen the minutes of that meeting. Was the Minister able to give the builders any assurance that the loans and the money they required would be forthcoming?—because that is the vital point, not the plan but the money.

LORD COHEN OF BRIGHTON

I was going to divide my speech, if I may, into mainly two parts: first of all the part dealing with local authority housing, and then I was going to come to private enterprise housing; and I should like to deal with that question later, if I may, when I deal with private enterprise housing.

That was accepted as the basis of a scheme approved by both the builders and the building societies and as a scheme, or proposals, which would go forward as the plans of the Ministry and of this Government. And I believe we are going to achieve that object. Of course in that object of 500,000 houses we shall not get 500,000 built by normal building methods, and the proposal is that we should have 400,000 houses built by normal methods and 100,000 by prefabrication. As your Lordships may be aware, I have been appointed chairman of the national board who are going to deal with the question of new materials in building. We are working in conjunction with the National Building Association to encourage both new materials and new methods in building. We have just acquired our new offices and staff at Hemel Hempstead.

In this connection the N.B.A. is most important, but my Board, comprised as it is of outstanding personalities in the building industry, is dealing also with new materials in building; and the two organisations working together, particu- larly the N.B.A., will, I believe, make it possible to provide the organisation so that the extra 100,000 houses a year will be built by modern methods of prefabrication. It will not happen at once, because these things take a considerable time, and so far as new methods are concerned there are too many on the market at the moment and the direction has got to be in the way of, say, half a dozen, or some such number, of proved and accepted new methods of prefabrication. But I believe that with that plan, which, as I say, was accepted at the meeting, and with these proposals, we shall get up to 500,000 houses a year. I should not be telling the truth nor should I be fair to the House if I did not say that so far this year I am disappointed over the number of houses that have been built. It is obvious and it is unfortunate.

If I may turn now to the private market, I would say that one of the causes of the difficulty—it has been stressed before—is the high cost of land. This is a difficult question so far as the small builder is concerned. May I give your Lordships an example that highlights this matter and which happened only last week. There was a question of a small piece of land which was sold in the village of Keymer—my noble friend Lord Gage will know that village well; I think the matter came before his town planning committee. This small piece of land was sold for the erection of 17 houses. They were small, terraced, three-bed roomed houses. The auctioneers announced that the land was going to be submitted to auction. They had five inquiries before the auction. A great deal of interest was shown, and the land was sold. The price of the land is £2,000 a plot. This, for a house that normally would sell at the most for £4,500, is just ludicrous, as I am sure your Lordships will agree.

I blame noble Lords on the other side for the fact that there has been no effort at all at controlling the price of land. When we had the South-East Study, and Sir Keith Joseph announced on television the details of that Study, I raised with him the question whether there was going to be any control of the price of land, and he evaded the question; and there has been no control at all. So where the blame lies to a large extent is on those who have permitted this escalation, this terrific rise in the price of land which is damping down the possibility of building houses at prices that people can afford. I say that so soon as we can possibly get the Land Commission working, and so soon as we can possibly stop these sky-high prices from being paid both by private enterprise and by local authorities, the better it will be for the housing market. I believe the price of land is one of the main reasons why we have gone so slowly this year.

There is just one point I wish to make before I turn to normal owner-occupation. I believe that a great deal could have been done with an idea which we started in my town and which has been copied a little, but nothing like enough. I refer to self-built houses. What we have done is to sell land at a reasonable price, the market price, the price agreed by the district valuer, to groups of people who build their own houses. In my town they are just ten ordinary citizens who have two craftsmen with them and who spend their week-ends and evenings, with lights in the winter, building their own houses. If anyone would care to come to Brighton I could show them about 300 of these houses that have been built at a cost nearly £1,000 less than the market price. They are built, with the agreement of the trade union, by people who have given all their spare time for something like two years. Thus they have obtained a decent, well-built house for £1,000 less than the normal price that anyone else would have paid. I wish that idea could be extended and developed throughout the country.

May I turn to building societies and the assistance they give to people to buy their own homes? Of course, things are not so bright as one would wish; but it is true that during the first six months of this year building societies have advanced more money than ever before in their history. It is also true that the flow of money is slightly slowing down, although not so appreciably as one would have thought. I will admit this: when we had that famous meeting, the proposal was that if building societies had too much money they should restrict their loans, so that there would not be too many private enterprise houses built. If there was not enough money it was hoped that the Government would come in and help in some way. But that is difficult at a time of crisis such as we are in now. However, I believe that building societies could be helped much more than they are, once we get back to more normal times. Suggestions have been mooted which I think are well worthy of consideration, that building societies, holding, as they do, millions of pounds' worth of assets in the shape of real property, could deposit some of those deeds with the Treasury and borrow in times of need. Millions of pounds are involved, and it might be possible to do that.

Then there is the question that the noble Lord, Lord Wade, dealt with—that of reserves. Building societies carry many millions of pounds' worth of reserves, to enable them to avoid any question of losses on mortgages. But in an inflationary position losses on mortgages just do not occur, and year by year the societies put by their £1 million or £2 million more to reserves. The delightful part of this is that that money goes into Government securities which depreciate year by year; but the societies put still more money in reserves, and nobody gets any benefit from it. The last Government decided that 2¼ per cent. up to £100 million and 2 per cent. above £100 million should be the proportion of reserves that the societies needed to retain their trustee status. I say that that could be halved if the Government would guarantee the other half, and I sincerely hope that when the problem comes to the Prices and Incomes Board they will consider that point, because it will make a great deal more money available.

Moreover, building societies have to put by gross 12s. per cent. of their earnings to build up their reserves. If they did not have to put up that 12s. per cent. they could lend at 6½ per cent. even to-day, before we get the Government scheme. I would remind the noble Lord, Lord Wade, that the rate is now 7⅛ per cent. Incidentally, I think that the Government scheme, the option scheme, is going to be of the greatest value to the ordinary house buyer. We shall be able to lend money to the man who is not liable for much income tax, or is liable to no tax at all, the chap who really needs help. We shall be able to lend him his house purchase money at 4½ per cent.

There are two other matters that obviously have to be considered at some time. There is the question of the law costs. If you buy a house at £4,000 or £4,500 it is not only the deposit you have to find; there is £70 in law costs as well. That is a lot of money for some young people to put down and it is a matter that we have to consider. This question of housing is not just one of what we say here, but is one of determination on both sides of the House, I hope, to see that we deal with the problem.

There are two and a half million old houses in this country which are rapidly declining in valuable use. We are not going to solve the housing problem within the next ten or fifteen years, even if we build 500,000 houses a year or a few more. I feel that we should consider the restoration of some of those old houses and the far more generous use by local authorities of more extensive improvement grants, and that it should be made mandatory upon local authorities to assist in this matter. Some local authorities are not so easy with this kind of assistance as others, and in that way I feel that we could save a proportion of those two and a half million old houses. If we could save, say, a million of them so that they provided good housing for the next twenty years while we were dealing with the housing problem proper, we should go a long way to ease the present difficult position.

Let us not forget that the builder who does that kind of work is not the ordinary house builder; he is the jobbing man, of whom there are a great number. He could be brought in to carry out the work of maintenance and preservation in a number of houses which otherwise will go out of proper use and become slums. In this way they could be made into useful homes for the next twenty years. If we adopt this method we must make certain that the repayments will be within the pocket of the ordinary purchaser.

There is another point on which I feel strongly, and it is this. The noble Viscount, Lord Gage, said, quite rightly, that houses to let are disappearing. If an empty house comes into the market today, the owner does not let it, but sells it. I hope that one day the Government will decide that if properties are left empty for more than three months they should pay full rates to the local authority. This will encourage owners to see that houses are put on the market and let rather than left empty for a long time waiting to be sold at the best possible price.

I could go on for a long time as this happens to be my pet subject. However, there are other speakers, and I am not going to bore your lordships. I would nevertheless stress this point. It is possible—it can be done—to deal with the housing problem of this country within the next ten or fifteen years so that we can give to all the people the opportunity of a decent home to live in, at a repayment or a rent which they can afford. That is a vital matter. It is no good building houses to sell at £5,000 or £6,000, it is no good housing societies building flats to let at £5 a week and rates, if that is going to take too high a proportion of a man's income. At the moment many people are paying half their income for bad accommodation. We must put our backs into the problem to see that we get the houses we need. Whilst in a modest way I have criticised the other side, I hope that we shall look at this as a national problem, a problem that must be solved, and a problem which we can solve if we put our backs into it.

5.55 p.m.

LORD AIREDALE

My Lords, the noble Lord, Lord Cohen of Brighton, is such an expert on all matters pertaining to new housing that I shall not attempt to add to anything he has said about that matter. But I was glad when he referred to conversion grants and improvement grants for old buildings for that is the subject on which I wish to say a few words. I suggest that at present this is probably the Cinderella of the present Government's housing policy, and probably mistakenly so.

Consider the average English village somewhere near an industrial town, which is probably used largely to-day as a dormitory for the people who work in the industrial towns. You will probably find, in the centre, the old village, which may be several centuries old, with its buildings made largely of stone. This nucleus will be surrounded by houses nearly all built in this century, which have probably doubled or trebled the population of the village. Near the centre you may find stone-built farm buildings which are perhaps 300 years old and which, if they have been well looked after, are probably as sound to-day as they were on the day they were built. Unfortunately, they will not be very satisfactory for use in the future as farm buildings.

To begin with they are probably not so efficient as the modern farm buildings which can be purchased to-day. Secondly, they are extremely badly sited for use as farm buildings. In the winter, vehicles used in connection with the farm buildings are bound to bring mud into the village. I know that it is an offence to do this, but in bad weather it is almost impossible not to do so. In the summer time if one of the buildings is fitted with a mechanical grain-drier it will make a noise and disturb the villagers, and will get the farmer a bad name with them.

Something ought to be done about these old buildings. If you ask the ordinary, average, reasonable man what he thinks ought to be done, he will probably say: "Well, if I have not got to pay for it, these old farm buildings in village centres should be replaced with modern, more efficient farm buildings nearer to the farm lands which they now serve, and these old buildings, with the help of conversion grants which are available from the Ministry of Housing, should be turned into dwellings." It is, unfortunately, even though grants are payable, an expensive exercise to do this, but it is worthwhile, bearing in mind that buildings of this kind, well converted into houses, will probably be good for the next 300 years, and certainly will outlive many generations of some of the new houses that are being built to-day.

