Lords Sitting of 20 March 1967

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Lichfield

MALTA: VISIT OF JOINT MISSION
LORD OGMORE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government when the names of the Joint Mission to Malta are expected to be announced; and, in view of the urgency of this matter, when it is expected that the Joint Mission will commence its duties in Malta.]
THE PARLIAMENTARY UNDER SECRETARY OF STATE FOR COMMONWEALTH AFFAIRS (LORD BESWICK): My Lords, our High Commissioner has had further discussions with the Prime Minister of Malta about the Joint Mission, which we are anxious should be set up as soon as possible. My right honourable friend the Commonwealth Secretary hopes to make an early announcement.
LORD OGMORE: My Lords, may I ask the noble Lord whether when his right honourable friend makes the announcement he will make a similar announcement in this House?
LORD BESWICK: My Lords, I should certainly hope to do that.

ADEN: SAFETY OF U.N. MISSION
2.37 p.m.
BARONESS EMMET OF AMBERLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government—
(1) Whether the Federal Government or Her Majesty's Government
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will be held responsible for the safety of the United Nations delegation in Aden; and
(2) Whether the United Nations have been warned of the risks attached to the visit and have been asked to use such influence as they may possess with the instigators of terrorist activities.]
LORD BESWICK: My Lords, in Aden State internal security is the responsibility of Her Majesty's Government who will therefore be responsible for the safety of the U.N. Mission. In the Protectorate of South Arabia, the Federal Government and the Governments of individual States will have this responsibility. I am sure that the U.N. Mission is well aware from the declarations issued by FLOSY of the risks which attend its visit. As the Mission's main task will be to bring together all parties in South Arabia its members will doubtless seek to use their influence with instigators of terrorist activities in an attempt to abolish the use of violence in Aden.
BARONESS EMMET OF AMBERLEY: My Lords, I am sure that the Minister is as anxious as we all are, but he will well remember the tragic fate which overtook Count Bernadotte in the Middle East when he went out there as a United Nations emissary. I wonder whether it would not have been better to start negotiations for a United Nations Peace Corps to go in as we vacate Aden, rather than to have this Mission, which will only add to the risk, and does not look like being very successful.
LORD BESWICK: My Lords, as the noble Baroness will understand, before we vacate Aden, as she puts it, we want to have an alternative political set-up there. It is in order to study the problems involved in getting a stable Government that the United Nations Mission is going to Aden.
LORD ALPORT: My Lords, are the Government satisfied that the present distribution of responsibilities for security among the various authorities in the Arabian Federation is most effective in containing the terrorists' activities? Is it not time that this matter was reviewed?
LORD BESWICK: My Lords, this is a matter that has been under review ever since I have had anything to do with it,

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over the last two years. In Aden State itself, the old Aden Colony, there is no difficulty about deciding who is in charge there: it is Her Majesty's Government, and Her Majesty's Government's forces. In the Federation, the matter is a little more complicated, but I believe that in the circumstances, although the situation is changing, and will continue to change from now until Independence, it is the best possible arrangement that can be made.
LORD OAKSHOTT: My Lords, the noble Lord spoke a moment ago of the necessity for seeing that there is a stable Government to whom we could hand over in Aden. Are Her Majesty's Government satisfied that the lessons of, for example, Palestine and the Congo have been learned, and that when we leave Aden we shall not leave a vacuum behind us and hand over something with the risk of the same sort of bloodshed and disorder as occurred in the other areas?
LORD BESWICK: My Lords, with respect to the noble Lord, I think the situation here is rather different from that in Palestine; but I agree with him that there is a necessity for us to do our utmost to ensure that there is no vacuum; and that is the objective of Her Majesty' Government.

THE CASE OF MR. LESLIE PARKES
2.41 p.m.
VISCOUNT DILHORNE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government, when the statements promised on the February 22 in relation to the case of Mr. Leslie Parkes will be made.]
THE MINISTER WITHOUT PORTFOLIO (LORD SHACKLETON): My Lords, I understand that consideration is being given by my right honourable friend the Attorney General to the possible institution of proceedings for perjury in this case arising from evidence give by Mr. Parkes before the magistrates at Fenton on July 7, 1966, and that inquiries in relation to this matter are continuing. In these circumstances, I am unable to
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say at this stage when it would be appropriate to make a statement.
VISCOUNT DILHORNE: My Lords, can the noble Lord say when the Attorney General is likely to reach a decision on whether or not to prosecute? If he decides not to do so, will the noble Lord give an undertaking that these statements will be made at the earliest possible date thereafter? And, if there be a decision to prosecute, can the noble Lord give any indication of the length of time that is likely to elapse before the promised statements are made?
LORD SHACKLETON: My Lords, I do not know that it is up to me to speculate on what the Attorney General's decision will be in this matter, and I do not think I should say anything to indicate more than I have done: that inquiries are taking place and there is a possibility of the institution of proceedings. As to how long these inquiries will take, I should not think they will take very long. But I do not know that the matter of the length of the making of the inquiries is material to the question of a date when the statement will be made. My right honourable friend had more or less completed his inquiries, and was hoping to make a statement shortly. For reasons which I think are apparent it would be undesirable for him to do so now, and I do not think I should speculate as to the outcome of any proceedings which may follow. But I fully take the noble and learned Viscount's point, and I will certainly convey his views to my right honourable friend, who is himself anxious to make a statement at the earliest possible moment.
VISCOUNT DILHORNE: My Lords, the noble Lord will realise that I was not asking him to speculate about the Attorney General's decision. But would he agree that it would be quite wrong to make the possibility of a prosecution the pretext for delaying making a statement about matters which could not possibly prejudice the trial of Mr. Parkes on any charge? Could he explain why it is apparently thought that a statement with regard to the legality of arresting persons for desertion and absence without leave in this country under Section 74 of the Army Act, without bringing them before the magistrates, and a statement as to

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the validity of Rule of Procedure 12, could possibly be thought to prejudice the trial of Mr. Parkes on any charge?
LORD SHACKLETON: My Lords, I will try to deal with the noble and learned Viscount's point, intended, I am sure, with the desire not to prejudice any future proceedings. The power to arrest a person under Section 74 depends upon that person's being subject to military law; and whether Mr. Parkes was at the relevant time subject to military law is a matter to be decided by the court if criminal proceedings are subsequently taken against him. Therefore it would be improper, and certainly very difficult, to make any comment on Mr. Parke's arrest; and it would be difficult, I think, to comment on the general validity or the appropriateness of using Section 74.
On the other point, concerning the Rule of Procedure No. 12 and the extent to whether it is ultra vires, of course the vires depend on the section; and I fully accept that. But I think it would be easier for the Secretary of State to make a comprehensive statement, and I must make clear that he is himself under some handicap in that he would have wished to make a comprehensive statement but finds it very difficult to do so without impinging on matters with which it would be inappropriate to deal at this moment. But I assure the noble and learned Viscount that I should certainly regard it as undesirable, and indeed my right honourable friend would not wish, to delay making a statement or to use the possibility of legal proceedings as an excuse for not making a statement.
VISCOUNT DILHORNE: My Lords, as apparently it is bound to be some time before the matter of arresting persons under Section 74 in this country is pronounced upon by Her Majesty's Government, will the noble Lord at least give an undertaking that until those statements are made no other persons in this country will be arrested for desertion or absence without leave under Section 74, or that they will, if arrested, be brought before magistrates?
LORD SHACKLETON: My Lords, I think it would be quite impossible for me to give that undertaking at this moment, and I think the noble and
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learned Viscount is pressing me a little hard. I will certainly convey his views to my right honourable friend. I can only say that this is precisely one of those matters which my right honourable friend has under consideration.

ADEN: COMPOSITION OF U.N. MISSION
2.46 p.m.
LORD GRIMSTON OF WESTBURY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they were asked to give their approval to the composition of the United Nations Mission of three about to visit Aden, consisting of the national of one country which abstained, and two nationals of countries which supported the resolution in the United Nations Special Committee, which Her Majesty's Government have described as being virtually unprecedented and wholly objectionable in its discrimination.]
LORD BESWICK: My Lords, in accordance with General Assembly resolution 2183 of December 12, 1966, the members of the United Nations Special Mission to South Arabia were appointed by the Secretary-General in consultation with Her Majesty's Government as the Administering Power and with the Committee of 24. Her Majesty's Government were not asked to give their approval; they were, however, consulted.
LORD GRIMSTON OF WESTBURY: My Lords, is it not apparent that Britain stands in some danger of being double-crossed by the United Nations in this matter? Is it not a fact that Her Majesty's Government accepted the Mission presuming than it would be impartial? Is it not now a fact that the Commission is packed with representatives of countries which have expressed themselves as unwilling to hear any evidence about Egyptian terrorism? What further action do Her Majesty's Government intend to take in order to ensure that this Mission does not become merely a propaganda exercise against the interests of Britain?
LORD BESWICK: My Lords, in answer to the first part of the noble Lord's supplementary—I think he uses strong language—it is probably true to say that the Committee of 24 steer a very careful course between partiality and impartiality in this matter. Nevertheless, the Mission which was eventually appointed is expected to be objective, and I think it would be wrong to question it in the way the noble Lord is now questioning it. So far as the latter part of his supplementary is concerned, we hope that the outcome of the Mission will be constructive.
LORD CARRINGTON: My Lords, would the noble Lord not agree, having regard to the background of nationalities of two out of the three members of this Commission, that any report they make will have to be regarded with the greatest reservations?
LORD BESWICK: My Lords, noble Lords opposite have had some experience of the difficulties in getting a balanced Mission on this international scale. In this matter it was hoped to get one member from Asia, another from Africa and another from Latin America. This we have succeeded in securing. The Mission will be landing in this country in the matter of an hour or so. It is on its way to Aden by way of Cairo and Jedda, and I should have thought that the best thing now would be to see what it does before making the sort of criticism which came from the lips of the noble Lord opposite.
LORD ROWLEY: My Lords, in view of the objections that were expressed by our representative at the meeting of the United Nations sub-committee, would my noble friend ensure that the United Nations Mission which is to proceed to Aden will be asked to agree to receive the eleven petitioners whose petitions were rejected by the Colonial Committee?
LORD BESWICK: My Lords, it is not for me to say how the Mission should set about its work. But it will be conferring in London this evening; it will be meeting other interested people, as I said, both in Cairo and in Jedda, and I should hope it would get all the information necessary before reaching conclusions.
LORD GLADWYN: My Lords, does the noble Lord really think it possible for
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the Committee to steer a course between partiality and impartiality?
LORD BESWICK: I was endeavouring to impart a little wit. I am sorry it is beyond the Liberal Benches to understand it.
LORD BROCKWAY: My Lords, may I ask my noble friend whether it is not the case that, in contrast with the opinions expressed on the other side of the House, this Mission has also been criticised in Cairo and by the nationalist leaders of Aden? Does not this suggest that it might make very useful impartial progress?
LORD BESWICK: My Lords, it is true that no matter who was appointed to a body of this kind it would be open to be "shot at". As I said, the Mission is now on its way to take up what will be a most difficult assignment. The members have been appointed on their individual capacities, not as representatives of different countries. I should have thought that we should give it every encouragement, and let us see what happens.
LORD GRIMSTON OF WESTBURY: My Lords, in view of these exchanges and the fact that the noble Lord, Lord Caradon, protested in very strong terms, and, according to the Press, has also written to the Secretary-General U Thant; and having regard also to the answers which the noble Lord gave, me last Wednesday or Thursday, is it not rather a pity that Her Majesty's Government, having made all these protests, should now to try to pretend that the Mission is likely to be impartial?
LORD BESWICK: My Lords, I stated what I did state last week about the Committee of 24 and that behaviour. I made some reference to the Committee of 24 to-day, although I am sorry that what I said went above the heads of certain noble Lords. As I have already said, the Mission is on its way. To suggest at this stage that we should refuse permission for it to proceed to Aden would be simply to play into the hands of the terrorists. I should not have thought noble Lords opposite wanted Her Majesty's Government's policy to be determined by terrorist organisations.
VISCOUNT ST. DAVIDS: My Lords, would not my noble friend agree Her Majesty's Government would be exceedingly unhappy to see grow up a practice

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by which sovereign nations like ourselves would veto the personnel of these various Missions which are bound to be sent about the world from time to time?
LORD BESWICK: My Lords, there can be no question of veto. As I have already indicated, I think it is very unlikely that in all cases all members of international bodies would be exactly of the type we ourselves would appoint.
LORD STRANGE: My Lords, I trust the noble Lord's expression "open to be shot at" is not precognition.

