HL Deb 07 December 1967 vol 287 cc839-52

6.9 p.m.

THE EARL OF KINNOULL rose to ask Her Majesty's Government when they propose to implement Section 11 of the Rent Act 1965 in regard to converting existing controlled tenancies into regulated tenancies. The noble Earl said: My Lords, it is with some relief that I come to-night to this Unstarred Question on controlled tenancies, as, for various reasons, it has been like a yo-yo: on and off the Order Paper no fewer than three times. The reason for my putting the Question will, I am sure, be clear to the noble Lord, Lord Kennet, and his Department. It is because there is now a general feeling of alarm and suspicion among those connected with controlled tenancies—it is not only among the landlords, but even among the professional bodies and the rent officer service—that the Government, and the Minister, in particular, have decided to abandon the use of their powers under Section 11 of the 1965 Rent Act to convert controlled tenancies into the regulated-tenancy system.

If this is so—and I hope the noble Lord, Lord Kennet, will be able to-night to assure us that it is not—the Minister will be greatly dishonouring the pledge given by his predecessor, Mr. Crossman, at the time of the passing of the 1965 Rent Act. Perhaps I may remind the noble Lord that the pledge was that as soon as the main bulk of the rent officers' work dealing with regulated tenancies was out of the way, stage II of their work, dealing with the controlled tenancies, would be undertaken. It is my submission to-night that stage II, so far as the rent officers are concerned, was reached in a number of areas throughout Britain some months ago when their work-load started to diminish. It is also my submission that the noble Lord's Ministry had full knowledge of this situation over six months ago and that since that time they have consistently stonewalled as to when stage II would be started.

My Lords, the problem of controlled tenancies has, of course, been with us ever since the 1914–18 war; but, whereas under war-time conditions, the system served a useful purpose, to-day, in my opinion, there is not a single argument that can commend it. It causes financial hardship to the landlords, it causes social hardship to the tenant; and, to the country, it is directly responsible for an annual loss of our housing resources, and to a situation amounting to no less than national negligence. I believe that few people to-day realise just how big a problem controlled tenancies constitute in relation to the overall picture of our national housing stock. Controlled tenancies, in fact, represent, unless I have my figures wrong, no less than 12 per cent. of our entire housing stock—approximately 2 million dwellings, including those in Scotland, out of a total of 17½ millions. One hears that this figure is diminishing, due to natural processes, at the rate of 8 per cent. a year, but, even so, it is still a very large figure.

When one examines what type of landlord owns these controlled properties, what type of tenant lives in them, and what are the conditions of the properties, some pretty striking facts emerge. Perhaps here I may say that I am taking my information from a survey published by the Fair Rents Association last March, much of which was taken from various Ministry publications. I am aware that a copy of this was lodged with the noble Lord's Ministry.

Taking the landlords first, one finds that they are not the insensitive property company that might be expected but are, in fact, 400,000 small, individual landlords, owning perhaps one or two houses each. On top of this, about 70 per cent. of these small landlords are themselves old-age pensioners, widows or orphans—the very section of the community that rely on income from their property investments to live on. The average rent that they receive from their property throughout the country is approximately 17s. per week. In Scotland it is less than 5s. a week. Theoretically, out of this money comes the cost of repair, management and insurance, before any income can be paid to the landlord. The practical result of this is that virtually no repair is done. Repair is shelved and the property slips away year after year into a state of deterioration, and eventually into slum condition. Looking at comparable rents of comparable-sized properties outside the controlled tenancies, one finds that the rentals are on average three times those of the controlled tenancies; and this includes council house rents.

Looking at the tenants of controlled tenancies, one finds that, very broadly, they fall into two categories: first, old-age pensioners. They represent perhaps 70 per cent. of the controlled tenants, and obviously they need protection; and, of course, here the Government can easily help with a form of rent rebate. In the second category, approximately 30 per cent., you have younger people who can well afford to pay an economic rent and who could well afford at least to keep their properties in order. As to the properties themselves, it would be fair to say that most have seen the better side of 50 years. Many are slipping rapidly into slums. If the majority of these are to be saved, then I submit that immediate action by the Government must be taken under their powers in Section 11. Few of the properties are, in fact, modernised—and for one good practical reason. The tenant of a controlled property, in order to avoid paying an additional 12½ per cent. interest on the cost, is quite entitled under present law to refuse to agree to any improvement to his house. I hope that the Government may look into this point. It is a situation that can hardly encourage landlords to modernise their property.