The first expense which one is usually up against in attempting anything of this kind is the problem of rising damp, because most of these buildings were built before damp-courses existed; and the first thing that has to be done is to put in new flooring to combat the rising damp. The Ministry of Housing recognized this and made a special grant available for the specific purpose of fitting new floors into old buildings to combat the problem of rising damp. I have not been able to ascertain when this policy decision was taken—I imagine that it was some time during 1964. At any rate, by December 10, 1964, a Member of another place put down a Question for Written Answer asking if the Minister …will now issue a circular to local authorities inviting them to apply for the increased grant which is payable when stone, brick or earth floors are replaced… The Minister's reply was that he would issue a circular, and that In the meantime he will gladly consider applications from local authorities on this matter."—[OFFICIAL REPORT, Commons, Vol. 703, cols 234–5; 10/12/64.] That circular, No. 41/65, did not appear until May 5, 1965—nearly six months later.

The question I would ask is this. Once a decision has been taken to make a new, special inducement to people to convert old buildings into new dwellings, why wait six months before addressing a circular to authorities inviting them to proceed with such a scheme? Perhaps the answer is that the Ministry were feeling their way with regard to this new development. If it is so, all I can say is that you do not solve an acute housing shortage by feeling your way. Another answer may be that on grounds of economy it is the practice not to issue Ministry circulars too often but to wait until there is an omnium gatherum of all sorts of things it is desired to convey and then, on the grounds of economy, to issue a circular. But an acute housing shortage is not solved by that sort of false economy. So I come back to the question which I asked at the beginning: Is not the policy of Her Majesty's Government, with regard to improvement grants and conversion grants for old buildings, the Cinderella of their housing policy, and could not something a bit more vigorous be pursued in the future with regard to this part of their policy?

6.0 p.m.

LORD AUCKLAND

My Lords, because of an official engagement of long standing I may not be able to be in my place when the Parliamentary Secretary winds up this debate, tonight, but I hope that the House will acquit me of any apparent discourtesy. The House will be very grateful to my noble friend Lord Hawke for having enabled us to discuss this very human social problem of housing. I think those of us who heard the speech of the right reverend Prelate the Bishop of Chester will all agree that housing is perhaps one of the greatest of all human social problems. Those of us who are magistrates (and my wife sits on the bench at the juvenile court at Epsom) will recognise that many cases of juvenile crime are due either to broken homes or to bad housing conditions—and very often both, with one a result of the other.

I should like, so far as possible, to keep any political aspersions out of what I have to say. Neither of the main political Parties has a perfect housing record, and I do not suppose that any political Party in this century ever will have. I should like to deal primarily with the future of the construction industry. Only a week ago I presented the prizes at a boys' grammar school in North London, where a very big emphasis is put on the building and construction industry. In fact, the President of the London Master Builders' Federation attends these annual prizegivings, and he himself presents a prize. Before the actual ceremony, we touredmany of the exhibits which these boys had made, not only of building but of metal ware and other crafts. One of the most interesting items was a complete scale model of a new house constructed by a very backward boy of fourteen years of age—and it really was a very impressive sight.

I want to ask the noble Lord who is to reply (I apologise for not giving him notice of this question, and I shall not expect a reply in the immediate future) what plans the Government have in mind for training the builders of the future, because I know that in the building industry there is a great shortage of young apprentices. We talk in terms of 200,000 houses, 400,000 houses and 500,000 houses, whether built by private enterprise or by local authorities. But unless we can get young people interested in the building industry, we shall not get those houses, under any Government.

That brings me to another problem which faces the housing industry; that is, the quality of workmanship, which is not always as high as it should be. I think that this is true both of local authority building and of private building. I was in Sussex the other weekend, and I happened to be walking with a friend over the Sussex Downs. We looked at a new housing estate near the village of Alfriston, near Eastbourne, and we saw some quite expensive houses under construction. One, in particular, was to cost £10,000. I am no expert on the building industry, but I could see for myself the very bad workmanship on the floorboards. The bricks were not properly laid, and one could imagine what would happen after a short time, with the amount of rainstorms we have been having over the past few weeks. I know that many builders guarantee their workmanship, in some cases for two years, and I believe that the Consumer Council itself is involved in this matter. But I believe there is a need for more rigorous inspection of building, particularly local authority building, because, if there are defects, the cost of putting them right often has to be paid for out of local authority or central authority finances. This not only delays housing schemes but also, eventually, puts up the cost. This is a matter which needs looking into.

I should declare an interest as a director of a very small building society—very much smaller and very much less distinguished than the one of which the noble Lord, Lord Cohen of Brighton, is a director. We specialise chiefly in loans for the older type of house and, like other societies, we have been meeting with problems. But I think that building societies play a very vital role in this country. Not only do they enable people of modest means to purchase houses, but they are a very good investment for people of moderate means who want to invest money in something sound. Those who decry building societies, and who decry high rates, should sometimes bear that point in mind, because the financial development of a building society is a matter of great importance.

I should like now to turn for a moment to Scotland, which has not so far been mentioned, although no doubt my noble friend Lord Stone haven will have something to say about Scotland when he comes to speak. But I hope that the Government will pay attention to the areas affected by the Highlands and Islands Development Act, because presumably a great deal of employment is going to be moved up there. There is the paper mill at Corpach, near Fort William, and it is essential that sufficient houses are available there to attract the very necessary labour, much of which will help the export drive.

Another very big problem which faces housing is that of planning, and here we have the problem of compulsory purchase. All too often it takes many months of time to effect a compulsory purchase order, and in any democratic society this problem must be faced. There should be more liaison (this is not a Party matter; it is something which I think any Government must face) between the Ministry of Housing and Local Government and the Ministry of Transport, particularly where new roads are affected. Only recently there was a case in a New Town where two almost brand-new houses had to be pulled down to make way for a road-widening scheme. It is clear that in this case there was no real liaison between the Departments concerned. This is the kind of thing that is making housing such an expensive development. So far as the New Towns are concerned, I agree very much with what the right reverend Prelate the Bishop of Chester has said. Knowing at least one New Town in Hertford shire, Steven age, I know that much has been done there to develop the community. There is a very thriving youth centre, which has drawn in a great many of the young people. But not everything should be provided by the local authority. The youngsters themselves, under the Youth Employment Act, should be encouraged to play their part in this work.

My Lords, in the Government White Paper of November, 1965, there is one really nebulous paragraph—and this is about the only controversial thing that I wish to say. It is paragraph 19, and I would mention particularly paragraph (b), "Expansion and modernisation of the construction industries". This is, of course, very laudable, but I believe that the construction industries are very worried about the possible effects of the selective employment tax. I will not say any more about that now, because we shall have an opportunity of discussing this when the Bill comes up for Second Reading in a few days' time; but I hope that the Government will study this point carefully. Having said that, my Lords, I would end by again urging the Government to do all they can to recruit the right people into the construction industries, and particularly into the smaller building industries. The small builder is the backbone of this country. I know that there are many who say he is uneconomical and inefficient, but the small builder, like the small shopkeeper, gives good personal service, with good-quality workmanship; and, in the end, that is the cheapest possible way of fulfilling our housing programme.

6.13 p.m.

LORD SILKIN

My Lords, so far every single speaker in this debate has started off by referring to the very grave housing situation, the very large numbers of people who are housed in bad conditions and the very big problem that confronts us. I shall be no exception, except to say that it has been my view for very many years that we have always underestimated the size of the problem. It reminds me very much of the need for car parking. Whatever number of places you provide for car parking, you inevitably find that it is not enough. I know one instance where a New Town decided to provide a certain number of places for car parking. Then they thought that, to make quite sure, they would double it; and within a year or so there was no room in that New Town for car parking on the surface. My noble friend Lord Cohen of Brighton can guess the particular place to which I am referring. So it is my view that, on the present basis of what we are proposing to do, it will take very much longer than any of us have contemplated before we can say that we are well on the way to solving the housing problem. I think it might well take a generation or more. I fear that we have got to look far more ambitiously at what we are proposing to do to deal with the housing problem.

Now I want to speak, as other noble Lords have spoken, fairly briefly, about the various media by which we are at present providing housing—that is, the public sector and the private sector. I am not going to play the numbers game. The noble Earl, Lord Jellicoe, said he was not going to play the numbers game, but he spent more than half his speech doing so. I think it is quite irrelevant merely to compare figures. I think the noble Lord, Lord Hawke, would agree with me that merely to compare so many houses provided by one Party as against so many provided by another is leaving out all sorts of factors which ought to be taken into account.

I want just to look at the way in which we are providing the housing. I do not think that, with our present labour force and with the present mechanism for building houses, it is possible to increase the numbers substantially. It may be that, as a result of the Building Control Bill, when it becomes an Act, a certain number of building projects will be diverted from office building and luxury building, town halls and so on, to housing, and that that will provide, temporarily, a certain amount of additional labour. But, by and large, it is not going to produce very much more, and is not going to provide a solution to our problem. I feel that we have to look far more drastically, in a far more revolutionary way, far more dramatically, at the manner in which the public sector is being administered.

At the present time there are 1,300 local authorities, all engaged in building houses, some of them in a very small way, building perhaps twenty or thirty houses a year, and others, of course, in a very large way, producing some thousands. In Lancashire alone there are 130 housing authorities. That seems to be an absurd situation. If one were starting afresh and considering how to provide housing for this country, would anyone ever imagine that the most efficient way of doing it would be to create 1,300 agencies in this small island for the purpose of building houses? Moreover, many of the local authorities have no land available for building, and have to go outside. They have to try to enter into arrangements with other bodies to enable them to house their overspill; and anyone who has had any connection with local government will know the difficulty of arriving at any sort of agreement between two authorities. It takes years to arrive at an agreement and another few years to settle the quarrels that arise afterwards.

Every one of these 1,300 authorities has an organisation—a housing officer, offices, clerks and so on—engaged in providing for houses in its area. And, ex hypothesi, all they are concerned with is their immediate area, large or small. Consequently, it would follow that in many cases houses are not being built in the most suitable, most appropriate places, but merely in order to fit in with the ideas of the particular local authority.