MATERIAL DEVELOPMENT REGULATIONS 1967
2.54 p.m.
THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET)THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET) rose to move that the Material Development Regulations 1967 be approved. The noble Lord said: My Lords, our Special Orders Committee reported that these Regulations are not founded on precedent and that they raise an important question of policy and principle, so I dare say the House would welcome it if I said a few words to explain what they are, what they do and what they do not do. They are, of course, the Regulations which will declare certain operations in, on, under or over the land not to be material development for the purposes of the collection of land levy; that is to say, they would exempt certain operations from levy.
I should like to frame them against the situation as it now stands. There are at present four provisions under which a given operation may not constitute material development. They are, first of all, the General Development Order itself; secondly, Schedule 3 to the 1962 Town and Country Planning Act; and, thirdly, subsection (2) of Section 12 of the 1962 Act. These three are there already, and if what builders or developers plan to do is covered by them it is not development, and so the question of levy does not arise. These Regulations add a fourth list of operations which are declared to be not material development for the purpose of assessing land levy.
I should like to give some examples of the kind of things which are to be
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exempted. I would ask the House to bear in mind that these are only some examples of one of the sets of exempt operations. There are three other sets already in force, which I will not mention. Under these Regulations, minor advertising, such as facia boards and so on, but not sites for hoardings, will be exempt. The construction of a timberyard on land used for agriculture will be exempt. So will the erection and maintenance of roadside stands for milk churns. So, for instance, will be the use of land as a caravan site in circumstances specified by the Caravan Sites and Control of Development Act 1960. Broadly speaking, this will cover all those who use caravans for their business, including travelling showmen and exempted organisations such as the Caravan Club, whose members seek their recreation in moving around the country in caravans and cannot reasonably be expected to plan their future stopping places.
The Regulations broaden and liberalise the provisions governing change of use so far as the collection of levy goes. Change of use within certain classes is already held not to constitute development. These Regulations say that change of use between certain classes will not constitute material development either, and so will not come into the question of land levy. The changes are from any one of the institutional uses in Classes XII to XVII to any other institutional use in that group of classes or to a dwelling-house, and vice versa. This is pretty large liberalisation. The rebuilding of dwelling-houses will not count as material development so long as the house as rebuilt is not more than 10 per cent., or 1,000 sq ft., larger than the original house. The alteration and enlargement of existing houses—so long as the altered, enlarged or improved house does not exceed the same tolerance of an additional 10 per cent. or 1,000 sq. ft., whichever is the greater—also is not material development.
Operations for searching, boring for and getting petroleum when they are licensed by the Minister of Power under the Petroleum (Production) Act 1934 are not material development. Buildings or other operations (except dwelling-houses) needed in connection with the use of land by persons taking part in outdoor physical recreation, or for the safety of those taking part or spectators—for example,

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club houses, refreshment rooms, changing rooms, and the like, for persons taking part—are not material development for the purposes of these Regulations. Use of land for recreation has to continue to be material development, because otherwise the Commission would not be able to use their powers of acquisition to get land for these purposes at all.
The construction of pipe-lines laid under the Pipe-lines Act 1962 is not material development; nor is the erection of any gate, fence or wall. I hope these Regulations may commend themselves to all sides of the House and that we shall pass them without further ado, because if we do not then all these things will be liable to land levy. I beg to move.
Moved, That the Material Development Regulations 1967 be approved.—(Lord Kennet.)
2.59 p.m.
LORD BROOKE OF CUMNOR: My Lords, these Regulations, which the noble Lord has so clearly explained (though I think he was aware of the finicky character of some of them) are of course basic to the Government's policy embodied in its Land Commission Act for raising the price of land. As the Bill was in the Government's Election programme, and as the electors endorsed it, failing to realise its inevitable effects, the Opposition in your Lordships' House did not divide on the Second or Third Reading of the Bill, and it would therefore be inconsistent if we were to divide against these Regulations.
As I understand it, there is a three-fold importance of defining what is or what is not material development. First of all, the Land Commission can acquire only land which, in its view, is suitable for material development. Perhaps the noble Lord will correct me if I go wrong on any point. Secondly, the carrying out of a project of material development can give rise to liability to betterment levy; and, thirdly, in connection with the calculation of betterment levy, current use value has under the Act to be based on the assumption that planning permission cannot be obtained for what is material development. So we have these detailed regulations and definitions.
I only have one or two questions to ask, and one or two points to which I invite your Lordships' attention. I think
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I can justify the use of the word "finicky". For example, if one takes Paragraph 1(1)(h), defining what is not material development, it says:
"An advertisement announcing any local event of a religious, educational, cultural, political, social or recreational character, or an advertisement relating to any temporary matter in connection with an event or local activity of such a character, not in either case being an event or local activity promoted or carried on for commercial purposes".
As I understand it, that means that an advertisement to advertise commercial bingo is material development, but an advertisement put up in a village to advertise bingo to raise money for an old people's tea is not material development.
I would invite your Lordships' attention also to the special generosity shown to certain developers in England and Wales under paragraph 1(1)(k), which excludes:
"An advertisement in the form of a flag which is attached to a single flagstaff fixed in an upright position on the roof of a building, and which bears no inscription or emblem, other than the name or device of a person or persons occupying the building".
That seems perfectly sensible. The reason why I say it is generous is that in the corresponding Scottish Regulations apparently the use of a flag in those circustances will constitute material development. Whether this is a sideways hit at the Scottish National Party or not, I do not know.
When we come to paragraph 2—which is important to farmers—one realises that if the farmer or landlord puts up a cottage for a cowman he will be rendering himself liable to betterment levy, No doubt he will be extremely grateful in that they have exempted from the definition of material development, as the noble Lord said:
"The erection or construction and the maintenance, improvement or other alteration of roadside stands for milk churns."
Then in paragraph 5 there are one or two differences between the English and Scottish Regulations. I am sure my noble friend, Lord Drumalbyn, will forgive me for making these comparisons so far as I understand the Government's intention, it is desired to have one main debate and only a shorter debate on the Scottish Regulations. Those of us who wonder whether there need be so many differences between English law and Scots

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law must be tempted to ask why paragraph 5(a) reads:
"the rebuilding, as often as occasion may require, of any original building used as one or more dwellinghouses …",
whereas the Scottish Regulations say:
"the rebuilding, as often as the person having the right to rebuild may desire, of any original building used as one or more dwellinghouses."
Whether those two phrases mean exactly the same thing, I do not know. If they do, it seems a pity that either the English Regulations could not be brought into line with the Scottish, or vice versa. Again, I should like to thank the Government for having been more generous to England in the proviso at the foot of paragraph 5. The English Regulations say:
"Provided that for the purpose of this paragraph the erection of a garage, stable, loosebox, or coach-house within the curtilage of the building shall be treated as part of the rebuilding or of the enlargement, improvement or alteration as the case may be."
But in the Scottish Regulations that is further defined and cut down:
"a garage, stable, loosebox or coach-house within the curtilage of the building and required for any purpose incidental to the enjoyment of the building ".
I cannot conceive why one should build a garage, stable, loosebox or coach-house within the curtilage of one's own house if it was not designed to be required for a purpose incidental to one's own enjoyment. Here again maybe there is some difference between North and South of the Border which I fail to perceive.
I should like to ask a more serious question about paragraph 6, which defines as not being material development
"The use as any number of separate dwellinghouses of not more than three adjacent buildings ".
I presume that here the point is that someone may take three adjacent houses and convert them into a larger number of flats. If he owns the whole terrace he may well wish to operate a scheme that would develop a whole lot of adjacent buildings. I should like to know whether there is anything special or magic about the limitation to three buildings in that paragraph. I hope it is the case that the provisions of paragraph 13 are acceptable to caravanning organisations and to the Showmen's Guild. I understood from the noble Lord that it
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was desired to be generous towards those interests, and if these provisions have been discussed with those bodies, and approval obtained, your Lordships will be all the happier to approve them.
I think your Lordships will perceive that I do not think a great deal of the Regulations, but I accept that they are linked with the Land Commission Act, and that it is necessary for the operations of the Land Commission and for the betterment levy to be based on some definition of this kind. I will close by referring to the Prime Minister's "doggy" interests. Your Lordships will probably be pleased to note that under paragraph 3(2)(a) his Ministers are providing that it will not be material development if a shop for the sale of pet animals is turned into a tripe shop.
LORD KENNET: My Lords, the noble Lord, Lord Brooke of Cumnor, is of course perfectly right in saying that these Regulations are an inseparable part of the Land Commission legislation. They are built right into it. In so far as he did not divide against that, he is logically not dividing against this. He is wrong in saying that the whole of the legislation and Regulations together are intended to put up the price of land. However, I do not think we need repeat the arguments we had at an earlier time. My noble friend who speaks for the Scottish Office will, I understand, say something about the apparent differences which the noble Lord has found between the English and the Scottish Regulations, and explain the background to that matter.
In regard to the particular examples about which the noble Lord asked me—and by the way, he did not give me warning, so I am not able to give him such full answers as otherwise I should have been able to do—I think the distinction between commercial bingo and charitable bingo is a perfectly obvious one. There are all sorts of distinctions made between the same activities undertaken for commercial ends and those undertaken for charitable ends. I am not sure that noble Lords opposite would really wish us to start taxing or raising a levy on an activity which is undertaken for charitable ends simply because it attracts levy or tax when undertaken for commercial ends. This is a distinction they have been rather strong in maintaining in this context.

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As to why the conversion of three buildings only into any number of dwellings is not material development when to convert more than three buildings is material development, there is a whole lot of background to this; but I think it is easy to see that, after a certain point, if you go into big operations the conversion of buildings can become a large and profitable enterprise which it would hardly be right to exempt from the operation of this levy, since the levy is imposed on analogous enterprises in adjacent fields of housing and development.
On Question, Motion agreed to.

MATERIAL DEVELOPMENT (SCOTLAND) REGULATIONS 1967
3.12 p.m.
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): My Lords, I beg to move that the Material Development (Scotland) Regulations 1967 be approved. I had intended to be exceedingly brief. The note I was given said that the Scottish Regulations are a straightforward adaptation of the English regulations, but in view of what has been said by the noble Lord, Lord Brooke of Cumnor, I will change the wording of my statement and say this. So far as the English Regulations, which have just been approved, are concerned, they are a straightforward adaptation of the Scottish Regulations, the adaptation being effected by the substitution of appropriate references to English statutory provisions and the replacement of Scottish legal terms by corresponding English ones, and so forth.
The noble Lord opposite introduced a certain note of entertainment into what he said about the previous Regulations, and he got a certain value out of this by comparing the Scottish and the English Regulations. For instance, he seemed to fear that we were getting worried about the Scottish Nationalist problem in Scotland by apparently denying the rights to Scotland which have been conferred on England. The fact is quite the reverse. The reason for the difference between the regulations is that in the control of advertisement regulations in Scotland we have never made it a matter of material development to do this sort of thing, so
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we do not now need to make it an exception.
On the subject of the difference in wording to which the noble Lord referred, this arises from the difference in wording which has existed through from 1950, with English consolidation in 1963, and therefore if it is a fault it is a fault to which both Parties are contributories. It exists in the wording in the English and Scottish Development Orders, and in these Regulations we must accept the wording in these Orders as they stand. We therefore must continue in the Regulations to perpetuate the differences which have existed throughout the years. Equally, the difference is only a difference of phraseology, and is not a difference of purpose. It will cause no difficulty either to English or Scottish lawyers, and in this particular Bill I should think that that is at least an advantage. I beg to move.
Moved, That the Material Development (Scotland) Regulations 1967 be approved.—(Lord Hughes.)
LORD DRUMALBYN: My Lords, there is one point I should like to draw to the attention of the noble Lord, Lord Hughes, apart from the explanation that he was good enough to give us. I am bound to say that in these days it is a little difficult to see how a stable or loose box can in any way he incidental to the enjoyment of a building. However, if the noble Lord assures us that there is no difference in purpose between the Scottish and English Regulations in this case, and that the Scottish ones are as liberal as the English ones, then I am satisfied.
The other point is that in paragraph 17 of the Order, under the definition of "original" there seems to be an unfortunate stutter. It reads:
"'Original' means, in relation to a building existing on the first appointed day, the building as existing on that day, and in, in relation to a building which is completed after the first appointed day, the building as so completed …"
I take it that that is a misprint. But I am bound to observe that Parliament has always taken the most stringent view of regulations of this character, for the good reason that they cannot be amended.
I have a vivid recollection of the objections that were taken to quite minor misprints in regulations in the past. I