My Lords, controlled properties offer to the national housing stock, as I see it, two bonuses if action is taken now. First, if the properties are caught before they slide into slums they can be improved and modernised at roughly one-third of the cost of building a new dwelling. Such improvements to controlled properties must offer a great saving and better utilisation of the country's existing housing resources. Secondly, the tenant of controlled properties—in many cases a widow or widower—is living alone and using perhaps only one-quarter of the house. If suitable alternative arrangements could be made for such people, controlled properties could play an important role in the fight against the national housing shortage.

As I mentioned earlier, among those who are worried about the situation are the rent officers. It has been my privilege in my professional life to come into contact with rent officers and I can truly say that, whether one agreed or disagreed with their decision as to a fair rent, they are a body of men who have earned the respect of all who deal with them. I think I am right in saying that 99 per cent. of them have a background of property experience and for many of them it was a choice of sacrificing lucrative careers in private practice to take up a far less lucrative career—but, I hope, a more rewarding one—in community service. By January, 1966, about 350 rent officers had been appointed, and in every letter of appointment the following paragraph appeared: Stage I will deal with previously decontrolled rents which are brought into regulation by the Act, and Stage II with the rents of properties which were subject to control under the earlier Rent Acts before the Act of 1965 came into force. This is the important stage. Stage I will throw up a relatively large volume of work initially which will then tail off to a steady and lower level. As this point is reached, the Minister will bring Stage II into operation. This will enable the present controlled rents to be reviewed by the new regulation system and fair rents to be fixed. It is expected that there will be another up-surge of work falling upon the rent officer service when this stage commences.

By early this year it became clear that the volume of work under Stage I had never reached, and was never likely to reach, the proportions expected. As the year progressed, it became clear in the minds of many of the rent officers—particularly in the regions—that Stage II could now be tackled; but by late summer of this year, as I understand it, the rent officers learned that, instead of Stage II being brought into force in the areas where their work had diminished, there were whispers from Whitehall of plans for redundancy and redeployment. It is perhaps not surprising that each rent officer likely to be affected turned to his original letter of appointment with a feeling of growing indignation. I believe, my Lords, that every rent officer is entitled to feel aggrieved, and the question I should like to ask the noble Lord, Lord Kennet, is this. Why is it that controlled tenancies could not be started now in areas where rent officers have the time and capacity to tackle them? Also, how many redundancies or redeployments of staff are planned? Further, I should like to ask him whether the rent assessment panels are also being included in the plans for rationalisation?

My Lords, during the last six months the Ministry have of course, been pressed by many individual landlords about their plans for controlled tenancies and, so far as I know, the replies have all been exactly the same. On every occasion the Ministry have, of course, been pressed an explanation for the delay. The first reason was that the Ministry needed more experience of the Rent Act before dealing with controlled tenancies. Not surprisingly, the reaction to this answer has been somewhat hostile. What is the special experience that the Ministry feel they require, and what are the repercussions they fear will result? Perhaps the noble Lord can explain this later.

The second official reason that has been given is that hardship would be suffered by both sides. This again has not appeared a very convincing reason to anyone, since during the discussions on the 1965 Act, as the noble Lord, Lord Mitchison, knew so well, the question of hardships was considered most carefully. Under Section 11(6) of that Act a limit was imposed on the rental increase in any one year, the maximum being fixed at 15 per cent. This provision was brought in by the Government. Are they now saying that these safeguards were not enough?

As I said at the beginning of my speech, controlled tenancies represent over 12 per cent. of our national housing stock and their future must be recognised and accepted by the Government as a national problem. The Milner Holland Report said it, and the Report Our Older Homes also said it. There are many alternatives which, in my opinion, are open to the Government to achieve a combination for safeguarding the future of the property while safeguarding the older tenants against hardship; the least of which, of course, is the introduction of some form of rents rebate scheme.