The noble Earl, Lord Jellicoe, in one of the few remarks with which I agreed, expressed the view that we should deal with the planning of this country regionally; that we ought to prepare regional plans instead of each planning authority preparing its own plans and the Minister trying to fit one in with the other. I think that, by the same token, having made our regional plans we ought to create regional housing authorities who would be responsible in an executive way for providing for the housing in their areas. In that way we could ensure that housing was provided to fit in with the regional plan; that houses would be put in the right places; that there would be no problems of overspill or jealousy or disputes between one authority and another. Moreover, they could place their orders on a large scale, they could make bulk purchases and make all the other economies which large-scale production of houses would permit.

I know that this is asking for trouble, I know that the same trouble arose when we had something like 1,300 town planning authorities in 1947 and it was decided that that number should be reduced to something like 140. But the problem was solved, and to-day the town planning authorities are the county councils and the county boroughs. I feel that even that number is too high and, as I have said—and the noble Earl, Lord Jellicoe, agreed—it would be much more appropriate if we had regional planning authorities.

Furthermore, if side by side with that we also had regional housing authorities, one could ensure that houses of the right kind were built in the right places, and built much more efficiently and economically than they are today. I do not suppose for one moment that the noble Lord, Lord Kennet, when he comes to reply, will stand up and say that he agrees with me; but I know that the Minister is one of the most courageous and imaginative Ministers that we have had for a very long time. I say this with respect to other Ministers who may be listening to the debate. If anybody would be prepared to consider it and go into the whole thing, I think this Minister would. Moreover, he is in fact considering the whole question of the reorganisation of local government.

The whole trend of local government has been away from the parish councils and towards larger and larger areas. In olden days the size of a local authority was largely determined by the distance a person could walk; it was thought that a person should be able to walk from one end of the local government area to the other without undue exhaustion. Of course, with the advent of the motor car, that situation changed and today I think the time has come for a new look at local government coupled, as I have said, with regional planning and regional housing. I feel that if we could only secure that we should get a much larger output of housing, with the same labour force, than we are able to get at present; and many of the financial difficulties would be overcome. A regional authority would be in a much better position to finance its housing and secure its land than are the existing 1,300 or so housing authorities. That is something that I hope will be looked at—not necessarily immediately—and considered quite seriously, because I feel that only by some method such as that can we hope substantially to increase the number of houses that can be produced and thereby bring about a solution of our problem at a much earlier stage.

I will now say a word or two about private enterprise houses. As did my noble friend Lord Mitchison and my noble friend Lord Cohen of Brighton, I would disagree with the noble Lord, Lord Hawke, that the private builders have lost confidence in the present Government, that it is a question of confidence. I do not think that is the reason at all for the reduction in the number of houses being built by private enterprise. One of the difficulties, the most obvious, is that the private builder has been priced out of the market. There is a definite market. The house costing about £3,000 sold very readily; but once you get beyond that figure houses do not sell so readily. So where the builder at one time thought he was well on the way to becoming a millionaire, he now finds that he has houses left on his hands and is not prepared to take the risk of building further houses.

Then there is, of course, the high cost of land which contributes to the higher cost of houses. Private developers have burned their fingers in building the wrong kind of houses. Incidentally, when one talks of the number of houses built by private developers, one includes a large number of luxury flats that have been standing empty in places like Bourne-mouth and other seaside resorts for a number of years because they are too expensive even for wealthy people to buy. These are all included in the numbers of dwellings provided in certain periods. But there is another difficulty: the amount of land available and suitable for housing is gradually becoming exhausted. I know that if one travels round the country one finds mile after mile of open land apparently suitable for building; but, in fact, people want to live relatively near to their work, in towns and villages, in proper communities. The kind of land that is suitable for building is rapidly coming to an end. Private developers are finding it very difficult to get hold of land.

A further factor is that town planning authorities are not always very helpful. They have their own development schemes; these schemes are very often placed before the Ministry, and they are not in a position to give a decision until the Minister has approved or dealt with their schemes. It may be a matter of years before he is able to do so. In the meantime there is a definite shortage of land, and if we wish to speed up development by private developers we shall have to look into the question of land and of the town planning machinery to see that matters are expedited.

I believe that the Land Commission Bill will be very helpful to the private developer. At least half the difference between the value of the land for agricultural purposes and its value for building will, under the provisions of that Bill, be returned to the community which created the additional value. The Land Commission will therefore be able to buy land at a considerably cheaper price than is possible at present, and it is contemplated that the Land Commission will be letting land to developers at a much lower price than is at present paid by a developer. To my mind, this should be very helpful to private developers. It will enable them to secure the necessary land, which at present they find difficult, and do so at a reduced rate. If the Bill becomes law it will, I think, be of great assistance to private developers and will enable them to increase their output.

THE EARL OF KINNOULL

My Lords, does the noble Lord, Lord Silkin, think the houses will be cheaper in future if builders are able to get land cheaper under the Land Commission?

LORD SILKIN

My Lords, that is what I was trying to indicate: that the price of houses will go down if private developers can get land more cheaply. I think that is pretty obvious.

I was going on to say something about a point which the noble Viscount, Lord Gage, has already dealt with rather fully, but I wish to support him wholeheartedly in his plea for housing societies and associations. In spite of the fair words of various Ministers, they do not seem to me to be making much headway and one of the difficulties is lack of machinery. The noble Viscount knows as well as I what is the drill. A housing association finds some land on which it would be appropriate to build. It has to obtain an option on the land which it is not in a position to buy. The association must find a landowner who is prepared to wait until the association can obtain planning permission, it having obtained an option on the land subject to getting such permission, which might take many months. Town planning authorities are very slow, and so it is necessary for the association to find an owner who is prepared to wait for many months before the association can exercise its option.

Even then, the association has no money, and once it has secured planning permission it has to negotiate the price of the land. It is not possible to do that before the agreement of the district valuer about the price of the land has been obtained, and then the association must get a building society, or a local authority, to advance money. Ministerial sanction must be obtained, and I can assure your Lordships that the procedure may take a year and a half or more. In the meantime, the owner of the land has to wait without knowing for certain that in the end his land will be acquired by the housing association. If we are serious about housing societies, something must be done to speed up this process and make it possible for the bodies to function properly.

Like the noble Viscount, Lord Gage, I am chairman of a housing association and know exactly what associations are going through. It is unfair to expect a landlord to wait a long time, and it is difficult for an association, when it does not know for certain that it will be able to acquire land. An association has to find an architect who will prepare plans in the expectation that one day they will be paid for, if the project matures. I am sure that the noble Viscount, Lord Gage, knows of these problems. It is not, therefore, surprising that the housing association movement has not made very much headway. I hope that if the Minister realises the problems involved, he will do something to ensure that things are speeded up and that housing associations are not discouraged from going forward; and make it possible for them to be able to proceed with greater certainty if they find suitable land.

My Lords, each speaker in this debate has tried to make his contribution towards assisting in solving the housing problem. As I said at the outset, the problem consists of trying to produce more housing more quickly with the same amount of labour as we have at present. I believe that it is necessary for us to look again, courageously and imaginatively, at the existing machinery to see whether we can streamline and rationalise it and so obtain better results with existing material. I hope that the Minister and the Government may be persuaded to look at this matter courageously and afresh, because I think that a fresh mind is needed on the subject.

6.38 p.m.

LORD WOLVERTON

My Lords, we are all grateful to the noble Lord, Lord Hawke, for putting down this Motion. It is, in my opinion, of paramount importance that the people of this country should be properly housed. The right reverend Prelate the Bishop of Chester was perfectly right when he said that housing is one of the most important of our social problems at the present time.

I wish to talk for a few minutes on the financial aspect of this problem, and I hope that at the end of the debate the noble Lord, Lord Kennet, will be able to give us a ray of hope. I do not think it wrong that noble Lords on this side of the House should be accused of not supporting Her Majesty's Government in their credit squeeze on housing, because housing, hospitals and schools were specifically excluded from the credit-squeeze restrictions. If adequate finance is not provided at reasonable rates, the houses will not be built, either by local authorities or by private enterprise, because they will be too expensive. I have recently had talks with local builders and local authorities who are worried about the very high rate of interest they have to pay. We are putting up substantial amounts of housing, both by private enterprise and by the local authority, in my own town of Newmarket, which is a small town with 12,000 inhabitants but which is growing a little. At New market, 75 flats are nearing completion which it is said will have to be let at between £4 10s. and £5 a week per flat. And for units that is a great deal of money. I should like to know from the noble Lord, Lord Kennet, whether he can tell us what are the proposals of the Government and the Treasury to help builders.

The Minister said that he hoped to reach a target of 500,000 houses by the year 1970, half to be private-enterprise houses and half municipal houses. Last year (to pick out a few figures), private enterprise completed 206,246 houses in England and Wales, and 7,555 in Scotland, where they do not build many private houses, making a total of something over 213,000 for the year. Local authorities in England and Wales completed 133,024, and in Scotland, 21,000, making a total of just over 154,000. So we have a long way to go, if we are to achieve the target mentioned.

I would remind the House that last year in Great Britain 382,297 houses were completed—only about 4,000 more than the year before. I have seen various estimates from responsible bodies, and the best I have seen shows that perhaps we shall get 390,000 this year. But if no finance is forthcoming, I do not think we shall. The position to-day is that a number of new houses are standing empty because, much as families who are overcrowded at present would like to move into a larger house, even if they can get a mortgage, they cannot sell their own house. Unless some guidance or directive is given to the banks to help this bridging operation for housing, like the priority loans for exports, I cannot see that we are going to advance much more than we are now.

The figures over the first five months of this year are down (we knew them before, but the Minister has given them to-day), though May was a little better than April. I should like to know what arrangements can be made for finance, because at 7½ per cent. for building society mortgages, and perhaps 8 per cent. for builders' loans from the banks, we are not, in my humble opinion, going to get the increased target that we all want and to which the present Government are committed by 1970.

In conclusion, I would say one thing in criticism of the speech of the noble Lord, Lord Mitchison. I well remember that when the Labour Government went out of office in 1951, Mr. Attlee (as he then was) said that it was not possible, with other things to do as well, to build more than 200,000 houses a year. Later the noble Earl, Lord Wool ton, accepting a Motion at the Conservative Conference at Blackpool, said that he would do his utmost to complete 300,000. If my memory is right, in about three years we had got up to 300,000 and when the Conservatives left office in 1964 we had reached 378,000: and we left over 430,000 houses building. So the record of the late Conservative Government, if we look at the facts, was a pretty good one. That is the only controversial thing I want to say. But I feel that we ought to be told, to-night if possible, what arrangements can be made for finance, because this matter is of prime importance. If we cannot get finance, I am perfectly certain that we shall not be able to build the extra houses that we all want to have.