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feel that this ought to be put right. I take it that there would be no objection whatsoever to the Order being withdrawn and being relaid to-morrow, because it could still come into operation in time, on April 6. If that is so, I feel certain that the noble Lord would wish it to be put right.
LORD HUGHES: My Lords, I am looking at the part of paragraph 17 to which the noble Lord referred, and I am not yet quite clear to what he was referring, unless it is the repetition of the word "in" with the comma between.
LORD DRUMALBYN: My Lords, that is it.
LORD HUGHES: My Lords, I do not see anything wrong with it otherwise. Looking at it now, it seems to me to be the sort of thing which makes no sense if one looks at it purely from a layman's point of view, although there might perfectly well be a legitimate legal reason. I do not know. I would rather incline to the view of the noble Lord that this is a misprint; but, quite frankly, I do not know. If the noble Lord would remind me of the other point which he raised, the answer might emerge in the meantime.
LORD DRUMALBYN: My Lords, I was merely drawing the attention of the noble Lord to the fact that the word "in" appears only once in the English Regulations. I doubt whether that is a difference between English and Scottish law.
LORD HUGHES: My Lords, while we are finding out what the position is, I will turn to the other point of the noble Lord, which I have now remembered; namely, whether in these days the erection of a loose box or coach house could possibly be regarded as part of the enjoyment of a dwelling-house. I should think that the reason for the inclusion of all these words is because they are in the original General Development Order and, while it is conceivable that a garage could be erected within the grounds of a house which had no relationship to the enjoyment of the house—I mean, someone with two acres of spare ground might contemplate the
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erection of a commercial garage—I would agree with him that the likelihood of anybody wishing to have a commercial development of a coach house or a loose box is in these days extremely remote. In going through these Regulations the noble Lord, with his usual ability, has in fact discovered what is a misprint and, quite frankly, I do not know whether it is necessary to withdraw the Regulations, or whether it would in any way interfere with them.
I have just been given what I believe to be a very sensible answer which I have no hesitation in reading aloud: "'In, in' is a misprint. There is no question of withdrawing the Regulations. If it is possible to omit within the rules this will be done, but if it is not possible we will have to live with it."
LORD DRUMALBYN: My Lords, is there any reason why we need to "live with it". I do not want to press it; it is an extremely minor matter.
LORD HUGHES: Finicky.
LORD DRUMALBYN: The noble Lord says "finicky", but Parliament attaches importance to getting these matters right, for the very good reason that they cannot be amended by Parliament. Is there any objection to its being altered and relaid? Sooner or later the noble Lord will have to reprint it. So long as the Regulations can come into operation on April 6, I should have thought that that was the right course.
LORD HUGHES: That is the point, my Lords. It may not be possible to bring them into operation if we withdraw them at the present time. I understand that possibly it would have to go back to the Special Orders Committee. After all, we do not have very many days now before April 6, and the noble Lord will accept that, while it is unfortunate there is this misprint, it will not have any effect on the operation of the Order. The answer which I have been given, and which I have passed on to your Lordships, does not rule out the possibility that within the rules it may be possible to take out the superfluous "in".
On Question, Motion agreed to.

HOUSE OF LORDS OFFICES
3.23 p.m.
Order of the Day read for the consideration of the Third Report from the Committee.
The Committee's Report was as follows:
1. LIBRARY
A report from the Library Sub-Committee for 1966 was laid before the Committee.
2. SUBSTITUTION AND STARTING PAY ON PROMOTION
The Committee authorised the application to the Staff of the House of Lords of Treasury DEO letter (67) (Pay) No. 2 dated 3rd February, 1967, applying new rules governing (a) substitution beginning on or after 1st March, 1967 and (b) starting pay on promotion.
3. RETIREMENT
The Committee sanctioned the payment of a pension and additional allowance under the Superannuation Act 1965 to Mr. Harold Edward Parkinson, M.B.E., Personal Assistant to the Lords of Appeal, on his retirement on the 1st June, 1967.
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, I beg to move that the Report be now considered.
Moved, accordingly, and, on Question, Motion agreed to.
THE CHAIRMAN OF COMMITTEES: My Lords, I beg to move that the Report be agreed to.
Moved, That the Report be agreed to.—(The Earl of Listowel.)
On Question, Motion agreed to.

SOUND BROADCASTING OF HOUSE OF LORDS PROCEEDINGS
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE, HOME OFFICE (LORD STONHAM): My Lords, in the absence of my noble Leader, I beg to move the Motion standing in his name. The Motion is consequential upon the acceptance by the House last Thursday of the first Report of the Select Committee on Televising the Proceedings of the House. In effect, it carries out the Select Committee's own request to have their terms of reference extended to sound. I beg to move.
Moved, That the question of the sound broadcasting of the proceedings of the House be referred to the Select Committee on Televising the Proceedings of the House.—(Lord Stonham.)
On Question, Motion agreed to.

DEER (AMENDMENT) (SCOTLAND) BILL [H.L.]
Report of the Amendment received (according to Order).
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of March 16), Bill read 3a, and passed and sent to the Commons.

REFRESHMENT HOUSES BILL [H.L.]
Read 3a (according to Order), and passed, and sent to the Commons.

CLERGY PENSIONS (AMENDMENT) MEASURE
3.25 p.m.
THE LORD BISHOP OF LICHFIELD THE LORD BISHOP OF LICHFIELD rose to move, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Clergy Pensions (Amendment) Measure be presented to Her Majesty for the Royal Assent. The right reverend Prelate said: My Lords, I beg to move the Motion standing in my name. I will not detain your Lordships for long over this small but very necessary Measure. Its primary object is to remove a requirement which is irritating to most of the clergy and which is now very largely unnecessary. At the same time the opportunity has been taken to make some other desirable amendments to the Clergy Pensions Measure of 1961. I should like to make it clear that this Measure went through the Church Assembly in all its stages without a Division. The Ecclesiastical Committee reported on it, and stated that in their opinion this Measure was desirable. Full details of the Measure are given in the Report of the Ecclesiastical Committee and that of the Legislative Committee which is appended to it. Therefore, I do not think I need do more than outline the main provisions of this Measure.
At present, every clergyman, whether married or single, ordained after the year 1947 has to pay £9 per annum in order to provide his widow, if he leaves one, with a pension of £50 per annum. In addition, a widow will get the State pension, which is now £208 per annum, and a non-contributory Church pension equal to half the pension to which her husband was, or would be, entitled at the time of his death. If he was in receipt of the full pension of £550, that would be £275 per annum.
Statistics show that 50 per cent. of the clergy do not leave a widow and the compulsory payment is a source of considerable irritation to the unmarried and to the widowers. It is therefore proposed to abolish the compulsory levy. No clergyman ordained after the passing of the Measure will be required to pay it, nor can he derive any benefit from this source. Any clergyman ordained between 1947 and the passing of this Measure may opt out and either reclaim part of his contributions or accept entitlement for his widow to a reduced pension. This will in no way affect a widow's entitlement to the survivorship pension or to the State pension. The Church Commissioners are given powers in certain cases to increase a widow's survivorship pension.
Clause 1 of this Measure affects 9,000 clergymen at the present time. In regard to this matter of the pension of £50, for which at present a sum of £9 per annum is contributed, it should be noted that if any clergyman wants his widow, if his wife outlives him, to receive this sum, he will be able to arrange this by means of taking out a life insurance policy; indeed, he might be able, I think, to obtain better terms than is possible by the present arrangement. So much for that part of the Measure.
The Measure also provides for a clergyman to be able to commute part of his pension for a lump sum, and authorises the Church Commissioners to make additional lump-sum payments to a clergyman on retirement when the necessary funds are available. I fear that long experience has proved that one of the biggest problems which faces a clergyman when he retires is finding somewhere to live. All his life he has, of necessity, been living in a tied house. I am not complaining about this—we are
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very grateful for the housing arrangements which are made for the clergy; but it will be appreciated that when retirement comes and the man has no house, the situation sometimes produces considerable problems. The Pensions Board has been doing some very good work for the clergy in regard to this matter. For instance, it has provided nine residential homes, two nursing homes, and 160 houses, bungalows or flats for retired clergy, their wives, widows and dependants. It has provided one residential home, and 11 houses or flats, for widows and dependants alone. It has also provided a bungalow for church workers. The Pensions Board has already operated a generous loan scheme to meet this need.
In regard to the commuting of pension, it should be made clear that if a clergyman desires to commute part of his pension he must commute not less than one-fifth of it and not more than one-quarter. I think it will be seen that that is a desirable step, because it would be unwise for provision to be made for a man to commute too much of his pension. The actuary informs us that if a man is retiring at the age of 70, having completed 40 years' service, the lump sum that he can obtain by means of this commuting of part of his pension is £693. It is hoped that these provisions will go at any rate some way towards helping the clergy to find the cash balance necessary in order to complete the purchase of a house.
The Pensions Board has other housing schemes to help the retired clergy and their wives or widows and dependants, and the remaining clauses of the Measure are designed to improve the powers under which the Board operates these schemes. As I mentioned at the beginning of my short speech, the Church Assembly feels that this Measure would very much help in regard to this matter of clergy pensions. We think it would remove something which is now unnecessary. I feel I can confidently commend the Measure for Your Lordships' approval. I beg to move.
Moved, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Clergy Pensions (Amendment) Measure be presented to Her Majesty for the Royal Assent.—(The Lord Bishop of Lichfield.)
LORD DERWENT: My Lords, may I just say, on behalf of those who sit on these Benches, that we think this is a most sensible Measure and we very much welcome it. I would take the opportunity of pointing out to Her Majesty's Government that this Measure, which as I say is a particularly sensible Measure, does away with a compulsory levy. I hope that Her Majesty's Government will take notice of that.
On Question, Motion agreed to.

ROYAL ASSENT BILL
3.33 p.m.
Order of the Day for the Third Reading read.
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I beg to move that this Bill be now read a third time. Your Lordships will remember that on the Committee stage of the Bill the noble Lord, Lord Grimston of Westbury, moved an Amendment which he subsequently withdrew. In the course of the discussion he suggested that it might be right for this House to make an Address to the Sovereign in somewhat similar terms to the proposed Amendment, and I said I would consider that. I have considered it and I have had some correspondence with the noble Lord about it. I think that for to-day's purposes it is perhaps sufficient that I should say that, according to Erskine May, at page 621, Addresses ought not to be presented in relation to any Bill depending in either House of Parliament. That appears to have been the position since 1666.
When the Bill has become law, it will of course be open to the noble Lord, or to any other noble Lord, to move such an Address as he thinks right, and the House could then consider whether that course would be either appropriate or likely to achieve any particular object. It is for this reason that I have been unable to support the suggestion that, while the Bill is pending, there should be any such Address. I have so informed the noble Lord, and I rather think that he is now of the same opinion. My Lords, I beg to move.
Moved, That the Bill be now read 3a.—(The Lord Chancellor.)
THE EARL OF SWINTON: My Lords, I fully appreciate what the noble and learned Lord the Lord Chancellor has said, and obviously it would be quite out of accord with practice for an humble Address to be presented about a Bill which has not yet received the Royal Assent. But I did not gather that that was really the proposition which was being put forward. I thought the idea that the Royal Assent should be pronounced in the formal manner on at least one occasion each Session, which seemed to me to be a very sensible one (we were all agreed on all sides of this House, as I think another place was), was that when the Bill had received the Royal Assent an humble Address might then be presented by both Houses to Her Majesty praying that that might happen. That, I think, would certainly be strictly in accordance with Erskine May and with all the precedents. I hope that after the Bill has received the Royal Assent it might be considered through the usual channels whether there could he an agreed Address by both Houses, such as there is in response to the gracious Speech from the Throne.
It is not that we have the least doubt that the noble and learned Lord the Lord Chancellor and the Government have every intention of carrying out every undertaking which was given. But, at the same time, when a great change like this goes through, it would be as well to put it on record in a formal manner with the agreement of both Houses that that should be the practice in future. I think that that would be strictly constitutional and, I hope, in accordance with the wishes of both Houses of Parliament.
LORD GRIMSTON OF WESTBURY: My Lords, I do not wish to detain your Lordships for more than a moment, but I should, first of all, like to express my thanks to the noble and learned Lord the Lord Chancellor for the courtesy and speed with which he has gone into the suggestion which was made on the Committee stage. I am very grateful to him. He has put the point very clearly, and I entirely agree that, whatever might be done at a later stage—and there are, as he has so kindly pointed out, difficulties about this—there is no question that an humble Address could not be presented before the Bill became law.

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As I say, I thank him for his attention to this.
It only remains for me to say that we have made our desire very clear on all sides: that the procedure referred to in Clause 1(1)(a) should be preserved. One hopes that perhaps the combined wisdom of all of us will find some means of ensuring what will happen after this Government have left office. We know that until then the procedure will be preserved, and for the moment I think we must leave it at that and speed the Bill on its course.
THE LORD CHANCELLOR: My Lords, I reply to say only two things. First, the noble Earl, Lord Swinton, said that he was sure the Government would carry out their undertaking, so I thought it right just to make it clear that of course the Government have given no undertaking at all. I have informed the House what is the present intention of the Leaders of all Parties in both Houses. Secondly, the noble Lord, Lord Grimston of Westbury, has been kind enough to acknowledge what he calls the courtesy and speed with which I dealt with the matter. I should be less than courteous if I did not acknowledge that the fact that I was able to do so was due to the courtesy and speed which Lord Chancellors always receive from the Clerk of the Parliaments.
On Question, Bill read 3a, and passed.