But whatever are the alternatives, there is clear proof now, in my humble opinion, that the problem of controlled tenancies can and should be tackled. I very much hope that the noble Lord, Lord Kennet, will be in a position tonight to announce the start of a scheme for dealing with controlled tenancies, even if it is only a pilot scheme. There is, my Lords, as I have said before, a feeling among many people that the Government pledge in this matter is about to be finally broken; and although I must admit that this would not cause a precedent with the present Administration, there are a few—disillusioned, perhaps, old-fashioned perhaps—people still left in this country who believe in a Government pledge as something which should be honestly upheld.

6.24 p.m.


My Lords, I remember Section 11 quite well during the Committee stage on the Bill. And I have been looking at it again. The noble Earl, Lord Kinnoull, pressed eagerly for a timetable on this section—that is to say, he wanted the Government to commit themselves to a time at which they would begin to operate the change from controlled tenancies to the regulated tenancies which perhaps constituted the major change in the Bill. He was refused, and I think there was not the least doubt that he was rightly refused. The noble Lord, Lord Hastings, who was then speaking from the Front Bench opposite on this matter, agreed that a timetable was quite impossible. My Lords, I should doubt whether it is any more possible now, though I am not going into that this evening. But I want to make one or two things clear.

It is quite untrue to say that rent control in its former form, before the 1965 Act introduced regulated tenancies, is at all recent. It is not simply a case of something that has gone on for a few years. It has been in operation since 1915, and it was continued between the wars, under Tory Governments as well as under Labour Governments.


My Lords, that is what I told the noble Lord if he was listening.


My Lords, perhaps I did not hear the noble Lord properly. I thought he was attributing a recent existence to it. If I did not understand him I certainly apologise, because I should not have thought that he and I could differ about this.

The point about it is that rent control in that form was thought to be necessary by everybody, and there is not the least doubt that from time to time during all that period landlords of controlled properties, with the support of the Tory Party, were claiming that the control should be diminished in some form or other or that, ultimately, provision should be made to do away with it altogether. Just the same thing is being said now, and I am going to leave it of course to my noble friend Lord Kennet to explain what is the Ministry's attitude about it. We can all have some inkling of what their attitude is, because it has been raised in another place more than once; and most recently, I think (I am not quite sure whether I have the most recent reference) towards the end of July of this year.

What the Minister said, in effect (I am not going to quote in detail), was that we must see rather more of how the new system—that is to say the system of regulation—is working. I should have thought that was pre-eminently the kind of question which must be left to the Minister, and that one would have to be very bold indeed to say that the system was all working so perfectly, to the satisfaction of all parties concerned, that the time had now come when it was imperative to make the change. Indeed, I did not understand the noble Earl, Lord Kinnoull, to suggest that. Therefore all I have risen to say is that it was made perfectly clear, when this section was under discussion in Committee in your Lordships' House two years ago now, that no time table could be given for its operation and that it would depend on getting the system of regulation into full operation to the complete satisfaction of the Minister. That is, of course, a gradual process. I suggest that it is for him to decide at what point it has been reached, and I repeat, just as the rent control itself is no new invention, so the demand for higher rents for controlled properties is also no new demand.

6.28 p.m.


My Lords, I am grateful to the, noble Earl, Lord Kinnoull, for putting down his Question, and I shall try to answer to as much of what he said to his satisfaction as I can—and to answer the rest. I am grateful also to my noble friend Lord Mitchison for remembering the discussion in this House during the Committee stage of the Bill whose operation we are now reviewing, and I shall revert to that later.


My Lords, I ought perhaps, if my noble friend will allow me, to take the opportunity of doing what I omitted to do before—to thank the noble Earl, Lord Kinnoull, for telling me that he was going to raise the point, which caused me to go and look it up. The noble Earl is always a most courteous person and that was a piece of courtesy for which I was grateful.


My Lords, part of the objections of the noble Earl to what is happening were based on the well-known fact that if you hold rents down, it is difficult to get repairs done. I shall have something to say about that later, but I should like to say in advance that the operation of this Act has not been uniformly to hold down rents. Quite a large number of persons have applied—landlords as well as tenants can apply—and there have been a large number of applications which have resulted in a rise in rent where that has been held to be fair; and we in the Ministry have pretty firm evidence from the presidents of rent assessment panels that this fact has given rise to an increased level of repairs. Where you get a rent increase it works out in detail on the ground—and I do not needs to tell the noble Earl how it works—and to that extent this Bill has already had the effect of improving the maintenance of older housing stock.