6.45 p.m.

LORD SOPER

My Lords, the noble Lord, Lord Hawke, must be gratified at the attention which has been attracted to this debate. I too should like to thank him for the opportunity to take some part in it, and for the information and help I have already received from the various speeches to which I have listened. I would briefly take advantage of the context in which this Motion is framed to make some observations on at least four of the main issues which seem to me to lie within the general area of what is called the housing situation. If these are large ticks I remember the ecclesiastical advice I received as a student, "Take large ticks, gentlemen, and if they persecute you in one city then flee into the next".

I do not pretend to have the expertise shared by many noble Lords, but I am aware of the gravity and intensity of the housing situation. I am pastorally responsible for an area of great housing need in West London, and would echo briefly, and not rehearse in any detail, what my right reverend prelatorial friend has already said about the cardinal importance of good housing in any amenity situation and in any civilised community. To know something of the actual conditions of housing and overcrowding in West and North Kensington is to realise to what an extent this is a tremendous and almost forbidding programme to which any man, any community or any Government can set its hand, and I echo what my noble friend Lord Silkin said of the size of this problem and of the inability to plan adequate measures to deal with it in the proximate future.

This leads to my second general observation, which is that not enough is being done. It is obvious that there are halts and hesitations and maybe quite grave faults in the actual administration of this programme as it is at present being undertaken. One of them is that there has obviously been a failure in the private sector or, at any rate, the majority of the criticisms of the failure are to be lodged there. I would agree with what my noble friend has already said, that here the Land Commission can at least provide one measure calculated to improve efficiency within that sector.

But it is on the third general category that I would delay your Lordships a little, if I may. In a speech made in another place on May 19 in a debate on housing, the honourable Member for Hexham referred to what he described as "a revolution by consent." He said that he was convinced that the present housing programme was revolutionary. I give the author of this statement because the word "revolution" might tend to stick somewhat uncomfortably in the gullets of some noble Lords. This was the only point on which the Minister and the honourable Member agreed. In the rest of his speech, he provided statistics which took the Minister almost as long to refute. But in this conception of a new kind of housing situation I believe lies the key to a great deal of what has been said this afternoon and of what needs to be done in the application of what has been said.

If your Lordships will let me say so, I have come from another forum which I regularly have to address on Wednesday, and I think that one thing which has commended itself as reasonable to the average crowd is that for the first time Housing is now considered as a service Ministry; that it is no longer part of the cut and thrust of a society in which it is regarded in terms of market values, and of private enterprise "enlightened self-interest", but takes its proper place alongside health and education as a primary requirement of any civilised Government which has to be provided as a service not only if it pays or happens to be profitable. It is this concept which I think has to be largely advocated and more widely spread.

I make no apology for saying that it is this kind of defence which I believe Her Majesty's Government are most in need of finding, and can most obviously and sincerely present. Whatever may be the faults and the imperfections lying within the present housing situation and the present housing programme, it is a revolution, and a great deal of it must be conducted by consent, and that consent is as yet not given in large enough measure. And if it is an appeal to the heart, let it be so, because in so far as people realise that the community is set upon the task of rehousing those who need it and setting up a general home life, so far as physical means can do that which is acceptable, and in so far as the community recognise that that is the intention of Her Majesty's Government, I believe that whatever feelings there may be of indecision and lack of cordiality towards the Government, and indeed lack of any confidence in the Government, may largely be repaired. This may not have an immediate financial application, but I make no apology for introducing it, because I think that only in so far as this housing situation is regarded and seen as part of the service which an enlightened Government must render to the community will it have any effective chance of final success.

One of the last things I want to say is something upon which I hope to adduce a certain amount of specific evidence. In considering the present situation of housing, it is, I think, of imperative need that we should know what the present situation is, and because I was not acquainted in sufficient detail with what that situation is I took the trouble to find out. If your Lordships will allow me, I think I can introduce at least one or two of the ideas which as yet have not been sufficiently ventilated, if indeed they have been dealt with at all. It is true that the housing problem is immense, and it is true that there are halts, hesitations and failures. But it is also true that the present situation has encouraging features, and has a strategic plan which is of profound significance; and that to me is very hopeful.

It is a plan which under the present system of stress recognises, as my noble friend Lord Silkin so pertinently pointed out, that we have not sufficient resources to do all that we should desire to do, even if we had the acumen to set about the task efficiently. Therefore, what we have to do is to set about an emergency plan, and to provide a priority housing programme, and it is to this particular field that I would commend the Government, if I may without impertinence, reminding myself and your Lordships that this is one of the elements of this debate that have hardly been dealt with at all. In a nutshell, it means this. In the absence of adequate machinery to deal with the overall problem the Government have decided on a specific and selective programme, and some 72 per cent. of the housing programme will be undertaken by some 15 per cent. of the housing authorities in the public sector. Why is this? It is because there are certain areas which have much greater need than others, particularly in London and some of the larger conurbations.

It is the specific intention of the Government, which is already in process of being carried out, that this programme should deal with those areas which are most in need in the first instance, and by so doing tackle the problem in its most acute form at that point where it must necessarily be treated. This, if I may say so to my prelatorial friend, is exactly his point. There is greater need in some areas than in others, and those areas where there is the greater need should have the primary consideration.

The first to be settled were four-year programmes for the 34 London authorities. They were highlighted in the Milner Holland Report, and they clearly merited the highest priority. That took place in September. Then came the turn of the conurbations, with their massive concentrations of slums and overcrowding, and these 96 priority authorities outside London were settled between February and April. The interesting thing to me is that in most of these cases—in fact, in all these priority cases—the agreed three-year programmes are well up on the authorities' tender approvals over the last three years.

I mentioned Kensington, and I naturally look at the housing programme in terms of the particular percentages. I find when I turn to Kensington, which is a borough in profound need of much housing, that the percentage increase in the programme, comparing the tenders approved from 1961 to 1964 and the programme between 1965 and 1968, is 539, which is a considerable percentage increase. Other percentage increases are, for example, Barking, 259, and Bevington (which as your Lordships know is in the North-West region), 550; and there are others.

This is the hard fact. It is perfectly open to noble Lords to say that, as yet, there is no absolute guarantee that unless we solve our financial problems we shall be in a position to fructify these particular plans. But, considering the present situation—and this is precisely what the purport of this particular conversation and Motion is about—it is only right and proper that the Government should be given the credit to which they are entitled for their priority programme and for the selectivity with which they have chosen the most needy places for the most immediate attention. This, I think, is right, and, with all the failures and difficulties, indicates a general trend which is admirable.

May I turn in a final comment to what to me is by far the most important aspect of this whole situation. I regard the community as one, in which the priorities must necessarily be priorities for people, and for people who are most in need. I want to make my plea again, as a pastor, for the young people, particularly for the young married people; for the people on incomes which are inadequate to provide them with the means of acquiring houses; for the many people I know who are living with their in-laws and are putting up with it—and both parties have to put up with it because it is satisfactory neither for the in-laws nor for the young people; and particularly for those who as yet have no hope.

In North Kensington there is a housing society, and in preparation for this debate I inquired of them what they regarded the present situation to be. Among the various comments they make is one which I think is significant. There is a high degree of immigrant population in North Kensington. For the first time many of these immigrants are asking for their names to be put on housing lists, because for the first time they seem to have confidence that the general trend of the housing policy is one to which they can commit themselves and in which they can find hope. That, I believe, is both the guerdon and should be the inspiration of the housing programme in future; and, based upon the conditions in which that programme is now framed, I, for one, have lively hopes.

6.58 p.m.

VISCOUNT STONEHAVEN

My Lords, I should like to add my thanks to the noble Lord, Lord Hawke, for bringing this Motion forward to-day and enabling us to discuss it. I have enjoyed two notable speeches from the Government side. I found a great deal with which I agree, but not all, in the speech of the noble Lord, Lord Cohen of Brighton, and in that of the noble Lord, Lord Silkin, as I very often do. Nevertheless, I want to keep this entirely non-Party, and if I say anything controversial it will not be in any Party spirit, because I should not know how to do it. I think noble Lords know I am no good at that. I have attended many debates in your Lordships' House which could be described as a lawyers' benefit, and it is refreshing that we could almost describe this debate as a building societies' benefit, because many noble Lords appear to run the building societies themselves. The only connection I can claim with a building society is that I loan one of them a certain amount of money. Nevertheless this is an interesting subject.

Up to 1953 I was employed full time in the constructional industry; therefore I have some knowledge of this problem from that side, and I hope noble Lords will bear with me if I talk a little about the background of that industry. I left it about thirteen years ago. The last six years have been marked by a steady progress. Output rose by roughly 5 per cent. per operative, and the remuneration or the "take-home" of the operatives rose by approximately 10 per cent. These are all average figures, and your Lordships know what averages are. But they are figures from the Ministry's publications. It is something which has not been mentioned to-night, and I believe it is something of which the building industry can be a little proud.

At present the industry is not in an extremely happy state. Many views have been expressed about that. While I accept the views expressed by the noble Lord, Lord Cohen of Brighton—who knows far more about the subject than I do—I still think that one reason for this recent setback is worry or the lack of confidence (that might be too strong a way to express it) about the Government's policies and actions. Obviously, the electorate believed the Government's Election pledges, and they are still waiting for this promised Utopia. If you are waiting for a promised Utopia you do not buy at the top of the market, which this appears to be. So it is a two-edged weapon, so far as I can see. Certainly to some extent—to what extent I do not know—this has stopped people from going ahead and buying, as they would have done had they not been told that heaven was just around the corner and if they waited a bit they would get it. At any rate, it has had the effect of slowing things up.

There are a few other things I want to talk about, and I do not want the noble Lord, Lord Mitchison, to think I am merely slinging mud if I mention things which are worrying people in the building industry. I do not think it is being unpatriotic or anything of the sort. If the moment you start criticising that is thrown at you, it is a bit off-side. Any way, I do not know how to sling Party mud, so I will just go on with my remarks, if noble Lords do not object. One of the things with which competitive tendering on a fixed-price basis has to compete is local authority direct labour which is not tied to the same conditions at all and which has what therefore appears to be an unfair advantage. This may not be so, but the industry thinks it is. The Ministry of Public Building and Works published some figures. I read them in a cutting from a newspaper, so they may not be accurate, but I think they are. It shows that the average output for a man in a direct labour team for a certain period was £1,440, compared with that of a man in a similar private enterprise team or contractor's team, whose output was £2,700 over the same period. Those are not my figures, but I have them here if anybody would like to go into them. They are allegedly the figures of the Ministry of Public Building and Works, and therefore I think there is something in them.