MATRIMONIAL CAUSES BILL [H.L.]
3.39 p.m.
Order of the Day for the Third Reading read.
THE LORD CHANCELLOR: My Lords, I beg to move that this Bill be now read a third time. Some doubts were expressed about this Bill on the Second Reading, but I venture to think that those doubts were in substance dissipated once the House had realised that what, in the main, this Bill is doing is creating reality out of what is now a piece of hypocrisy, and that the actual changes will be very much less, I think, than had at one time been thought. I hope that the House is now satisfied with the Bill and that we can send it forward
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on its way with good will. I beg to move.
Moved, That the Bill be now read 3a.—(The Lord Chancellor.)
LORD SILKIN: My Lords, I should not have thought it necessary to say anything on this occasion, but for the fact that on Report stage I had an Amendment down which I was unfortunately prevented from moving in Committee. If I had been able to move it in Committee and had then received the reply which my noble and learned friend in fact gave me on Report, I should have had the opportunity of replying to it, as I would have done because, quite frankly, I thought that his reply was not in all respects satisfactory. As my noble and learned friend knows, on Report stage, having moved my Amendment, I had no further opportunity of replying; so I thought I might just say a few words now with reference to the speech which my noble and learned friend made in reply to my Amendment on Report.
It was an Amendment which would have permitted, at some time in the future if it should have been thought desirable, the extension of the operations of this Bill to enable county courts, as well as dealing with undefended divorce cases, to deal with short defended cases. It put no obligation on anybody to extend the Bill in that direction. It was merely a question of whether at some time or other it might be thought desirable to do so, and therefore permitting the Rules of Court, for which the Bill itself provides, to make appropriate provision in that respect. I appreciate that my noble and learned friend may not be keen on extending this Bill to short defended cases: and he may have very good reason for his view. But a future Lord Chancellor may take a different view—indeed, a previous Lord Chancellor also takes a different view. Therefore, it is a matter which could be open to argument; and all I wished was to make it possible if at some time it was thought desirable to do so.
The main argument that my noble and learned friend put forward was the difficulty which the registrar would have in deciding whether a case was likely to be a short case or a long case. He would have before him, as we agreed, the case for the petitioner and the case for the respondent; but my noble and learned

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friend thought that, on the basis of reading those two statements, the registrar would not be able to make a decision. But, of course, he could make a decision on the basis of hearing both sides. It is quite a normal practice for the solicitors for the petitioner and the solicitors for the respondent to appear before the registrar, and on the occasion of that appearance the registrar could inquire how many witnesses each side proposed to call, and what was the solicitors' view of the probable duration of the case. And on the basis of such a hearing he could make a decision. As my noble and learned friend well knows, from his much greater experience than mine, before any case in the High Court is heard the solicitors on each side have to give to the court an estimate of how long the case is likely to last, and it is on the basis of those estimates that the daily lists are prepared. So there is no real difficulty here.
I have not put an Amendment down again on Third Reading, as I might have done, because this Bill is going forward to another place, and I have every hope that somebody may desire to table a similar Amendment there with a view to achieving what I have failed to achieve here. But I hope that my noble and learned friend will reconsider this point, in the light of what may occur in another place, and will not turn his face resolutely against the possibility of achieving what I think it would be desirable to achieve at some time in the future.
Apart from that, I wish this Bill every success. I think it is a great move forward. I know that my noble and learned friend has been desirous of pointing out to those noble Lords who are not very enthusiastic about this Bill how little change it makes. I think it makes a great change. I believe that it is a great advance in the direction of helping poor people who find it necessary to go to court to get a divorce, or to take other similar matrimonial proceedings. It will help them to get it done with a minimum of expense and trouble, and, in many cases, without having to travel long distances. I think it is a very great advance, and I am most grateful to my noble and learned friend for introducing this measure. I only hope that he will be willing to accept the possibility of going a little further at some time in the future.
THE LORD CHANCELLOR: My Lords, I know what an interest my noble friend Lord Silkin has always taken in this subject, and for how long a time he has wanted to see our law become what it will become if this Bill passes into law. I appreciate that he personally would have liked to go further and either enable the county courts to try some defended cases, as well as undefended cases, or to enable the Lord Chancellor to provide that they should. For the reasons I gave at Committee stage, it seems to me that the right place to draw the line is between defended cases and undefended cases.
As to my noble friend's point that he was seeking merely to give jurisdiction to a Lord Chancellor to make this change in the future, I have felt that this was not a responsibility which ought to be put on a Lord Chancellor; that it does matter to people in what courts divorce cases are tried; that it is a subject on which there always have been different views, and that therefore it was a matter which ought to be decided by Parliament rather than left to a Lord Chancellor to decide in the future. However, if Amendments are made to the Bill in another place your Lordships will of course have every opportunity of considering them, as I shall also; and I hope that my mind is never closed on any proposals which have been made. I am grateful to my noble friend for what he has said.
On Question, Bill read 3a; an Amendment (privilege) made; Bill passed, and sent to the Commons.

HOUSING SUBSIDIES BILL
3.48 p.m.
Order of the Day for the Second Reading read.
LORD SORENSEN: My Lords, we have not had a comprehensive debate on housing since July 27 last year, when the noble Lord, Lord Hawke, introduced a Motion; and I was very glad indeed to see that he is to participate in our debate to-day. To-day we concentrate on this very important subject by considering the Housing Subsidies Bill, which is a substantial measure that I am sure will prove of great benefit to many thousands of people in this country who still urgently need decent accommodation. Housing is now of course recognised to be a national

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responsibility, whether it be by the Government financially assisting local authorities to provide buildings or, more directly, by their financially assisting persons to purchase their own dwellings.
As we know, this has not always been so. At one time it was assumed that the building and supply of houses should be left entirely to private enterprise and the free play of the market. This is apart from the laudable provision of almshouses by philanthropic persons or, equally so, the erection by those persons of urban blocks of flats for working-class occupation. In those times, of course, it was not assumed that we should go anywhere near the point we have reached to-day, where the Government, in one way or the other, either through private enterprise or public enterprise (both of them essential, of course, to meet the problem), take such responsibility as they now do. Hence it is that all parties now vie with each other to devise policies which they believe will ensure—if not immediate, then ultimate; and, perhaps, in the foreseeable future—the provision of sufficient good-standard dwellings to satisfy what is now admitted to be a great social need. Although much remains to be done, I think we can without complacency feel gratified at the progress that has been made.
Before I plunge into the Bill, I would remind your Lordships that according to housing statistics issued recently these are the figures of progress that has been made. From 1945 (which includes the period after the war when few houses were constructed apart from purely temporary dwellings) up to December, 1966, 4,867,996 dwellings, either flats or houses, had been built, which probably means that about 15 million or more families are now living in post-war dwellings. The total number built in 1966 was 385,509, of which 180,137 were in what we now know as the public sector, and 205,372 in the private sector. This represented a fall in private sector building compared with 1965; although there are now signs of improvement in that sector. But on the other hand there was an increase in the public sector. I must emphasise that both the public and private sectors are of immense importance in the solution of this problem. We know that many previous assumptions and anticipations have
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been falsified by a number of unpredictable factors: people are now living longer; young people are marrying earlier; there is far less sub-letting than formerly, probably mainly because the income of even the working-class people is higher, both proportionately and absolutely, than it was. These unpredictable factors have given some concern to those who try to make an estimate about the future, but I think we are getting now a little nearer concrete facts.
My Lords, the Housing Subsidies Bill, which has now been introduced in this House, is a further valuable contribution to the solution of that problem, and notwithstanding minor criticisms that have been made the Bill has been welcomed by all Parties in another place and outside—for which, I am sure, all noble Lords here are most grateful. It is probably wider in scope than any comparable Bill since the Chamberlain Act of 1923. Part I of the present Bill introduces an entirely new system of housing subsidies to encourage the building of houses to let at moderate rents by local authorities, by housing associations and by new town development corporations.
Part II of the Bill introduces the option mortgage scheme which is designed to broaden the basis of owner-occupation by bringing it within the reach of more families of moderate means. It does this by giving those families the same kind of assistance with their mortgage repayments as the standard taxpayer enjoys through income tax relief.
Part I of the Bill also contains two other kinds of grant to assist special types of housing work: Clause 15 increases the grant for hostels from £5 to £15 a year for each bedroom provided. The types of hostel to which this grant applies are, for example, those provided by local authorities for elderly people, and those provided by voluntary bodies for young people in employment, single women and others whose need of a permanent home can best be met in this kind of communal accommodation. Clause 12 is of particular interest, because it was introduced into the Bill during its Report stage in another place. My noble friend Lord Kennet will explain more fully some of the provisions of that clause. It provides a new, or refurbished, grant for housing associations acting under authorised

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arrangements with local authorities in providing accommodation by the improvement and conversion of older houses. Much of this is already being done. Certainly in those localities that some of us know quite a number of houses have been converted, improved and made available for people who by moving into them have, in turn, eased somewhat the general housing situation. The new provisions are designed especially to assist those housing associations who are concentrating their efforts on helping families who are homeless, or in danger of becoming homeless. There was recently a television presentation on this subject which certainly moved a large number of people in this country. I here would pay tribute to the many housing associations already in existence who have done excellent work in this direction.
The case for giving housing special priority was stated in a White Paper, The Housing Programme, 1965 to 1970. It was presented in November, 1965. It would be appropriate, I think, if I extracted from it some few facts relevant to the Bill. In Great Britain then, according to that White Paper, there were still about 1 million slum houses—although I agree that the term is a little ambiguous. But it is a fact that substandard housing numbered approximately about 1 million, in spite of what had been done. Also there were up to 2 million houses which were sub-standard, but not as severely so as the slum houses which would have to be replaced. About three-quarters of a million houses were needed to overcome the shortage and provide a reserve for mobility. Further, it was estimated that each year 30,000 houses were needed to replace those lost by redevelopment, such as road widening, and 150,000 more to keep up with the formation of new households in a rising population. Altogether, it was envisaged that close on 4 million houses should be completed in the next few years—fewer, of course, than the number of post-war houses that have been built. This is an indication of the seriousness of the problem that still remains.
The White Paper proposed to raise house-building from the 1964 level of 374,000 (of which about 60 per cent. were for the private sector and 40 per cent. for the public authorities) to the 1970 level of 500,000 houses, divided
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about equally between the private and the public sector. That remains the target, however much we fall short of it. It is an objective, and the objective which we are striving to reach as quickly as we can. Much will depend on performance in the private sector, which is less predictable and less controllable than the public sector. The case for a bigger increase on the public sector arises from the desperate shortage of houses to let at rents which the average family can afford.
Now, my Lords, I turn to the Bill itself, which is one, and only one, vital component of the Government's general housing policy. Part I of the Bill applies only to England and Wales: the separate Scottish Bill will be considered later to-day. It introduces a new type of basic housing subsidy. Instead of the traditional unit subsidy or basic subsidy for each house, regardless of costs, location or interest rate charge, we introduce a cost-related subsidy related to building costs, site costs and the costs of borrowing. The present basic subsidy was fixed in 1961 at £8 or £24 a house. Clause 2 of this Bill introduces the aggregate cost subsidy which works like this. A local authority applies to the Minister for subsidy approval on the houses or flats it proposes to build. Approval is related to the actual cost or value of the land and the estimated cost of site works and construction at tender stage. The approved cost of all dwellings built by that authority in the financial year is then totalled, and the subsidy covers the difference between the loan charges incurred in that year and what the loan charges would have been if the money had been borrowed at 4 per cent.
To simplify the new system the local authority associations have agreed that the Minister should specify representative rates each year, instead of calculating the borrowing costs separately for each of the 1,400 or so local housing authorities in England and Wales. Clause 2 therefore gives the Minister power to specify the rate, or rates, of borrowing—after consulting the authorities—by means of an Order subject to the Negative Resolution procedure. There has to be power to specify more than one rate because the borrowing arrangements for new towns, for instance, are different from those of local authorities. This means that the Bill makes two proposals not attempted