I should like to remind the House of some of the things which the Bill does, and on which the noble Earl did not touch. It establishes security of tenure for the vast majority of tenants of unfurnished accommodation and confers upon regulated tenants security of tenure similar to that hitherto enjoyed by controlled tenants. Only a court can order a tenant to leave, and with tenants under regulated tenancies, as with those under controlled tenancies, a court can do this only on the strict conditions laid down by the earlier Rent Acts. Thus, for example, possession may be sought by the landlord if the tenant has failed to pay the rent, or has made himself a nuisance to the neighbours. Even so, the court cannot order the tenant to leave unless they are satisfied that it is reasonable to do so. This is an added safeguard, and it is clear that the Act is having the effect in this field that Parliament desired when they passed it.

The 1965 Act also extended jurisdiction of the furnished houses rent tribunals so that they can fix reasonable rents for furnished dwellings with rateable values up to £400 in London and £200 elsewhere, and can give tenants security for up to six months at a time instead of three months. This, too, is a gain on the side of the security of tenants.

To come to the heart of the matter, the Act came into effect at the beginning of 1966. The provisions establishing the rent registration service were brought into force area by area, and the service was functioning throughout the whole country only by the end of June of last year. The rent officer service, which I think the noble Earl slightly underestimated, is operated by 323 officers in 157 areas.

At this point, I should like to give the House the latest news about the actual effect of registration of fair rents. I think that the most interesting figures I can give are those valid up to the end of September of this year about the way rent is likely to go up and down according to the rateable value of the property occupied. I want to lay some emphasis on this because the shape of these adjustments is not generally appreciated in the country and possibly in your Lordships' House. I have caused to be prepared a rather formidable table which gives all the details. I think that it is interesting enough to entitle me to ask leave of the House to circulate it in the OFFICIAL REPORT. Let me say in advance that noble Lords who consult it to-morrow in Hansard will find that there are certain blanks. These blanks are because the number of tenancies of the rateable value concerned were statistically insignificant. The pattern will emerge clearly to anyone who knows the business.

I do not wish to confuse the House, but I should like to take one or two examples to show what has been happening. If we take the rateable value band between £25 and £50, we find that there has been for houses an average rent decrease of 17 per cent., for flats an average rent decrease of 21 per cent., and for rooms an average rent decrease of 37 per cent. Let me take the next band from between £50 and £75 rateable value. For houses there has been a decrease of 2 per cent., for flats 12 per cent., and for rooms 29 per cent.

I jump now to the rateable value band between £100 and £125, and here the figures show for houses an average rent increase of 26 per cent., for flats an increase of 3 per cent., and for rooms a decrease of 12 per cent. As we go higher, so we find increases. The point I want to get across to the House, which is one of great social importance, is that people living in poor quality property with a low rateable value who apply for registration of a fair rent are likely to get a decrease. On the other hand, people living in good property with a higher rateable value who apply for registration of a fair rent are likely to get rent increases at the end of the day. I do not believe that this is known to the country. I believe that the word has got about that tenants who go to the rent officer and then appeal against his determination through the assessment machinery are likely to get increases. This is only true if they live in good property. As we know, it is difficult to get Government information to the kind of people who live in poor property.

The Government are satisfied in general with the way in which the machinery set up by the Act is working, but naturally enough with a completely new organisation we have found in the light of experience that there is room for improvement, especially under the present system, the noble Earl's Stage 1. My right honourable friend is not convinced that the time is yet ripe for a considerable enlargement of the field of rent legislation which would result from taking into it the tenancies at present subject to rent control.

We have to remember that a gradual expansion in rent legislation is probably resulting from decontrol by the ending of controlled tenancies—the so-called creeping decontrol introduced by the 1957 Rent Act—by the re-letting of houses on the death or departure of a controlled tenant. The noble Earl said he thought that 8 per cent. a year might have become decontrolled by this means. My information is that it may be nearly 10 per cent. But there is not a great difference between us. There will be a further decrease in control with the passing into law of the Leasehold Reform Act, which converts into regulated tenancies long tenancies at rack rents. For these reasons, as well as for the newness of the whole scheme, my right honourable friend feels that it would be premature to go beyond this at the moment.