There is another point. On the one hand you have the Redundancy Payments Act, which is probably Avery good Act, and on the other hand you have the selective employment tax. One encourages you not to lay your men off, the other encourages you to do so, and you are caught by both. The provisions of the Redundancy Payments Act are drawn so wide that even if you sack or lay a man off to-day and he walks into another job on Monday, you still have to pay him a redundancy payment. This is something which worries the employers a little. Then there is the 40-hour week, and yet they have a fixed-price contract and cannot raise their prices.

The Government Department, through the Ban well Report, urges the adoption of a standard form of contract, which I believe is a good thing. But the Restrictive Practices Court says that you may not do that, so there is another contradiction which worries them. The industry is told, quite rightly, to modernise and mechanise, but very recently the investment grants were taken away from them and have only just been restored. That does not give them any confidence, either. The building industry is told to reduce its demand on manpower, but public and local authorities are allowed to increase strictly in accordance with Parkinson's Law. The National Plan makes it clear that the building labour force must grow: the selective employment tax is designed to stop it from growing. Owing to the nature of building, which is often localised, you have a large number of, perhaps, elderly men employees with a home in the district. You lay a man off from the building industry, and he is taken on in a factory where he will stay, and you have lost a building trade worker and a skilled man for good. That is a point worth considering.

There are the supply industries, and bricks, tiles, plasterboard and cement are the chief ones which come to mind. I believe in planning—no one who has been in the building trade can believe in anything else. But it must be good planning, and I do not call it good planning when you fluctuate between scarcities of certain building bricks, plasterboard and cement, and a state in which your brickyards are stocked up when they should be empty, to such an extent that the firms are beginning to consider that they will have to lay off a large number of men this winter, because that is a time when you cannot use a large number of bricks, anyway. The extra cost of financing all this idle material, and the cost of double-handling, all derives from inefficient planning. In that connection, one must remember that the building industry depends to quite a large extent on the transport industry. The sorry tale of the gallon of fuel started, I think, with Selwyn's sixpence; it then went on with Callaghan's "tanner", and now we have Wilson's "fourpenny wallop" on top of the lot. That does not help the building industry at all, or anybody else. It may be essential, but it is a fact.

Can we do anything about high building costs? I think this is something we really should think about a little. I do not think it is generally realised that when a builder tenders for a contract, over and above the basic rate of pay of an operative he has to allow a figure of about 2s. 2d. for all the various contingencies he has to deal with. They are the sort of things one normally forgets. There is absenteeism; he has to allow for overtime; travelling time; travelling facilities (and very often he has to provide his own transport); National Insurance, of course; graduated pensions; annual public holidays with pay; guaranteed time (because the building industry has a guaranteed week no matter what the weather); tool money—that is, sharpening tools and providing replacements; sick pay; construction industry training levy; redundancy payments and third party insurance. There are probably other items, but those are just the normal things which add to the cost of building.

The costs of materials for a house are a good deal greater than the cost of putting up that house. Therefore any rise in the general industrial field or in impositions and taxes indirectly hits building hard, because the cost of every single item used in a building is affected by any general rise. Wages, costs, anything at all, hits building twice, it might be said, because the cost of everything goes up.

What of the future? Can we make any savings? I think a point which has not been mentioned yet is that quite a large field for savings exists in customer efficiency. Customer efficiency means, among other things, prompt payment of bills. In many cases a builder is kept hanging about for a long time before the bill is met, and of course he has to finance the cost, with the interest that is involved. There is another thing that I would suggest ought to be done. It is the practice in the building industry when a building is finished for the retention money to be held back. It used to be5 per cent. for six months, in my day. I do not know what the figure is now, but it is something of that sort. That retention money represents the whole profit, and I would suggest that a fidelity guarantee could be taken out with an insurance company, just as a professional man does. If you are a design engineer you take out a fidelity guarantee in case you make a muck of the design and the structure falls down. Overall, in a sizeable building programme this retention represents a heck of a lot of money, and I think that is a saving which could be made.

We have already heard mention of dimensional co-ordination. I do not know whether everybody realises what that means. In London the height of a ceiling in a new building is 8 feet. Therefore the factory-made staircase or the plaster board for the walls, and all that kind of thing, works in on the 8 ft. dimension. But in the Provinces it is 8 ft. 4 in. This seems to be idiotic, and I think it is a field in which Her Majesty's Government could put a bit of drive.

Another point is that these chaps who say they are going to get on with it should really put their foot down about modular construction. They should make people work on a module, because almost every engineer and a large number of architects agree that great advantages can be derived from this. The only thing they cannot agree on is what module should be used; but that is where the Government could come in. Another matter is in regard to the plans for council houses. Many of them are as alike as two peas in a pod, and they are bound to be because they must be built as cheaply as possible. I do not see why there should not be plans—as in fact there are—of 20 standard local authority houses, with full drawings, full bills of quantities and full measurements of payment. This could arrive through the post. At the present moment every local authoriy has an architectural department, which generally employs a quantity surveyor to measure the contract when it is done. This is rubbish. It has all been done. And if 20 varieties of houses are not enough, I do not know what is. Therefore a big saving might be made there.

The same point applies to schools. Why sit down and spend months designing a plate glass and concrete palace when it has been done all over England, and we sit and do it again in Scotland and have the same snags. Why not have the same design of school for varying numbers of pupils and treat it in exactly the same way? A packet of money could be saved on that.

I am afraid my next barb is directed to the Scottish Office, but I certainly think the Departments concerned should be scrutinised a little. Our local authority is building a new academy and, like everyone else, we have a cost allowance which we must not exceed. This is a cost allowance of so much per square yard of building, and that is all right. If we save on that we do not save the Exchequer anything at all, but we are permitted to use the sum saved for building something that is not essential, such as a swimming pool. This particular school is finally destined to take 1,000 pupils. It requires two gymnasia and a swimming pool. Within half a mile of the school there is a heated swimming pool up to international standards. I may say the pool that the school will get is only a quarter-length thing which is not up to any standards at all. If this is not a colossal waste of money when money is tight, I do not know what is. I am all in favour of teaching people to swim, but the facilities are there, and running half-a-mile is a jolly good bit of physical training. Indeed it might remove the necessity for one of the gymnasia. I think these things should be looked into.

I would just add to my plea in regard to improvement grants. I do not know whether I ought to declare an interestin this matter, but I have myself done 22 houses under this scheme. It is a thoroughly good scheme, but it depends on the local authority's having a good sanitary inspector or building inspector—we call them sanitary inspectors in Scotland—who will be tolerant. If there is a good building which can be brought up to modern standards with the exception that the ceiling is two inches lower than it should be, if there is a good county official he will say, "All right; in order to make the ceilings right you would have to tear the whole house down, and that is idiotic when it is perfectly sound". We have a good man and he says this sort of thing. But I tried to do another scheme under the Hill Farming Act, and the hill farming inspector saw the same house, condemned it and said, "Build a new house. It will cost you £4,000 and the Government will give you £2,000 grant". I said "Rubbish! I won't do it under the Hill Farming Act but under the local authority legislation". It cost me £1,100 and it is a darned good house. This is the sort of thing that is going on and we must stop it.

In particular I would put in a plea for our old Scots stone houses, which are solidly built although the height of the ceilings is sometimes a wee bit under the height laid down. A large number of these houses can be brought up to reasonable standards for certainly 20 to 30 years at a very reasonable cost, instead of being pulled down and a new house started. I think that is a matter which should be looked into.

Now I must declare a very tenuous and indirect interest. One of the problems with old houses is that they have no damp course. There is a thing called electro-osmosis, which merely consists of putting a copper anode into the wall at about every18 inches, together with a copper strip, and by some sort of magic physics you can dry that wall up with no further bother whatever. This is a cheap method and should be fully known. Our local authority knows about it, and I think it is a point which should be taken up in a field of this kind.

THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION)

My Lords, can the noble Viscount tell us the cost of this in a comparatively small cottage?

VISCOUNT STONEHAVEN

I can tell your Lordships the approximate cost. It depends on the size of the operation, but for the usual size of cottage it would be about £250. I could not tell you more precisely unless you showed me a house and asked, "What will it cost in this case?" I hope that this Government, the next Government, or indeed any Government, will meet and surpass this target of 500,000. Personally I do not mind who does it so long as it is done.

LORD FERRIER

My Lords, on the subject of stone houses in Scotland, could the noble Viscount tell us this about the cost of this drying system in lieu of damp-course? Does he not mean that that is not the bare cost? It saves destroying a house which would otherwise be condemned because it had not got a damp-course.

VISCOUNT STONEHAVEN

One can use this method instead of putting in a damp course. It is very costly to put in a damp course, but you can instead put in the electro-osmosis and preserve the house.

7.22 p.m.

LORD WELLS-PESTELL

My Lords, I wish to concern myself with certain sociological factors connected with housing, but before I do so I should like to refer to the speeches of the noble Lord, Lord Hawke, and the noble Earl, Lord Jellicoe. I rather detected a hint of criticism of the Government's plans and achievements so far; I felt that they did rather delicately twist the tail of the Government, and perhaps they will not mind if I nip theirs—or try to.

With regard to the noble Lord, Lord Hawke, I am under the impression that he said that when the Conservative Party were in power the production of houses continued to rise. This may not be an important point, but we may as well have it correct for the record. As the noble Lord, Lord Wolver ton, quite rightly pointed out, it took them two years—and that does not seem to me to be at all unreasonable—to reach their promise made in 1951 of building 300,000 houses. It is equally true that in 1954 the number went up to 347,000, in round figures. But then it fell, and for the next four years from 1957 onwards the production of houses fell below 300,000a year. So I do not think it is quite accurate to say that during the thirteen years of Toryism the production of houses continued to rise.