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before. First, it provides for higher subsidy where building or land costs are higher, so that all authorities get proportionately the same benefit, whereas at present the £24 subsidy is payable whether the costs are high or low. Secondly, it ensures that if interest rates increase the subsidy does not remain static, as the 1961 subsidies did. Thus local authorities, development corporations or housing associations will know for certain that if interest rates rise they will be protected, since the subsidy will also rise. They can therefore plan ahead on the basis of a stable interest rate of 4 per cent. As a corollary to this, of course, as interest rates fall, the subsidy is adjusted accordingly.
Let me provide two illustrations. On a house costing £3,000, including the cost of the land, the loan charges at 6½ per cent. would be £199 per year; and at 4 per cent. the figure would be £132 per year, a difference of £67. On a flat in a high block, costing £5,000, the loan charges at 6½ per cent. would be £332; and at 4 per cent. £420, a difference of £112. Noble Lords should compare these amounts of subsidy, £67 and £112 respectively, with the provisions of the 1961 Act where the basic subsidies were respectively £8 or £24.
As I have explained, the new basic subsidy is a cost-related subsidy. This, we can appreciate, is something about which a Chancellor of the Exchequer or, for that matter, a Minister of Health would have seriously to be concerned. We are therefore introducing, as an essential part of the new subsidy system, a new system of control for which powers are provided in Clause 3. Briefly, the Minister intends to lay down new housing standards based on recommendations by the Parker Morris Committee Report, Homes for Today and Tomorrow.
The new department is also preparing a series of cost yardsticks which define the cost limits for housing designed to these standards. The yardsticks allow for regional variations and differences in costs for different types of houses at different densities. Local authorities will be free to build at these standards up to the limit of the cost yardstick and will receive subsidy up to this limit. They may exceed the yardstick by up to 10 per cent., but while they will get loan
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sanction for this excess they will not receive subsidy. If the cost exceeds 10 per cent. loan sanction will not be given, and the scheme will have to be revised to bring it within the cost limit. This aims at deepening cost-consciousness in local authority house-building and encouraging still greater efficiency and economy. It is a valuable feature of the new subsidy system. This does not cast any reflection on the desire and intention of local authorities to reduce costs as much as possible, but it will be an added stimulus.
In general, my Lords, the new subsidies apply to all houses and flats in tenders approved on and after November 25, 1965; that is, after the publication of the White Paper. But Clause 1(3) provides that the Minister may pay the new subsidies on houses or flats completed on or after November 25, 1965, in areas where, in the opinion of the Minister, there is an exceptional need for more houses as a result of exceptional slum problems or housing shortage, and where the provision of that housing would result in unreasonably high rents or rates. The Minister has announced the list of authorities who will benefit by this retrospective subsidy. They are the 54 local authorities in England with more than 12½ per cent. unfit dwellings, according to returns submitted to the Ministry in 1965; or with 10 per cent. or more excess of households over dwellings according to the 1961 Census, and who had 100 or more houses or flats approved but not started or under construction at the end of November, 1965.
The rules adopted for this retrospective payment of subsidy admittedly involve an element of rough justice. That was almost inevitable. A few authorities have complained that tests have worked unfairly in their case, but as it was essential to work on the most comprehensive and objective data available—data which related to all authorities—we could not do better than take the 1961 Census and the 1961–1965 slum clearance return. Generally speaking, the vast majority of local authorities, including those who might have expected to qualify but were disappointed, have accepted that the rules adopted and the list of qualifying authorities are fair and reasonable. It is, of course, a once-and-for-all operation, and not a continuing feature

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of the new subsidy system. It must be realised that while retrospective subsidy has had to be limited to very few local authorities with quite exceptional housing problems, the new subsidies will bring greatly increased financial assistance to all housing authorities.
The Bill also provides, in Clauses 4 to 11, additional subsidies to meet special needs; for instance, for flats in high blocks; housing for industry and town development; extra costs incurred through mining subsidence, or building in local materials, such as Cotswold stone; and special provision for expensive sites. In each case the special subsidy is paid in addition to the basic aggregate cost subsidy.
Clause 13 of the Bill enables the Minister, by order, to abolish or reduce subsidies payable under Part I of the Bill. This is a similar power to that contained in Section 2 of the Housing Act 1961 which was criticised by the then Opposition. In view of the apparent inconsistency, a word of explanation as to why it appears in this Bill is necessary. Such adjustments are fairly well known in political evaluation. Essentially, the justification for the inclusion of these powers in this Bill is that the Bill provides a totally new form of basic subsidy which is related to the difference between the cost of a 60-year loan at a rate of interest representative of rates paid by recipient authorities in the immediately preceding financial year, and the cost of a 60-year loan at 4 per cent. But local authority borrowing is not based only on 60-year loans; it includes long-term, short-term and temporary borrowing. Part of the borrowing is therefore always being renewed at prevailing rates of interest. This means that if the new subsidies were based on a representative interest rate of about 6½ per cent., and subsequently interest rates fell to, say, 5 per cent., local authorities would continue to draw subsidies on houses completed in the earlier period related to a rate of interest about 1½ per cent. higher than they were now paying on their current debt. In such circumstances a reduction of subsidy might be justifiable.
But, just as it is possible for interest rates to fall, after a period of high interest rates, so it is possible for interest rates to rise again. In such circumstances it would be only reasonable for the
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Minister to have the power to make an order restoring, in part or in whole, subsidies which had been abolished or reduced by a previous order. Unlike the 1961 Act, therefore, this Bill enables the Minister to vary or revoke a previous order as respects any subsidy period remaining after the new order comes into force—that is to say, a first order might be made abolishing certain 60-year subsidies after they had run for 20 years. Ten years later this order could be revoked or varied so as to restore the whole or part of these subsidies for the remaining period of 30 years. I am sure that this flexibility will commend itself to your Lordships.
I should like now to turn to Part II of the Bill, which deals with what has come to be known as the option mortgage scheme. This part of the Bill applies to the whole of Great Britain and not only to England and Wales. The details of the scheme are a little complicated, but the broad principles are straightforward and have already been explained in the Government's White Paper, Help Towards Home Ownership, which was published last December. The object of the option mortgage scheme is to rectify one of the anomalies of our present tax arrangements as they apply to the purchase of houses for owner-occupation. A man who buys a house is entitled to relief from income tax on the interest which he pays on the loan. If he pays income tax at the standard rate, the effective rate of interest which he pays on the loan is reduced by about a third. But if he pays income tax at less than the standard rate, the tax reliefs to which he is entitled are obviously that much less. And if his income is so low that he does not pay any income tax, then he can get no income tax reliefs at all upon his mortgage interest. So we have the rather odd situation that, when it comes to buying a house on mortgage, the higher your income, the more help you can get.
The option mortgage scheme seeks to redress the balance by providing a Government subsidy which any borrower may choose as an alternative to income tax reliefs. Taken over the period of a normal mortgage, the amount of the subsidy works out at marginally less than income tax reliefs at current rates. Generally speaking, therefore, it will not be to the advantage of the man who is

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paying the standard rate of income tax to choose the subsidy when he takes out a mortgage. But the man who is paying less than the standard rate can, by opting for the Government subsidy, secure for himself assistance with his mortgage repayments broadly comparable with that which he would get by way of tax reliefs if he were a standard rate taxpayer. For annuity type mortgages of the sort normally given by building societies and local authorities, the subsidy has been fixed at 2 per cent. of the capital outstanding from time to time. This means, in effect, that the interest payable by the borrower will be effectively reduced by 2 per cent. There is, however, an interest floor of 4 per cent., so that if interest rates fall below 6 per cent., the subsidy will be reduced, and if they fall as low as 4 per cent., it will disappear altogether.
Some mortgages, particularly those issued by insurance companies, are of the endowment type. In these cases the capital borrowed is secured by an endowment insurance policy and is paid off by a single payment with the proceeds of the insurance at the end of the period for which the loan is made. Under these arrangements, of course, no capital is repaid until the mortgage is finally redeemed, so that interest is payable for the full amount of the loan throughout the whole of the period. A 2 per cent. subsidy in these circumstances would provide a very much greater degree of benefit than that which will be given on the annuity type mortgage. To keep the subsidy on the two types of mortgage broadly in line, therefore, only 1¾ per cent. will be paid on endowment mortgages.
Option mortgages will be available through building societies, local authorities, insurance companies and friendly societies. It would not be practical or desirable to apply the scheme to anyone who is prepared to lend for this purpose. A great deal of thought has been given to the administrative problems of paying subsidy and having it credited to the borrower's account, with the object of keeping the operating costs to the minimum. Under the scheme which has been devised, the subsidy will be paid in bulk to the lending agencies. They will claim from the Exchequer at appropriate in
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tervals 2 per cent. or 1¾ per cent., in the case of endowment mortgages, of all the capital outstanding from time to time in those cases where the borrower has opted for the subsidy. The borrower will simply be given a mortgage with repayments calculated as if it had been at 2 per cent. less than the current rate of interest. This is the situation so far as new borrowers in the future are concerned.
But the scheme will apply equally to existing borrowers who already have mortgages. It is common practice for both building societies and local authorities, as interest rates fluctuate, to leave the borrowers' regular repayments at their existing figure but to adjust the period of the loan. This frequently means that the current repayments on a loan bear no direct relationship to the current rate of interest. To avoid the vast number of individual calculations that would be involved, the subsidy will be reduced by a uniform one-sixth, or broadly, the effect of the subsidy. This will not give exactly the right result, and any margin will be corrected by a small adjustment of the period of the loan. This scheme is, of course, for assisting owner-occupiers, but it is also being applied to the co-ownership housing association. In co-ownership housing, a comparatively new development in this country, the members of the association own cooperatively the houses which they occupy. This type of association has been treated in the past as equivalent to owner-occupation for tax purposes—it is indeed a special form of owner-occupation—and the Bill extends the right to receive Government subsidy to them by regulation.
The essence of the option mortgage scheme is that it will effectively reduce the interest which has to be paid on a mortgage when it has been obtained. But the obstacle for many people in buying their own home lies in finding the necessary deposit. Linked with the option mortgage scheme in Part II of the Bill, therefore, is a new scheme designed to enable option loans to be made in excess of the amount which would normally be advanced, and up to 100 per cent. of valuation in suitable cases. This will be done under an arrangement by which the excess advance will be the subject of a guarantee to be given jointly by the Government and an

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insurance company. The arrangements have indeed been worked out with the Building Societies Association and the British Insurance Association.
This scheme is being grafted on to existing well-tried arrangements by which mortgages above the normal level are advanced on the collateral security of an insurance indemnity, and the guarantee will be provided by an insurance policy in the ordinary way. But since the Government will be joining with the insurance companies in sharing the risk, the premium—which is normally a single payment—will be reduced accordingly. The borrower will be able to add this to the mortgage debt and repay it over the period of the loan.
The option mortgage scheme will come into operation with effect from April 1, 1968: that is to say, subsidy will be payable on mortgages which are then already in existence as from April 1, and thereafter on new mortgages from the date when they start. Those whose mortgages are already in existence will in general have to decide whether or not they are going to opt for the Government subsidy by the end of this year. After September 1 next, new borrowers applying for mortgages will be asked to say whether they propose to opt for the Government subsidy or to keep their right to income tax reliefs at the time when they apply formally for a loan.
The guarantee scheme will be brought into effect after the option mortgage scheme on a date to be fixed by the Minister by statutory instrument. This will be fixed after consultation with the building societies and insurance companies, the object being, of course, to ensure that adequate funds are available to meet the anticipated increased demand for loans.
Before concluding, I must express appreciation on the part of the Government for the great deal of help and cooperation which the Minister has received from the building societies, the local authorities, the friendly societies and the insurance companies in working out the details of the option mortgage scheme and the guarantee scheme, particularly as we know that the option mortgage scheme will inevitably add to the complexities of their day to day business. Nevertheless, they have agreed to co-operate in
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the arrangements, and the Government are most grateful to them for all their helpful service.
My Lords, my noble friend Lord Kennet will have more to say on this subject in replying to the debate, and he will, I am sure, supplement my own observations most adequately. This is a Bill to help the housing programme, with which we are all concerned, and it involves both what we have called the public and the private sectors. It is comprehensive in scope and generous in its provisions. I am glad indeed that it has received such general support from all quarters. It is a major piece of social legislation which over the years will have a great impact on the housing needs of this country, and will I am sure bring increased hope to those who, unfortunately, still suffer the stress, burden and frustration of inadequate or congested homes. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Sorensen.)
4.25 p.m.
LORD BROOKE OF CUMNOR: My Lords, we are all grateful to the noble Lord, Lord Sorensen, for his speech introducing this Bill and explaining its provisions. Though I cannot go so far with him in the flattering remarks he made at the end of his speech about its importance and effectiveness, I can give him the assurance which probably at this moment he most wants, that the Opposition will certainly be ready to co-operate in speeding this Bill on to the Statute Book.
It was my concern about housing conditions with which I was familiar when I was an undergraduate that first aroused my interest in politics; and whatever I have done in the political scene since, the fact that large numbers of our fellow citizens are living, and continue to live, in disgraceful conditions has never been far from my thoughts or my political purpose. I hope the noble Lord will not mind my saying that I cannot help feeling grieved at the loss of impetus in the housing programme which has been suffered in these last two and a half years. We had hoped—the Conservative Government had planned, and the Labour Opposition had led us to expect—that whichever Government won the Election there would be a continuance of the rise in the number of new houses completed. I am glad that