Another reason, perhaps the main reason—and this should be understood in all sections of the House—is that when we have a large new structure operating a completely new system like this, 18 months (it is rather less than 18 months since it completely covered the country) is not a long time to allow to carry out Stage 1. When the Bill was going through the House, the noble Earl asked for a term on Stage 1 of three years. The House was not willing to grant him a term at all, and he did not suggest 18 months, but three years. Yet of some 750,000 tenancies concerned, less than 60,000 have been referred to rent officers at the moment.


My Lords, the reply I received at that stage was, as Mr. Crossman said in another place, that Stage 2 would come into operation as soon as the bulk of the work of Stage I was out of the way. So I am satisfied with that.


My Lords, I think that what we are differing about is whether the bulk is or is not yet out of the way. It is for this reason that we are now engaged in mounting more publicity measures to get the operation of the Act known, and, above all, to get known the fact that the lower the rateable value the more likely people are to get a rent reduction.

Although there has been a suggestion that the functioning of the service is too complex for ordinary people to understand, our impression, sitting at the centre of the old Whitehall web, is that this is not really what is at stake, but it is the mere existence of the service which is not yet known. So we are looking into various new means—television "fillers", possibly a poster campaign in the right place, where there are low rateable values—in order to spread knowledge of the sheer existence of the service at all; and we are getting out another leaflet shortly.

There is another improvement that we should like to introduce into the service, and that is the provision of a surveyors' aid scheme for people of limited means appearing before rent assessment committees. I understand that the chartered bodies think that they themselves may be able to launch a pilot scheme quite soon now. I am most grateful to them for the work they have been doing on this matter, and look forward to the successful operation of this beneficent idea.

The Government are not unmindful of the fact that rent control does affect property as well as people. The House will remember that the sample survey carried out earlier this year of the condition of houses in England and Wales disclosed that a disquieting high proportion—more than a quarter—were in a condition which varied from less than satisfactory to just better than unfit. That is a very high figure. We are conscious that new building is only one way of increasing and bettering the national housing stock, and that the improvement of older dwellings and the prevention of further decay is another most important way of achieving the same end.

It was for that reason that the Government undertook a general and comprehensive review of the problems and legislation affecting older houses, and in this are bearing in mind the difficulties of landlords, as well as those of tenants. This review, I am glad to say, is making good progress. My former right honourable friend Mr. Crossman invited me to gather an informal study conference on this whole field, and this I did at Cambridge in June of this year. This conference was attended by some 50 experts from the universities, the professions, local authorities, the building industry and the Government Departments concerned, and reviewed the progress achieved in this field and discussed possible changes. Further legislative proposals treating comprehensively the problems of our older houses and their environment will be produced in due course.

My Lords, on a point of Order, I am informed that I cannot circulate tables in the OFFICIAL REPORT, but I can put them in the Library. This I will do, and I hope that noble Lords who are interested will study them.


My Lords, before my noble friend sits down, may I express the hope that the rift in the lute is not too serious, and that his former friend still remains his friend?


My Lords, what I should like to know from the noble Lord before he sits down (perhaps he has not come to the end of his speech) is this. He has not dealt with the question asked by my noble friend Lord Kinnoull about the future of the rent officers and the rent assessment committees. If there is some rumour that they are not going to be required in such numbers, or that they are going to be reorganised, this is not likely to be healthy for the service. I should have thought that this was an excellent opportunity for the noble Lord to deal with this point.


My Lords, to answer the first point, raised by my noble friend Lord Mitchison, my right honourable friend remains my right honourable friend. What he does not remain is Minister of Housing and Local Government. That is all. It was he who started this idea, and I did it during the term of office of my right honourable friend Mr. Greenwood. There is no rift in the lute.

On the question of the future of the rent officers service, I have little to add to what has been said on more than one occasion recently in another place. There is a review of the rent officers service to see what reshaping and economies may be needed to adapt it with the current and expected workload from tenancies already regulated. This load is uneven. In London and some provincial areas, it will be obvious to all noble Lords, the load is heavy; elsewhere it is lighter. This varying geographical distribution and the ignorance of the existence of the service, of which I am convinced, are two of the main reasons for the review of the service. There is no review of the assessment panel structure, as such, but there is a review of the panel staffs which corresponds to the review of the rent officers.

House adjourned at a quarter before seven o'clock.