Having said that, I wonder whether we appreciate the extent of the problem which faces us. I think we should be less than fair if we did not recognise that the present housing problem has been building up for a good many years. I do not want to make political capital out of this, but I think we ought to get clear in our own minds what the problem is, and what it was a year or two ago. After thirteen years of Conservative rule—and I make no complaint about this, because I am the first to recognise that during those thirteen years they built over 4 million houses, which I do not think was a bad achievement—in 1964, Britain was still left with at least 1 million families without homes of their own, with about 1 million slums remaining to be cleared, and up to 5 million house-holds which lacked essentials like baths and hot water supplies.

The tail I should like to nip of the noble Earl, Lord Jellicoe, concerns his reference to some brick "muddling" of this present Government—I think I quote him correctly. But I would remind him that in September, 1964, just before this Government took over, there was a sharp shortage of a good many building materials. I think I am right in saying that when the Conservative Party went out of office there was only four days' supply of bricks, four-and-a-half days' supply of cement and eight-and-a-half days' supply of plasterboard. As I said, I do not deny that during those thirteen years the Conservative Government built on average about 303,000 houses per year, and I think that most of us would recognise that that was something of an achievement. The fact that they reached their peak of 373,676 houses in 1964 may have some relation to the fact that that was Election year—I do not know. I think we shall reach our peak in 1970.

EARL JELLICOE

My Lords, I wonder whether I might interrupt the noble Lord in this interesting point he is making. He referred to the trough in housing built under the Conservative Government. I personally disagree with what he was saying, that the Conservatives built those and Labour is building them; it is merely creating the conditions in which they are built. But he referred to the trough, and I would remind him that the Election year, 1959, happened to be one of the low years.

LORD WELLS-PESTELL

My Lords, I have made no claims at all so far as the building by this Government is concerned. But I wonder how much of the success of the last Administration—and it was successful when it came to housebuilding—was due to the fact that standards of house-building were very drastically reduced.

November, 1951, saw the adoption of a people's house, a three-bed roomed house of 847 square feet with 77 square feet of storage space, for five people. The following spring, local authorities were told to economise not only in the design of the house but also in the services and equipment installed in the house. Not only were standards cut, but floor space was reduced, ceilings were lowered and the quality of internal and external design fell. I think many of us would feel that we have been left not so much with houses but with a good many boxes. Here again, I would not deny that there may have been very good reasons at the time for cutting down in the way these drastic cuts were made, and I think we have to face the fact that, notwithstanding that the present Government have decided not to cut back housing, we are living at a time of grave economic crisis when it may not be possible to do some of the things that all of us would like to see.

I think one noble Lord has already made the point—and perhaps your Lordships would allow me to put it another way—that the fact that there are about 1,000 families moving daily into new homes (and this again applies to the last year or two of the last Administration) only serves to remind us that the rate of building to-day is not fast enough; and it is something that we on these Benches realise only too well. Many of your Lordships, on both sides of the Chamber, will be in close touch with many of the problems, social and personal, which stem from inadequate housing. I am primarily concerned that we build the right kind of homes. For me, it is not just a question of the number we build—although that is important; it is essential that the standard is right. This is a matter to which the Government are giving most careful consideration, and encouraging the National House-Builders Registration Council and the Building Societies Association to pool their ideas with a view to protecting the house buyer from shoddy building.

I think we have to keep in the forefront of our minds the fact that the average wife and mother spends a large part of her life in the house. We have already had far too many under-sized, poorly designed, and cheaply built homes in the past. I think we have got to show more imagination in our building, and get away from the two-storey box which to me seems to dominate both town and country. I understand that the Building Research Station is undertaking a two-year study of housing estates. It is reported that on one estate, where the average cost of a house was £2,780, £165 went in site costs, £108 for footpaths and roads, £59 for services, and only £12 for landscaping. Surely in future we must give more thought to location and surroundings.

I am also concerned with the question of privacy. Most people like a degree of it. I realise that it is difficult to give a real measure of privacy when housing densities are so high and must, of necessity, be so in our large cities. I therefore welcome the Government's intention to plan the growth of cities, and to give careful consideration to the planning of new towns. High housing densities mean high blocks of flats. I do not think some of us in your Lordships' House realise what life can be like in a high block of flats. It is a strain for both mother and child.

A Rowntree Trust Survey has shown, in a study of 200 families with children aged 2 to 5 living in twelve London estates, that the mothers felt that their children were deprived of the opportunities of meeting and playing with other children of similar ages because they had to spend the whole of their time in the flats, perhaps on the tenth, eleventh or twelfth storey. It is too great a responsibility for mothers living high up to leave their children, particularly younger children, to play in the courtyards. One London borough has, I understand, installed closed circuit television in its flats so that the mothers can keep their children under observation when they are playing in the courtyards. But what happens when the mother sees the child going out of the courtyard and she is twelve storeys up, I just do not know. I wish local housing authorities could be persuaded, and I wish the Ministry would issue a note to the effect, that they must exercise more care when it comes to rehousing families with young children in high blocks of flats.

My main concern is in respect of the young marrieds. Young couples to-day are not prepared to put up with the kind of living accommodation familiar to, and suffered by, their parents in the past. On marriage, they want, and quite rightly want, a place of their own. I speak as a sociologist, and I can say (and it is not meant to be funny) that a new aim and purpose has arisen among young marrieds to-day, that of mother-in-law avoidance.

Marriage is popular to-day, and earlier marriage is taking place. To-day, we have the situation of the average woman leaving school at 15, and at 22 marrying a batchelor of 25. Many marry much younger. Over 25 per cent. of all brides, and upwards of 6 per cent. of all bride-grooms, are under the age of 20. The average wife goes out to work for the first eighteen months then she starts her family. By the time she is 25 years of age she has two children, and is often not adequately housed, nor has the chance of making a home of her own. In my view, it is the young marrieds who have a real claim on society when it comes to housing. A young man can marry under the age of 21 if he gets his parents' consent. He can fight for his country and is expected to do so when he is under the age of 21. Until a few months ago, he had the doubtful privilege of being liable to be hanged if he was 18 or over. But no one—I repeat no one—will help him to acquire a house of his own if he is under the age of 21, and even at 21 he has to have a surprisingly high income.

In 1964 there were 359,307 marriages. In 51,940, nearly 52,000, of those 359,000 marriages the bridegroom was under the age of 21. So we have 15 per cent. of all the bridegrooms who marry in this country under the age of 21. This is one of the reasons, if I may say this with the greatest respect to the noble Lord, Lord Hawke, why some of us feel so strongly that the local authorities must be given a real measure of preference to build local authority houses as distinct from privately built houses—because the only hope these couples have is to get rented accommodation from their local authority.

As your Lordships know, the local authority will not grant a mortgage to anyone under the age of 21; nor will any building society, so far as I know, because, being a minor, he cannot own land nor be proceeded against in the courts. In my view, this calls for an amendment of the law, and I hope that something will be done quickly. I understand that the noble and learned Lord the Lord Chancellor is more than aware of the situation and, had he been here, I would have said (and will nevertheless say it in his absence) that I hope he will not think me impertinent if I congratulate him on setting up the Latey Committee, which is at the present time considering the position of minors and the law. Regardless of the recommendation, if any, of the Latey Committee, I hope that the noble and learned Lord the Lord Chancellor will feel able to hold out some hope for those who marry under the age of 21 being permitted to own land, so that they can take advantage of whatever mortgages may be available in the future.

The position is difficult enough for people over the age of 21. The potential borrower must have a weekly income of between £27 and £28 per week before he can borrow £3,000 from a building society. He then pays it back at the rate of £23 17s. 6d. per month for twenty years, if it is at twenty years, and by that time he has paid back the inclusive sum of £5,730 for the £3,000 that he has borrowed. It is perhaps not surprising that the ten or so major building societies have between them millions of pounds in reserve, and, as we have been told this afternoon have succeeded in avoiding losing any money. Perhaps the time has come when there should be an independent inquiry into the scope and function of building societies to see whether they are meeting, or could meet, the needs of the changed situation to-day.

I realise that the Government, faced with the present economic position, cannot arrange for cheap loans, but I understand that the Minister of Land and Natural Resources has made it clear that the Land Commission will be acquiring land for the national and regional plans and will act as a land bank for small buildings. He went on to say: Thus, if the small house-builder is ready and willing to build, he will be able to get land without difficulty at prices which are not inflated by artificial scarcity I can only hope that that particular Minister will move far more quickly than others of his colleagues, as this will help to bring house ownership within the grip of a much higher number of married people; and they are my chief concern. I believe that the Government are to be congratulated on their housing policy and on their determination to make it succeed.

7.42 p.m.

THE EARL OF KINNOULL

My Lords, anybody who has referred back to previous debates on housing in your Lordships' House cannot have failed to notice that this subject always produces plenty of criticism for the Government of the day. But I feel that the difference to-day, as compared with earlier debates on this subject, is that there has never before been such unified criticism of the growing uncertainty and depression of the present housing programme. Other noble Lords who have spoken have described in detail the reasons for this depression, and at this late hour I do not wish to repeat them. I hope that when the noble Lord, Lord Kennet, comes to reply he will be able to describe what positive steps the Government propose to take to correct the present situation.

It is difficult, in a debate with so many speakers, not to repeat or trespass upon the points made by earlier speakers, and I hope that I shall not be guilty of this. I will confine my few remarks to two points: first, the paralysing effect which the proposed Land Commission is having on house-building, particularly in the private sector; and, secondly, to draw attention to certain injustices which arise under the present law of compulsory purchase and compensation.

Criticism of the Land Commission will not come as anything new to the noble Lord, Lord Kennet, and it will be interesting to hear from his Department about the enormous deluge of letters which one assumes must have been sent in, and also the number of delegations which have asked to be received seeking amendments to the proposed legislation. Yet, so far as I know, in spite of all these letters and delegations, the Minister of Land and Natural Resources has not thought fit to move one inch from the proposed and published legislation.

One particular point of criticism of the Commission to which I would draw the noble Lord's attention today concerns that part which has caused private builders to reduce drastically their house-building programme. I refer to the effect of Clause 64 of the Bill as it now stands. That provides that if a builder purchases, or holds, residential building land, and has not obtained the necessary outline planning consent, and has not been able to start the development before March, 1967, he will be required to pay a 40 per cent. levy tax on the difference between existing use value—which in most cases will be agricultural value—and the development value.