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the noble Lord confirmed the target of 500,000 houses by 1970; but the Government having missed their target in 1965 and 1966, and being certain to miss their target again in 1967, of 400,000 houses—not 500,000—one cannot help feeling sceptical about their ability to reach 500,000 three years hence.
LORD SORENSEN: I am sure the noble Lord will agree that there has been a steady increase, and the 486,000 houses built last year in the public and private sectors represents a distinct advance on which we can build for the future.
LORD BROOKE OF CUMNOR: The noble Lord said 486,000; the correct figure is 386,000. In fact, when the Conservative Government went out of office there were some 430,000 houses and flats under construction, and only 380,000 of those were completed during the subsequent year, 1965. There is no doubt that if the Labour Government had not forfeited the confidence of the building industry in that year, a figure of 400,000 would have been reached. If the Conservative Government had remained in power the figure would have been 420,000 last year and 440,000 this year. On present housing figures it looks as though by the end of 1967, next Christmas, there will be something like 100,000 families who will be without the homes that they badly need, and who would have had homes if the Conservative Government had remained in power after 1964.
LORD KENNET: I am grateful to the noble Lord for yielding. Would he not agree that the number of houses under construction at any moment is a less valid measure of housing progress than the number of houses completed in any given year; and that the number of completions has risen year by year, not only since the present Government took office, but during the latter years of the Conservative Government's tenure of office?
LORD BROOKE OF CUMNOR: My Lords, I agree that the number of houses completed is the most important figure of all, and that is why I was surprised by the noble Lord's colleague, the Joint Parliamentary Secretary, taking so much credit recently for the number of houses in Greater London planned but not completed. It is quite true that it is the
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number of houses completed that matters. But whereas when the Conservative Government went out of office there was a steadily rising trend, that has slowed off, and so far the Government have been able to get little beyond 380,000 completions a year.
LORD MITCHISON: Perhaps the noble Lord will allow me to interrupt. Did I not hear him claiming credit for houses which had been planned or promised, and not completed? Surely the right test is completed houses. If the noble Lord wants another test, it should be the same for both Parties.
LORD BROOKE OF CUMNOR: My Lords, it would have been the same if people had been wise enough to put a Conservative Government into office. But in fact there has been this loss of impetus, just as in 1951, when a Conservative Government came in, there was a great new surge of impetus which carried the figures forward.
This Bill is, for the Government, a kind of rescue operation, but my sincere hope is that both Parts of it will succeed, and succeed rapidly, in getting more houses built, both in the private sector and in the public sector. Part I embodies an interesting experimental subsidy. We have been trying various kinds of subsidy ever since the Addison subsidy of 1919, and broadly speaking each subsidy Bill has probably been an improvement on the last. I was responsible for one in 1959. But certainly no Government to date could have put its hand on its metaphorical heart and claimed that the subsidy system was perfect. In the old days, before the Labour Party gained power in 1964, their plan (as I understood it) was for artificially low rates of interest to be made available to local authorities for housing purposes, which would have constituted a hidden subsidy. I think this plan in the Bill is both more ingenious and more sound, because this is an open subsidy, and it always seemed to me it would be a weakness if one had some kind of concealed subsidy for housing alongside an open one.
This subsidy is new, experimental and generous, at a time like this when the Government have forced interest rates up so high. Certain questions arise. The former subsidy, which it replaces, was selective in the sense that it gave a

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higher subsidy to those local authorities with heavier financial burdens on their housing revenue accounts. This new subsidy, as I understand it, has done away with that differential and will be, at any rate for all new houses henceforward, at the same rate regardless of the financial problems of the particular local authority on the housing side. I say "for new houses" because I appreciate that there are special arrangements in the retrospective clauses, and I am not making any criticism of them. I think it was wise to have a retrospective provision in respect of certain local authorities. Retrospectively there is an element of selectivity in it, but not as regards new houses to be built in the future.
The second question which must be asked is this. If this policy of controlled interest rates—assuming I may use that term—is right for housing, why do the Government withhold a similar concession from local authorities which are building schools or colleges or children's homes, or all the other kinds of local authority building for social purposes? What is the logical difference? It appears to be because the Government do not mind being brutal to the ratepayers generally, so long as they are considerate towards one section of the ratepayers; namely, the council tenants. Many council tenants have small incomes—some, very small incomes—and thoroughly deserve assistance, while many of them have quite large household incomes and do not need subsidy at all. We cannot escape the fact that under these generous subsidies, as under previous subsidy schemes, a great deal of money will go to tenants with no need.
I am aware of all the difficulties about differential rent schemes and rent rebate schemes and so on, but so far as I know all Parties in Parliament are now agreed that, ideally, subsidies which we vote here in Parliament should be wisely allocated among tenants so that tenants who receive subsidy do so according to their needs and do not receive subsidy beyond their needs. There are some local authorities which have achieved that. There are some extremely good differential schemes operating now, but I think the noble Lord, Lord Kennet, will confirm that the majority of local authorities do not yet have schemes which achieve that ideal object, and that it would be much
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better if they did. I understand that a Working Party has been studying this as between the Ministry and the local authority associations. If the noble Lord, Lord Kennet, in winding up, could give us any information about progress there, I think it would be helpful, because all of us who are interested in housing, and certainly all of us in your Lordships' House who are concerned, even formally, with the voting of money for Exchequer subsidies must naturally ask what further action the Government contemplate to secure that all housing authorities adopt sensible rent schemes.
I should like to illustrate this, if I may, by one quotation from a member of the Government speaking in another place. The Joint Parliamentary Secretary, Mr. Mellish, winding up the Third Reading debate on this Bill on March 8, said:
"This is the best Bill dealing with subsidies ever to be introduced by any Government. Simple figures illustrate that. Today, subsidies are running at £86 million a year. Under the Bill, they go up this year to £100 million, and by 1970 they will rise to £140 million."—[OFFICIAL REPORT, Commons, col. 1711.]
I know what was in the Joint Parliamentary-Secretary's mind. He was thinking of the people who were in need, and he felt that more and more Exchequer money was being made available for those who were in need. But of course the fact is that one cannot evaluate the use made of housing subsidies simply by adding up their total amount. We all of us know that it is easy to make money available; it is a far harder task so to allocate that money so that it does the maximum good.
LORD MITCHISON: My Lords, would not the noble Lord like to add the last sentence, which he has omitted from the quotation, or shall I add it for him?
LORD BROOKE OF CUMNOR: My Lords, I will gladly add it. I will go right to the end. Mr. Mellish added two further sentences:
"We are determined to give aid to those in genuine need. This is a Bill which even their Lordships will describe as a first-class Bill produced by a first-class Government."
If the honourable Member really thought that I should declare this to be a Bill produced by a first-class Government I think his imagination was running riot, but I am grateful to the noble Lord for

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having invited me to quote the other sentence, when Mr. Mellish said:
"We are determined to give aid to those in genuine need ".
That is just my point. One cannot be certain that one is giving aid to those in genuine need, simply and solely by paying out more money from the Exchequer. Indeed in a sane world where economics were less topsy-turvy it should not be necessary to subsidise the rents of nearly so many people. We do not have to subsidise food and all kinds of other necessities of life, but in this country and, let me say at once, in most other industrialised countries, we have brought ourselves into a situation where it is necessary to pay a subsidy from some source or other in order to make the rents of newly-built, good standard houses or flats within the reach of people who are not well off.
LORD SORENSEN: My Lords, did I understand the noble Lord to say that we do not subsidise food?
LORD BROOKE OF CUMNOR: I forget the exact words I used, but I was seeking to say that we single houses out for very large subsidies from the public purse. I know that we subsidise school meals, and items like that.
LORD POPPLEWELL: My Lords, seeing the noble Lord is widening the scope of this debate, would he not put housing subsidies in relation to subsidies to the Cunard Line for building Q4, to various aircraft projects, to agriculture, vast sums of subsidies? Seeing that he is dealing with subsidies, should he not mention also the vast amounts of subsidies given to private enterprise, probably very rightly—I am not complaining—in order to encourage their business?
LORD BROOKE OF CUMNOR: My Lords, the noble Lord is possibly imagining that I am seeking to make some nasty Party point here. I am not. I know perfectly well that subsidies are voted by Parliaments, sometimes wisely and sometimes unwisely, for a variety of purposes—in the case of the Cunarder, it was done for national prestige; but we do not, so far as I am aware, subsidise the whole of the shipbuilding industry, and we do not subsidise on this scale anything that I can think of, except agriculture; and in that case it is a subsidy to the farmer rather than to the consumer.
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I come back to what I was saying, that if we did not live in an economically topsy-turvy world we should be able so to arrange matters that people could, out of their earnings, pay for the roof over their heads in the same way as they can pay for food and all kinds of other necessities and semi-luxuries of life. But, so far as I am aware, no industrial country has managed to solve this problem. Every country has large numbers of people living in what are rightly regarded as sub-standard conditions, and some of them, at any rate, will need new good standard housing. I say "some of them" will need it because others of them will manage to find older housing that will suit them.
But surely noble Lords opposite cannot argue that simply to increase the bill for housing subsidies should be regarded as a good thing in itself, any more than that an increase of the agricultural subsidy bill can be regarded as a good thing in itself. What is a good thing is to relieve need, and therefore the use made of these subsidies must be carefully regarded, and we have all the time to make sure that we are achieving value for money. This is something we know we are not doing over quite a large field in the use of these housing subsidies, as a result of the failure of many local authorities to adopt schemes which ensure that the money goes only to tenants in need, and only so far as they do need it.
Perhaps I may return now, after those interruptions, to the Bill. This seems to me to be essentially a House of Commons Bill. It deals with money matters. It is not the kind of Bill which your Lordships can extensively amend. I am therefore not proposing to go into the financial details; but I have one or two questions of which perhaps the noble Lord, Lord Kennet, would take note. In various places in this Bill we find the use of those somewhat objectionable words "reasonable" and "unreasonable". I well remember the noble Lord, Lord Mitchison, when he was in Opposition and I was the responsible Minister, criticising me whenever I sought to include either of these words in a Bill. We have a provision in Clause 1—it is on line 35 of page 2—relating to the Minister being of opinion that
"an unreasonable rate burden will have to be imposed or unreasonably high rents will have to be charged by the authority".

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Can the noble Lord, Lord Kennet, when he replies, tell us what the Minister is likely to regard as reasonable or unreasonable in these matters? So far as I know, we have had no guidance on that, and I do not think any answer was given to that question in another place. But it is very pertinent here, unless we are giving the Minister an arbitrary discretion.
Likewise we have in Clause 3, in relation to the cost yardsticks:
"what in the opinion of the Minister, having regard to all the circumstances of the case, should be the reasonable and appropriate cost".
Can the noble Lord give us any indication (this relates to the future, whereas the other one related to the past) what the Minister is going to regard as the "reasonable and appropriate" cost? I entirely see the necessity for introducing into this new subsidy scheme the concept of the cost yardstick. I hope that it will do something to check those local authorities which, through employing direct labour, have in fact had to spend far more on some of their building schemes than was at first estimated, though I am not sure this plan is entirely watertight even now against them. I should be particularly grateful to the noble Lord if he could tell us whether the Minister has in mind different yardsticks for traditional building and for industrialised building. So far as I know, it is the policy of the present Government, as of their predecessor, to stimulate building by industrialised methods. Indeed, most of us take the view that the target of 500,000 could not possibly be reached otherwise. But industrialised building, at any rate at present, tends to be more expensive, and I think the Government themselves would regret it if the cost yardstick plan were in fact to operate as a disincentive to local authorities to make use of industrialised methods.
I warmly welcome Clause 15, to which the noble Lord, Lord Sorensen, referred, increasing to £15 the subsidy for hostels. I welcome also Clause 12, which grants subsidies for conversions or improvements by housing associations, a clause which, if I remember rightly, was introduced by the Government on the Report stage in another place after pressure from some of my political friends at the Committee stage.
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My Lords, I turn now to Part II of the Bill, and I welcome the scheme of option mortgages. I also welcome the wisdom of the Government in yielding to persuasion from the building societies that their original scheme for accomplishing their object was unworkable. This is a better plan. I think we all regret, and particularly those who are thinking of getting married within the next 12 months, the delay until April, 1968, on which the Government are insisting before this new scheme of option mortagages comes into operation. I regret, too, what appears to be the indefinite postponement of the guarantee scheme under Clause 30. The Government are taking the requisite powers in this Bill, but clearly none of us can count on that scheme being in operation by any given time. I am very glad that the option mortgage plan is to extend to co-ownership schemes, although I would suspect that these new concessions are likely to kill the cost-rent schemes. They do not appear to me to gain anything from any part of this Bill and cost-rent will seem henceforward to be, by comparison, expensive.
There is, of course, nothing here about the 3 per cent. mortgages which we heard all about from the Foreign Secretary in Election days. It seems a long time since the present Prime Minister, speaking at Sittingbourne in 1963, said:
"By intelligent monetary policies, Labour will bring mortgages within the reach of young couples on average incomes."
Their intelligent monetary polices have landed us with a 7 per cent. bank rate for a longer time in the first 2½ years of Labour Government than during the whole 13 years of Conservative Government. This Bill is brought in against a background of a 7⅛ per cent. mortgage rate, compared with a 6 per cent. rate when the Conservative Government were in power. Since then, of course, building costs also have gone up. They have been further increased by the selective employment tax. I simply cannot conceive why the former Minister of Housing, Mr. Crossman, agreed to the Chancellor of the Exchequer introducing that into his Budget and applying it to building work. I can only imagine he received no warning from the Chancellor at all as to what he was proposing to do. It has been calculated that the selective employment tax alone adds £150 to the

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price of a £3,000-house, and all that has to be set off against any reduction in interest rates which this Bill will secure.
I said at the beginning that it is the number of new houses built that matters more than anything else. The noble Lord, Lord Sorensen, confirmed not only the Government's target of 500,000 houses by 1970, but also the Government's hope that they would be divided, roughly equally, between private sector and public authority building. He said that private enterprise building was unpredictable. Private enterprise building in fact is very predictable, provided the Government continue to deserve the confidence of the private builders. I can tell him that this Government will only achieve their target on the private enterprise side, and I think on the other side too, if they gain and keep the confidence of the building industry. I am not saying that everything was perfect while the Conservative Housing Ministers were in power. But the Conservative Government did achieve that; they did throughout the years secure and retain the confidence of the building industry, and I do urge upon present Ministers that they should not regard that as something they can play about with.
In our time, in those 13 years, house ownership went up from roughly 31 per cent. to 47 per cent. of all the families in the country. The number of houses built by private builders in 1966 was 13,000 lower than in 1964. We shall watch with keen interest to see whether that shortfall is now quickly made good, and more than made good, because if option mortgages are not to drive up prices by upsetting the equation of supply and demand many more houses must be built for sale. Otherwise, nothing is gained for the people who are wanting mortgages by lowering the cost of the mortgage to them; if that simply increases the demand, and if the supply of houses is not correspondingly raised, house prices will go up.
May I ask what is the Government's attitude to the scheme which I initiated, and which was a great success, while it lasted, of making Exchequer advances to building societies to assist them to grant 95 per cent. mortgages for older houses? That went extremely well; nearly the whole of the £100 million was taken up.
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It has never been revived. I appreciate that there is a danger in this scheme, because if it was brought in at the wrong time it could force up house prices. At the same time, building societies are generally less anxious to lend on these old, smaller properties than on new houses. I should like to be assured by the Government that they have the purchase of old houses in mind no less than the purchase of new houses, and that if conditions seem appropriate they will reactivate that scheme.
We are dealing with a Housing Subsidies Bill, and it is not the occasion for an extensive debate over the whole field of housing, but perhaps the noble Lord, Lord Kennet, will allow me to ask one or two questions on matters essential to an integrated housing policy. I have said the building of new houses is the most important test of all, but the modernisation of older houses is, in our present circumstances in this country, nearly as important. Of course, when older houses pass into owner-occupation, modernisation normally gets done, and that was one of the virtues of the £100 million scheme for assisting the purchase of older houses. May I ask the noble Lord if the Government are satisfied with the progress of modernisation? Let me say at once, I was never satisfied with it all the time I was Minister. I took various steps to speed it up. They all had some effect, but even yet it seems to me we have not got powerful enough instruments to bring about the rapid conversion and modernisation of all the older houses in this country—houses such as none of us would wish our daughters or daughters-in-law to move into when they get married because of the lack of modern amenities.
Secondly, are the Government satisfied that the powers under the 1961 and 1964 Acts to deal with bad management of houses in multi-occupation are effective? I hope they are. I was responsible for the original powers in 1961. That was an experiment, like Part I of this Bill, and I am well aware you do not always get an experiment right first time; it was necessary to tighten them up in certain respects in the 1964 Act. I am asking these questions simply because this might be the only time for some months when we shall have the opportunity to debate housing here. It would be a pity if

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we were to speak as if those topics specifically included in this Bill were the only ones which should be of interest to the Minister and your Lordships in developing our housing policy. My Lords, I conclude as I began. This is a useful Bill. By common consent it was considerably improved in the course of its passage through another place, and we on this side of the House will do all in our power to speed it on to the Statute Book.
4.58 p.m.
LORD SILKIN: My Lords, may I begin by saying that I infinitely preferred the ending of Lord Brooke of Cumnor's speech to the beginning. He began by the usual wrangle about the defects of the present Government, and how much they were below their forecasts. He made a speech which was almost identical in terms to the speech which his opposite number made in another place—he might almost have read out what his opposite number said on that occasion. It was rather surprising that he should have done so, because in his later remarks he indicated the source of his interest in housing. He mentioned that even as a young man he had become very much concerned about housing conditions of the people, and had retained that interest ever since. Just to match that, may I say that my own interest in housing began when I was first born, because for a great many years of my early life I lived in the sort of house that we are trying now to improve or to get rid of. I am quite familiar with the slum dwelling, and therefore both the noble Lord and I have a common interest in the housing problem.
I pay full tribute to the noble Lord's sincerity in trying to deal with the housing question, and it is a great pity that one should start off by treating this as a purely political matter, with this rancour about "You said 400,000: you have built only 383,000." If the noble Lord were quite sincere he would pay tribute to the fact that this is the highest number of dwellings that has ever been erected in one year in the history of this country. Surely that is something about which we can feel proud.
But is this not all shadow boxing? The number of houses that are built in any one year by a Government is a complete misnomer. The Government do not build houses at all; it is the local
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authority. The Government can only inspire or encourage local authorities to build more, and the method of doing it is by providing a greater financial inducement. This Government are hoping, just as previous Governments have hoped, that by greater financial inducements, they can get an increase in the number of houses built. The noble Lord said that the numbers of houses are all important. Of course they are important, but they are not all important. I think far more important is the kind of houses that are built, where they are built, and whether they satisfy the needs of the people whom we want to help.
The noble Lord said that the amount of subsidy was irrelevant as compared with those who received the benefit of it. He was anxious that those who most needed the subsidy should get the benefit of it. I completely agree with him: I agreed with the whole of that part of his speech. But he must also recognise that mere numbers of houses are not by themselves significant. If you were to build all your houses in Eastbourne and Bournemouth and the southern seaside resorts, and ignore the East End of London, you would not be going far towards meeting the problem. To a great extent, when you count numbers, that is what has been done in the past.
One of the things that worries me—I am going rather wider than the Bill itself—is that our machinery for building houses by public enterprise is really not the most efficient or satisfactory. Nobody would dream of devising a scheme for building houses that are most needed in this country by appointing 1,400 agencies, local authorities of varying sizes, large and small, efficient and inefficient, those amply supplied with finance and those not, each of them with the responsibility for providing houses. I am very glad that a Royal Commission are sitting, which I hope will drastically reduce the number of local authorities with housing powers. I am sure that if they do so, it will make for greater efficiency.
I wish also that it were possible to have some kind of subsidy which would distinguish between houses which are being built in areas where housing is most needed as against those in areas where it is less urgently needed. I recognise that the Government have made

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a beginning by some kind of discrimination, by selecting a number of authorities where the subsidy will begin earlier than it would otherwise. That, at any rate, is an acceptance of the idea, but I hope it may be possible to go further.
May I say a word about targets? The noble Lord, Lord Sorensen, referred to a target one day of half a million houses. May I say that throughout our housing history we have underestimated our housing demands. I do not want to analyse deeply the figures which the noble Lord himself gave, but I could quite easily demonstrate to him that he has underestimated our housing requirements, and if we are successful even in building 500,000 houses a year, all we shall be doing is to stand still: we shall not be improving our housing conditions. Even if we go on for the next ten years building 500,000 houses a year (I shall not be here to see the conclusion of it, so it is easy for me to prophesy), I am quite certain that, on the facts as we know them at the present time, on the forecasts that have been given officially, 500,000 houses a year will not be adequate to meet all our requirements and to improve conditions. But at least let us get on with the 500,000.
LORD COOPER OF STOCKTON HEATH: My Lords, would the noble Lord give way while I make a point? While I agree with him that targets are not wise, would he not agree that the capacity to build houses depends ultimately upon the whole of our investment programme, and housing itself must share part of the overall investment? This is the speed at which, in practice, we can work.
LORD SILKIN: My Lords, certainly I would agree with that. But I do not think we ought to be too complacent about these targets, because never in the past have our targets been high enough, and I see no reason why they should be more successful in the future.
There is one other factor that I wish to deal with, though I do not think the noble Lord himself touched on it. I agree to a great extent with what he said on the question of subsidy. We are dividing into two sections those of the population who are obliged to live in rented houses. If you are lucky enough
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to get a council dwelling or a dwelling with a housing association, you get an enormous subsidy from the Government. It is perhaps £2, or it might even be £3, a week in subsidy. If you are living in an expensive flat and are not fortunate enough to get a dwelling from a local authority, even though you are compelled to live in rented accommodation, you get nothing. Yet in many cases the people who are living in rented accommodation are no better off than those who have council accommodation.
Is there not some way in which the Government can help those who are compelled to live in privately-owned rented accommodation? Have the Government even considered that problem? Because at the moment there are far more people living in privately-owned rented accommodation of a completely unsatisfactory nature and who are paying enormous sums by way of rent than there are in council rented accommodation. I know that the Rent Act is intended to bite to a certain extent. There are limits to the rent a person can be forced to pay if he has the knowledge and the courage to take advantage of his rights, but nevertheless there is this vast difference between the privately rented house and the council rented house, and very often it is a matter of chance as to whether you get local authority accommodation.
I should like now to say a few words about mortgages. The option mortgage is no doubt a satisfactory method, I suppose the best the Government could devise, of putting the person who gets no relief from income tax because his income is too low in the same position as the person who gets the full advantage. But the position of a person who has to exercise the option is a very difficult one. These are people with low incomes who have no advice accessible to them and who have to decide, at the time of taking a mortgage, whether they will take advantage of the scheme. Look at the imponderables they have to consider, if they are in a position to consider them. First of all, they have to consider what is the likely rate of interest. At the moment, with interest rates as high as they are, it may pay them to take advantage of the scheme. If interest rates go down, it is another matter; they get no benefit beyond any interest above 4 per cent., 2 per cent. being the maximum. In normal times the rate of

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interest of 5 per cent. may be appropriate. In that case all they would get is 1 per cent.
They have to weigh this up once and for all. At the moment they are not paying income tax because their income is low, and they have to weigh up their prospects of having to pay income tax in the future. They even have to try to fathom what is in the mind of the Chancellor of the Exchequer as to what will be the rate of income tax in the future, and whether it will increase or decrease. A man is being asked to decide all these matters at the time of taking a mortgage. He is being asked to decide once and for all, and he must make his choice. This choice may last, if he is in occupation for that time, for 25 years with no chance of changing it. I wonder why the Government are so insistent that, having made the choice, it is to be a choice once and for all, and that the man is not able to change his mind when his own circumstances or general circumstances have changed. I can see no great harm that would come to the scheme or to anything else if he were permitted to change his mind.
I was under the impression that a scheme was to be introduced which would shield people who could least afford it from the high rate of interest charges. At the moment, as the noble Lord, Lord Brooke of Cumnor, said, people are paying 7⅛ per cent. and they are committed to that rate for the duration of their mortgage. Those people who get income tax relief in respect of their payments of interest are getting no other relief in respect of the high interest rates. I hope interest rates generally will come down, but there is no guarantee of that if they have borrowed their money from a building society. All they can do, if they are fortunate enough to be able to manage it, is to pay off the building society and reborrow elsewhere. But that is a rather costly procedure and is not very satisfactory. You have to pay a redemption fee; then you have to find another mortgage and pay their fees again; then there is a fresh survey, fresh legal costs, and so on. It is not an entirely inexpensive matter to change your mortgage, but it is all that is available to a person who may be committed for 25 years to a mortgage at a rate of 7⅛ per cent.
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I was hoping that the Government would have found some way of giving relief to those people who are forced to pay these high rates of interest. It is true that they are receiving some benefit from income tax relief on their payments, but it is nothing compared with the subsidy that would have been payable if they were living in a rented house. The nation is being paid the cost of this subsidy in the case of people who are buying their own houses. It is impossible to do so under this Bill, but I hope that the Government will give further consideration to the possibility of giving help to such people who in many cases are just as worthy as are the potential tenants of local authority houses. As the noble Lord, Lord Brooke of Cumnor said, it is difficult to talk about the financial aspects of this Bill in any detail because this House is not primarily concerned with these financial matters. I hope that we can suggest a number of ways in which the Bill might be improved in Committee.
I join with the noble Lord in welcoming this Bill. In fact the noble Lord welcomed the Bill rather more warmly than did some of his colleagues in another place. Their welcome was rather cool and unenthusiastic. I think the noble Lord was rather more enthusiastic. I think he is quite right, for this is a good Bill. I agree with the words of Mr. Mellish in another place (I am not sure if I may use his name) that this is one of the most far-reaching housing measures we have had in our day. I hope it will meet with great success, but that does not mean that we shall not be able to improve it as we go along.
5.17 p.m.
LORD HAWKE: My Lords, I have never been one to indulge in the older Parliamentary game of, "We built X; we will build Y" and vice versa, because it is the builders who build houses and not local authorities, as the noble Lord, Lord Silkin, said. Builders operate according to the economic climate of the day. The economic climate has not been very good of late. I personally welcome the squeeze. I think it is the one good service this Government have performed in the whole time they have been in office. It is regrettable, however, that the effect of the squeeze should have borne so hard on housing. It could have been avoided by proper arrangements