Let us take as an example a 10-acre site, which a builder purchases at £10,000 an acre, with outline planning consent. If he is unable—perhaps because of delays in planning—to start that development before March of next year, he will suddenly find that he is liable to tax, as I estimate, in the region of £38,000, which he will have no alternative but to pass on to the house purchaser. Again, assuming that that 10-acre site has a density of six houses per acre, one reaches a figure of approximately £650 extra cost to the individual house purchaser. Because of this threat, builders to-day are not prepared to commit themselves to purchase building land with outline planning consent, as they feel it to be a gamble to which they are not prepared to commit themselves.

I believe that the case for relief of tax in the case of builders is a very good one. It is simply that the principle of the levy was designed solely to fall on the landowner, and not on the builder. What the builders are asking is that temporary relief should be given to their land banks up to March, 1967. Any land bought after that date would automatically be liable to a levy on the landowner, as the Land Commission wishes. In a Written Answer on June 29 on this point, the noble Lord, Lord Kennet, said that the present provisions were designed by his Department to encourage builders to buy land now. It may be of interest to Lord Kennet to know that I have shown his reply to a number of builders. Without referring to the various Anglo-Saxon adjectives which they used about the noble Lord's Department, they were genuinely appalled by what they considered to be a thoroughly misleading and deceptive reply from his Department. What is the encouragement, they ask, offered by his Department to builders at present, except the threat of working to a deadline? I should very much appreciate it if the noble Lord, when he comes to reply, would explain to the House what this advantage is.

The second point I would draw to the noble Lord's attention is the question of compulsory purchase and compensation. I believe that at present there are two fundamental weaknesses in the law of compulsory purchase, both of which are causing hardship. The first occurs when a local authority announces its plans to develon an area, subject, of course, to the Minister's approval. Any owner within that development area immediately discovers that his property becomes very difficult to sell and is put under a cloud in terms of value. Should the owner wish to move out of the area, he finds it extremely difficult to sell the property. At that stage the local authorities will not commit themselves to purchase the property because the Minister's consent has not been given, and in many cases, particularly in Uxbridge, it takes years for a decision to be reached. I very much hope that the noble Lord will urge his Department to look again at this legislation with a view to remedying the hardship it is causing.

The second grievance arises where, under Section 12 of the Housing Act1957, local authorities serve a compulsory purchase order on property deemed unfit for habitation and not capable of repair at reasonable cost. It is quite possible for people to purchase such property for, say, £1,500, after consulting a solicitor, and to find within a few months that they receive a compulsory purchase order notice from the local authority. Then, to their horror, they find that the only compensation they receive is on the site value. Site values are often as low as £30 to £50. I know that there has already been a considerable outcry on this point, and last year there was a further concession given under the Housing (Slum Clearance Compensation) Act 1965. But the National Federation of Property Owners have studied this problem since that Act came into force, and they still find that there is a considerable amount of hardship being caused.

I should like to ask the noble Lord whether the Government would look at this compensation law again, and allow all owners to have the benefit of full market value when such a notice is served on their property. If those two weaknesses were corrected, I am sure that a great deal of unnecessary hardship could be prevented in the future.

7.52 p.m.

LORD GRIDLEY

My Lords, before I deal with the main parts of my speech, I want to say that I am terrified of the noble Lord, Lord Mitchison. I think that this is a pity. I like noble Lords opposite, but it seemed to me when the noble Lord spoke that I, in common with other noble Lords who sit on this side of the House, was considered by him as responsible for all the evils which face the building industry to-day. Personally, I refute this. I do not want to say who particularly is responsible. I look upon your Lordships' House as a constructive Chamber, the nation's forum, and although I believe in private enterprise and endeavour, I like to think of myself as believing in the humanity in endeavour, and I intend to be constructive.

With the greatest respect to the noble Lord, Lord Cohen of Brighton, who quoted the astronomical price of £2,000 for a plot of land as evidence of the Tory failure to deal with land values when they were in power, he must know that an example such as this of an isolated piece of land does not convey an accurate picture of the price of land everywhere. In fact, I could take him to a place where there is building land at £2,400 an acre, or £300 a plot, and any amount of further land is available at that figure. So much for that.

Other criticisms were made concerning the alleged failure of noble Lords on this side of the House when they were in power to deal with local authority housing, and it was said that a sufficient number of that class of house was not being built. But although there are a great number of people on the waiting lists for local authority housing, there are also large numbers of people who really have no right to be in occupation of local authority housing and who should be in occupation of private dwellings. Those are the main points which have arisen since the debate began.

It is customary to state one's interest when speaking in your Lordships' House and I am another one of those who arc directors of a building society. I am very proud to belong to this building society and to be among the people with whom I am associated. It seems to me that an important factor to-day which is increasing the burdens of those involved in the building industry—this is apart from the general economic situation, which it has been accepted by noble Lords on both sides of this House is an intense worry at this time—is the effect of the Land Commission Bill and the selective employment tax which create the maximum amount of uncertainty.

I want to speak first about the developers. There are many fine men in the industry, and in building houses they are filling a social need and carrying out a social service. As a general rule, they prefer to be left alone to get on with the job in hand without too much interference from Government legislation. Let me illustrate this from my experience. Before the advent of the present Government and the arrival of the present legislation, people in the development industry had always to contend with the Town and Country Planning Act and its effects. In 1964 I negotiated as agent the sale of land in Somerset to George Wimpey and Company, the national developers. Before they were prepared to make an offer for the land, on which there was outlined planning permission but no detailed planning permission, they carried out the most exhaustive investigations. This is an example of what every developer is faced with when acquiring land for a large-scale development. They carried out these investigations, because they wished to be certain that the development was right economically. I have no reason to believe that this is not general among people who work in a similar capacity.

They took samples of the soil over a wide area and made a statistical analysis of the population within a reasonable area of the site which was to be developed. Estimates had then to be prepared of the cost and type of house which it was proposed to build. This had to be dead right and in the right price range, so that the prospective purchasers could afford the type of house which it was proposed to build. When all of these criteria had been satisfied, that was not the end of the business. After being satisfied that the development was economically sound, the developers were then faced with the problem of submitting to the planning authorities an application for detailed planning permission. In the case to which I am referring—this was in 1964–65—the lapse of time between the submission of the detailed application and the approval of the planning authorities was six months. I will not weary your Lordships with too many further details on this subject. There were arguments with the planning authorities about the type of layout and the type of house of which they would approve, and arguments went backwards and forwards between the developers and the planning authorities concerned.

Another point which I should like to put to your Lordships (and, in this case, to the Government particularly) is that when anybody is submitting to a planning authority a detailed application for planning permission there is an invariable rule that the application must be with the planning officer at least one week before it is considered. If this is not so, then the application is put back four to five weeks before it is considered. It seems to me that there is an example here of a constructive suggestion which can be made to Her Majesty's Government: that the time has come to issue some directive, if you like, to local planning authorities that they should streamline their organisations; that their committees should sit more than once a month; or that perhaps there should be a delegation of authority to the planning officer, allowing him to approve some of the detailed plans which are submitted. I merely draw attention to this because, if this kind of delay occurs—it occurred in this case, and was general in other areas throughout the country—it automatically holds back the "starts" of housing, and if this position could be improved I think it would be a contribution towards that increase in the number of "starts" that we should all like to see.

My Lords, referring again to this particular type of development (because I think it is interesting) I may tell you that we were not finished with this when, in November, 1964, the bank rate was raised to 7 per cent. for the reasons which the Labour Government gave at the time. In the spring and summer of the following year, when we were about to get under way, there was a shortage of money in the building societies, and it was practically impossible to get any funds. As a direct result, phased development started. The plan was to develop 112 houses, but, because of the shortage of finance, it was impossible to start and to build straight through the 112 properties which were planned. They built 25 properties at a time, and they sold those 25 properties. Only when those 25 properties were completed and sold did they start the next 25.

I think it is erroneously believed in some quarters that owners of land, and even developers, are wicked speculators with no social conscience. This is simply not true of the majority, who, for the reasons I have given, face difficulties and considerable financial risk. I think the Land Commission, to which I referred just now, has created a certain amount of uncertainty for developers, who do not know quite how the Land Commission will operate so far as concerns the land held by them for future development. If a statement could be issued by the Ministry of Housing and Local Government on this point, it would help developers in this matter.

My Lords, may I say just one more thing about these people? There are some fine men in the development industry—and let me quote the case of one whom it is my privilege to know. This is a Mr. Daniel Sheffield, J.P., of Twickenham, who, without any prompting on the part of the Government, has built on his estate at Ling field houses for the occupation of old people. This means that, on the same estate, families can be together, and that young married couple, while still having their own separate residences, can look after mother and father in their old age. He is doing the same on the other estates he is developing. Mr. Sheffield is, I believe, a brother of Andrew Sheffield, whom we know and often see on television. I think it might be a good idea if other developers followed Mr. Sheffield's fine example.

Now with regard to building societies. They render a great service to the country, and attract finance from private savings which goes towards capital formation. They have reserves of capital, and it is essential in my view that this should be so. I believe that the Government is at present discussing matters with leaders of the building societies. I do not know what it is about, but one sincerely hopes that the building societies will be left alone to manage their own affairs. My Lords, I do not think that, on this matter, there is anything more that I can usefully add to what has been said by other noble Lords. I have given a practical example of things which, in my dealings with the development industry, happened to me in 1964 and 1965, and I will now leave it to other noble Lords to make their observations.

8.8 p.m.

LORD NEWTON

My Lords, a large number of the speakers in our debate this afternoon have emphasised the social importance of housing because of its direct relationship with human happiness. I should like to start off by saying how entirely I agree with those sentiments. As one would have expected in this House, the debate to-day has been extremely wide-ranging, and I would say that it has comprehended nearly all the aspects of housing, which the noble Lord, Lord Cohen of Brighton, said is really a single, indivisible whole. I would agree with that, too, but I do not think it is surprising that different speakers have dealt with different aspects.

Your Lordships have spoken with great knowledge, and many constructive ideas and suggestions have been thrown up. It seemed to me—and I think I have heard every speech—that every speech had its own particular interest. The right reverend Prelate the Bishop of Chester closed his observations by expressing the hope that, somehow or other, housing will be taken out of the sphere of Party politics. My Lords, I think that is too much to ask of politicians; but, at any rate, I believe it was only a matter of chance that the most enthusiastic political speech made so far in this debate was made by the noble Lord who followed the right reverend Prelate.

As this debate progressed, I felt myself wishing more and more that it was possible for me to withdraw from it, because it appeared to me that there would be nothing left for me to say—except, of course, uncomplimentary things about the Government; but there are plenty of opportunities for doing that. But I suppose a winding-up speaker is not permitted to withdraw from the debate, and so, as I cannot do that, I will be as brief as I can and, in the light of the speeches which we have heard, concentrate on what seem to me to be the salient features of the housing situation at the present time.

The first impression I got, after listening to the speech of the noble Lord, Lord Hilton of Upton, and from what I was able to take in of the information he gave us (though I was not able to take down all the figures) was that that information did not justify the optimism he showed about the Government's housing programme. I hope I am wrong; I hope I may realise I am wrong to-morrow when I read his speech and the figures he gave. I fancy that all of us who have taken part in this debate, or listened to it, were conscious that it has been overtaken by the Prime Minister's Budget statement of last Wednesday. What is going to happen now to the housing programme is, I suppose, anybody's guess—and I dare say that Mr. Crossman is guessing as hard as anybody.

But the underlying weaknesses of the housing situation remain; they are not the result of the Prime Minister's Budget. Anyway, we have the Prime Minister's Election pledge, to which my noble friend Lord Jellicoe referred in his speech: that no development or circumstance, however adverse, will be allowed to deflect the Government from achieving their target. Those are sentiments that we can all applaud, wherever we sit in this House. But, as my noble friends Lord Hawke and Lord Jellicoe pointed out, unhappily—or happily, according to which way you look at it—houses are not built by Governments; and I would add that they are not sold by Governments, either. What depresses me is the downward trend which began with the disappointing total of houses completed in 1965. I think it was disappointing although the noble Lord, Lord Mitchison, did not.

LORD MITCHISON

It was a record.

LORD NEWTON

It was a record, but it ought to have been a better record, considering the number of houses under construction—434,000, I think—in the autumn of 1954. That is really the point.

LORD MITCHISON

Both figures were records.

LORD NEWTON

I do not think the noble Lord and I will agree about this. But I do not think that is an unfair comment I have made on one portion of his speech. It seems to me also that this downward trend is still apparent in the results so far this year: fewer completions and fewer starts than in the same period last year. But both completions and starts, it seems to me, ought to have been better this year if there is to be a steady approach to the target of 500,000 by 1970.

In this connection, it is significant to me that the National Federation of Building Trades Employers recently reported that half of the 700 building firms of whom it made inquiry about the state of trade said in their replies that they anticipate that they will both complete and start fewer houses this year than last. It was only the very large firms who said they expect to do better this year. Of course, this inquiry was made before the last Budget, the Prime Minister's Budget of last week, although it was made after the Chancellor of the Exchequer's last Budget, in April.

The firms were asked by the National Federation what they considered to be the deterrents at the present time to house building. High in the list of answers was the belief that there is deliberate Government discrimination against private house building, with consequent discouragement of home ownership. I hasten to say straight away that I myself decline to consider that that belief was justified. I do not think the Government have been consciously discriminating against private house building. On the other hand, I think the Government have only themselves to blame for 'the existence of this misbelief—and I will come back to that point a little later.

I think it was a psychological error on the part of the Government to announce that the private sector would be limited to half the planned 500,000 houses. By all means let the Government say that they want many more local authority houses to be built for letting. I think the Government have been quite right to take steps to try to stimulate local authority building of more council houses. But it seems tome that if you set a ceiling on private enterprise building, then you must expect that output will start falling off. You must expect that capitalists—and builders are capitalists—will be more cautious in their plans. What the Government should have done, in my view, was to say that they will take all steps they can to secure that more council houses are built; and leave it at that. Had they done so, they could have waited to see how these sectors advanced; and if the private sector started building too many houses, then something could have been done to rectify it. I am sure that that would have been more beneficial.

I have always believed that one of the reasons why Mr. Macmillan was so successful a Minister of Housing is that he said to everybody: "The sooner you complete what you are building now, the sooner you will be able to start building more." In 1964, house building in this country was booming; the pressure of effective demand for home ownership was insatiable, and in the local authority sector the only factor limiting the output of council houses was the availability of loan sanction. But that trend has been reversed since 1964; and the change began with the change of Government at the end of 1964. I think it would be straining charity too much to attribute that change to coincidence. The noble Lord, Lord Mitchison, took noble Lords on this side of the House to task for not speaking enough about the public sector. He also seemed to be attacking those of my noble friends who had spoken for indicating that they thought the Government wrong to stimulate building in the local authority sector. But I do not think that any noble Lord did take that line.

I am now going to say something about the local authority sector, because it seems to me that the most worrying factor in the housing situation to-day is precisely what is going on in the local authority sector. The Minister, Mr. Crossman, said in the other place last Tuesday: …the public sector is doing well and this year will increase on last year and will increase on this year's target."—[OFFICIAL REPORT, Commons, Vol. 732 (No. 57), col. 356; 19/7/66.] I presume that he was talking about completions, but what about starts in the local authority sector'? The Minister said in another place on May 19 that in the first four months of this year starts were down by 4,000 on 1965, and if I under-stood the noble Lord, Lord Hilton of Upton, aright, he said this afternoon that local authority starts were down another 1,800 in May of this year.

My Lords, I find this situation completely baffling, bearing in mind that for nearly two years now, the Government have been at pains to give the go-ahead and to show the green light to local housing authorities. I cannot form any idea about what has gone wrong. There can be only two possible answers, in my opinion. One is that for some reason or other the local authorities are reluctant to build. Whether that reason is that they are waiting to know details of the housing subsidies, or whether they do not want to build in the present economic climate, I do not know. The only other explanation seems to me to be that the Government have not been generous enough in granting loan sanctions or that they have been taking too long to getting around to doing so. I suppose it is pos- sible that for some time now, perhaps for too long, local authorities have been cogitating on introducing industrialised instead of traditional building methods. I hope that the Parliamentary Secretary will be able to tell us what has been going on this year in the public sector, and what are his expectations about starts in the public sector for the next few months of this year.

As a number of speakers have pointed out, the trend is disappointing, too, in the private sector, In the first quarter of 1964 about 47,000 houses where produced for home ownership. In the first quarter of 1965 the figure rose to 50,500. In the first quarter of this year it has, I think, fallen to 46,000. The noble Lord, Lord Hilton of Upton, gave some later figures about completions in the private sector, and the impression which I received from those figures was that the position was no more encouraging than during the first three months of this year, but I may be wrong. Obviously there are a variety of reasons for this down-turn and a number of them have been given to us this afternoon. But in the aggregate it seems to me that it comes down to a willingness on the part of the buyer to buy and a willingness by the builder to build. From such inquiries as I have been able to make, it seems that the desire to be an owner-occupier is just as strong as ever it was, and perhaps more so. But it may be that the effective demand for owner-occupation is falling off.

We know that house prices have been rising rapidly—I think 10 per cent. last year, was it not? Mortgage rates are immensely high, and potential purchasers are still waiting for the Government to carry out their promise to do something about subsidising mortgage rates. There are conflicting views, and conflicting views have been expressed, about the availability of mortgages for new houses; but I do not think there is any doubt that there is a shortage of bridging finance and it is at present extremely difficult to get a mortgage for the purpose of buying an old house. Rates have risen substantially in the last two years, as we all know, and so it may be—I am only guessing—that the monthly outgoings of owner-occupiers are now such that people who would have contemplated owner-occupation a few years ago no longer do so. It may be that potential buyers are deterred by the fear that they may make a loss on resale. At any rate, I think it can only be a matter for concern that at the end of May applications for house purchases were fewer than they were three months earlier, despite the fact that summer is usually the time of the year when house sales reach their peak.

The builders and the organisations which represent them give a number of reasons for the short-fall, and among those reasons are the cost and shortage of land and labour. I suspect that these are merely symptoms of a deeper malaise because for a number of years now the cost and shortage of land and labour have, relatively speaking, been great. I think that this deeper malaise is a lack of confidence in the industry. A number of my noble friends have spoken about this, and a number of noble Lords opposite have pooh-poohed it. But this is not just an invention of the wicked Tories, trying to make debating points. You have only to ask the builders and the organisations representing them. This is what we are saying, and have said: that there is a lack of confidence. It is no good the Government complaining about it. After all, it is the Government who create confidence, or alack of it, and it is up to them to do something.

As we all know, the majority of houses are built by small firms employing few men. These builders are capitalists. They take risks in the hope of making a reasonable profit and they will not take a risk if they do not think they will make a reasonable profit. They cannot afford to hold on for too long to building land, and because they have to borrow money in order to build at all they look for quick sales. At the same time they know that credit is tight for them and for potential house purchasers, and, like the potential house purchasers, they are still waiting for the Government to redeem their promise which is now nearly two years old, to do something about mortgage rates. I think there is one thing which has been more depressive in its effect on the housing problem than any other, and that is the long wait for something to be done about mortgage rates by the Government. As we have heard from other speakers, builders are frightened of the proposed Land Commission. This was explained by my noble friend Lord Knoll. They are also affronted by the payroll tax, and I am afraid that many of them believe that no Labour Government is really on the side of the small capitalist. I imagine that that is really the reason for the existence of the mistaken belief, to which I referred earlier, that the Government have been discriminating against private house builders.

My Lords, as I said at the beginning of my speech, a great many constructive suggestions have been made in this debate, and at this time of night I do not propose to rehearse them all over again. But I would emphasise that a number of noble Lords, including the noble Lord, Lord Cohen of Brighton, have in one way or another, made the point that the time has come when economic council rents should be paid by those who can afford to pay them. I would also mention that a number of noble Lords, particularly my noble friend Lord Jellicoe and my noble friend Lord Gage, think that the Government ought to give some form of encouragement to housing societies and housing associations. As I listened to the various suggestions that emanated from both sides, I tried to think of other helpful ones I could make. I am afraid I was unable to think of any which, by my reckoning, would be acceptable to the Government.

I must say, in conclusion, that the future does not look to me particularly rosy. Housing seems to have escaped unscathed from the Prime Minister's Budget; but are the local authorities going to get the loan sanctions which they will need if they are going to build the houses the Government want them to build? And are potential buyers of their own houses going to get the money they will need in order to buy? With great respect to the noble Lord, Lord Hilton of Upton, it is no good his saying that in the view of the Government housing is of paramount importance and that it still has top priority, unless the answers to both those questions are firmly in the affirmative. I am afraid that if they are not, then Mr. Crossman is going to lose the reputation which he has himself put at stake.