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with the banks for bridging loans, and to a large extent housing should have been allowed to opt out of the squeeze. In the debate in which I took part last year, I asked the Government what were the views of the Chancellor of the Exchequer on these matters, and I got no reply.
By increasing subsidies this Bill, to my mind, illustrates the general malaise of the whole building situation. To have subsidies at all is bad enough, but to have to increase them is worse. Building costs are an integral part of the overhead charges on our nation, and too high costs are visited on our economy unto the third and fourth generations. I am more familiar with the field of housing which deals with the provision of single, custom-built houses for the Church of England, and I know that the price of those has gone up by at least 50 per cent. in the last five or six years. Here there is no question of land prices at all; the land belongs to us. I am referring to the plain, simple building costs.
Knowing very little about local authority tenders, I looked them up this morning and, expecting to find that the prices for local authority tenders had risen much less, I was very disagreeably surprised to find that between 1960 and the second quarter of 1966—and that is not by any means the latest price—prices had gone up by approximately 60 per cent.; that is, from £1,615 to £2,672. Then one must add site costs and the like, so that the cheapest three-bedroomed house is to-day costing something like £3,500 if one includes the extra cost imposed by the S.E.T.et cetera.
I understand that the United Nations suggest that 20 per cent. of income should be available for housing. That is a very low figure and, in some cases, the building societies go up to a third. But if one takes 25 per cent. of income as available to finance house purchase, one gets to the situation where a man with the average industrial earnings of £1,000 a year can just afford a house costing £3,500 or thereabouts, although it is by no means sure that, at any rate in the Home Counties, he can obtain a dwelling at that price. When we turn to renting the position is still worse. I imagine that a renter would consider that anything under a 10 per cent. return on the cost of his money and repairs would be
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grossly uneconomic. But 10 per cent. on £3,500 comes to approximately £7 a week, and that is on a cheap, three-bedroomed house to be built to-day.
This appalling cost of building has been recognised as an increasing burden for some time. It was hoped that calling on industry to make the mass-produced house would be a remedy, but apparently these houses cost more than the others. Why is that, and why is building so expensive in general? No one seems to know. There are so many possible explanations. Management may be incompetent, but our biggest firms obtain huge contracts overseas against international competition. The components may be too dear, and possibly there is not enough standardisation. One does not know. Labour may be incompetent, so are our training facilities adequate and is the number of new entrants to the journeyman trades sufficient? Men may be badly deployed or idle. We know that money is dear, but how can we expect otherwise when consumption based on hire-purchase is so high and savings are so low? It is a question of supply and demand.
If all these factors are ruled out as possible causes of the malaise, then we have to resign ourselves to other alternatives, other theses, the curing of which may be much more intractable. We might have to say that our ideas about the proportion of income which is regarded as rightly available to provide shelter are too low. We might have to say that industrial wages are still too low. But how are we to export if they go much higher? We might have to say that the standard of houses is too high, but everybody in the country would recoil from such a suggestion. I should prefer the first lot of possible explanations to be investigated, including the way in which the building industry is used.
The other day my noble friend Lord Eccles made what I think was the best speech on education which I have ever heard in this House. He emphasised that the art of Government was the art of priorities, and he said that in the educational field it was quite impossible to do all the things which in the eyes of most educationists were vitally necessary. He said that such a situation had always existed and, indeed, always would exist. I believe that far too much building

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work has been attempted, and there has not been a sufficient emphasis on priorities. Housing should have a much higher positive priority than it has had over the last few years. For instance, the Offices, Shops and Railway Premises Act, however necessary it might be to get rid of slum offices, et cetera, could well have been postponed. A great deal of local authority building is very desirable, but it could well have been postponed. I doubt whether, in comparison with housing, the provision of many new universities could really be justified on a priority basis.
The fact is that the whole building industry has been overloaded, but, as the Economist has stated in another context, it is just playing into the hands of the monopoly bargaining power of the trade unions if one overloads the economy. Then, I think it is time there was another inquiry into the whole economics and deployment of the building industry, from the component factories to the finished house. At the moment, huge volumes of Government and local authority work are making it easy for people to pay more and more money. Wage rates go up every year, and we do not know very much about how the earnings go up. If some of the rumours one hears are correct, then some of the contractors are paying very much higher than the normal wages in order to entice men into their employ and away from their competitors.
To subsidise housing at large is obviously quite uneconomic. In many cases, one is merely subsidising the motor industry; the lower the rent the larger the car can be. But so long as politics are politics the battle cry, "If the Tories get in your rents will go up" is an absolute sure winner, and the Labour Party has recognised that for many years. Proper rent rebate schemes have the effect of diverting subsidies to those who need them most. But of course this could be achieved in other ways; that is not the only method. But how many proper rent rebate schemes are being operated in this country at the moment?
To turn for one second to the Bill itself, Clause 12, which covers subsidies to the housing associations, seems to be one of the best provisions in the Bill. Even with the subsidy, I think that most of these tenants will be paying a very sub
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stantial rent; probably far higher than local authority rentings, or more than purchase through a building society would cost. This seems to me the only hope, outside local authority housing, of providing rented accommodation; and there are many people in this country for whom it is highly inconvenient to have to buy a house—people whose jobs tend to shift from place to place.
It ought to be possible for houses to be provided by mass-production techniques at prices which can be afforded even by those who are slightly below the industrial average wage, and to do this without a subsidy. But it might entail a considerable shake-up in the tradition and practice of the deployment of the building industry. Something ought to be done. The Government's steps seem to be higher subsidies, higher taxes, selective employment tax and Land Commission tax on land. All these things seem to be steps towards higher housing costs. The Government claim all sorts of credits and responsibilities towards building. It is time they got down to reducing the costs.
5.30 p.m.
LORD MITCHISON: My Lords, it is expedient to be short. I found the noble Lord, Lord Brooke of Cumnor, in his most enchanting form. He always reminds me of Dr. Jekyll and Mr. Hyde. This time, if he does not mind my saying so, he was more Dr. Jekyll and Mr. Hyde than ever. We began with pure Dr. Jekyll; that is, with a little bit about his enthusiasm for and interest in housing, which I entirely accept. I may have heard it before, but I do not mind how often he says it, because I think it is really good Dr. Jekyll. Then we had a terrible bit of Mr. Hyde about the housing record of the two Governments. Really, with great respect this is sheer nonsense. One has only to look at the table on page 6 of the White Paper, The Housing Programme, 1965 to 1970, which is conveniently printed in connection with this Bill.
It is quite a simple story. What happened was this. There was indeed a surge in 1951—the noble Lord, Lord Brooke of Cumnor, is quite entitled to claim that—but it stopped in 1954. I am looking at the "All Dwellings" figures. They then fell, they continued to fall for a number of years and then ran roughly

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level until just before the 1964 Election, when they mounted up again. That was when we were promised or offered all kinds of things that might happen in the future. I prefer the test of the noble Lord, Lord Brooke of Cumnor—that of the number of completed dwellings. When one looks at the rest of this table, one sees something even more significant. While this was going on, the "Private Sector" housing roughly—quite roughly—followed the curve of the "All Dwellings"; but what fell, and fell sharply, under Tory Governments was the proportion of buildings put up at the instance of public authorities. That proportion had been a great deal higher, but in 1958 it fell below, and has since remained below, at any rate until quite lately, the figure of private buildings.
The reason why it ought not to have fallen is not due to any metaphysical question as between public and private building. Both are done by the hands, and on the immediate orders of builders by trade. It is not due to that at all. It is due to the fact that the real shortage during those years was the shortage of dwellings to let; and of course one of the things the Tory Governments did when they came in after 1951 was to start using fiscal methods in a way in which they had not been used by the Labour Government. How well I remember the constant entreaties to them not to go on pushing interest rates up high because it was so hard on local authorities! This was said time and time again; and local authorities who, under the post-war Labour Governments, had been able to borrow at round about 3 per cent. were cramped, and cramped almost to a stop, by the interest rates that the Tory Governments introduced as what they thought was the right weapon in the national economy.
My Lords, I am not going into the question, but that is what happened at the time; and the result was that their building was cramped, and they were unable to provide houses to let to ordinary working folk at rents they could afford to pay. Private enterprise did not do it; it was perhaps unable to do it, but it certainly did not do it. What private enterprise did was to build houses for sale. This is all comparatively ancient history. It is notorious by now; there can be no doubt about it. It makes me
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laugh to hear Tory Members getting up now and saying that the drive has gone out of the housing programme, when a record number of houses was built last year; and saying, "You have done terribly badly, because, instead of building 400,000, you found that the debt that we, the Tories, had bequeathed to you overseas was so large that you could manage only 385,000".
LORD BROOKE OF CUMNOR: My Lords, perhaps the noble Lord will explain how he squares his argument about the impetus going out of the programme with the fact that in 1964 total completions rose by 75,000, whereas in the two years following that they rose by only 12,000.
LORD MITCHISON: I have given the noble Lord an answer, but I think he got up too quickly to hear it. The trouble was that when we came in we had to meet an overseas debt bequeathed by the extravagance of the previous Government. That was the difficulty; and surely he has not forgotten the figure. Some people say £700 million, others say £900 million. I am not arguing as between one and the other—it depends exactly how you put it—but the answer is clear enough. The squeeze, which is the only thing in the whole programme of the Labour Government which appeals to his poor noble friend behind him, is the result of just that; and surely the noble Lord knows it. Has he been living in this country since then without realising (a) that there was a squeeze; (b) that it was unlikely to result from the malevolence of any particular Government and therefore had some other cause; and (c) that the cause was clearly obvious—the overseas debt left at the end by the Tory Government? Does the noble Lord wish to interrupt again?
LORD BROOKE OF CUMNOR: My Lords, it is good of the noble Lord to sit down. If he wants to pursue this argument, he must explain why, when the Labour Government fell in 1951, having created a far greater financial crisis, the Conservative Government had within two years put up the rate of house building by 100,000 houses a year.
LORD MITCHISON: It is 16 years ago, but the reason was that they thought their only chance politically was to increase the housing programme, which I

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entirely agree badly needed increasing. I share the noble Lord's own view, and the views of my noble friend Lord Silkin, that the housing programme has been consistently too small all the time; but it is a question of what can be afforded and what can be allocated to that purpose as against other equally urgent purposes.
My Lords, I welcome this Bill, and I do it without any reservation at all—and that is not just because I have been a member of the Labour Party for a long time. In my view, the Government have hit the right device for dealing with the subsidy to local authorities. What in fact is being done is to carry out in a rather different form the promise that local authorities should have money for housing at a cheaper rate than the normal rate, if the normal rate was too high, and for this purpose the rate of 4 per cent. has been taken as the reasonable rate to pay. I think it is about right. It is of course a question of judgment; and it will result, as is shown by the figures quoted by the noble Lord, Lord Brooke of Cumnor, in a very large increase in the assistance given to local authorities over housing. That, too, I think is right. The trouble has been that the expenses of local authorities, including the cost of house-building, and including the price of land, have gone up very considerably in recent years. There clearly was a moment—and I think this was it—when something had to he done to help them meet their housing obligations. I welcome that action wholeheartedly.
Secondly, in relation to local authorities there is one other point I should like to mention. I do not agree with noble Lords opposite who say that housing subsidies should be directed only to cases of need, for the simple reason that you just cannot do it. If you are going to do it, you are going to have to direct, through legislation from Whitehall, what are the cases of need. This is exactly the sort of question that ought to be left, and is left, to local authorities. But I welcome the arrangements that are being made at present about rent rebates. Many years ago when the noble Lord, Lord Brooke of Cumnor, was chairman of the Central Advisory Committee (I think it was called) of the Ministry of Housing, before he took office, indeed I think before he came into Parliament, he chaired a Committee which recommended, and rightly,
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that rent rebates really are a matter for the local authorities themselves. Neither he nor I would deny that there is also a case for the Government giving a lead about it.
There is one other point which I hope—which I am sure—will be borne in mind. It is that this matter of rent rebates is very different from a differential rent scheme. Differential rent schemes will not work. The reason is that people change not only their houses but their occupations and incomes. You cannot in practice keep up with what is going on. It is the biggest provider of neighbourly tittle-tattle that any kind of scheme has been, and has been proved so by experience. Rent rebates, where the tenant is obliged to show that he cannot afford to pay a normal council rent, are, I think, right in present circumstances.
My Lords, I turn now to say a word or two about the option scheme—I forget the precise title. Let us call it the option scheme and the guarantees. I too, share the regret—I think one cannot help doing it—that these things are being delayed: the option arrangements for a year or thereabouts, and the guarantees to a date to be announced later. But this is a question of what one can afford. It was put as that quite clearly in another place, and I should have thought it was quite obviously so. If one has to choose which comes into operation first, then I think it is right to bring the local authorities in for the moment. If noble Lords will look at the Financial Memorandum, the position is that the costs to the Government of both Part I and Part II are roughly the same to begin with, although they alter a little later. But, broadly speaking, the Part has been chosen which has to be chosen at present as the most urgent. I think it would have been impossible to have brought the other in and to have postponed the local authority arrangements.
The option scheme does not seem to me to be quite as difficult to understand as my noble friend Lord Silkin thought everybody would find it. The man who is going to take out a mortgage must choose between the two things. It is open to him to follow Punch's advice to those about to marry and not to take a mortgage. But, if he is to take it, there is a pretty clear table at the end

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of the White Paper which shows the comparative effect of the two things over 25 years. I should have thought the broad advice is that people who pay the standard rate might well be content with their income tax benefits, while those who pay less than the standard rate of tax ought to think seriously about taking the bird in hand in the shape of the option scheme. This would not lead many people wrong. I do not suppose that everybody in this country always gets the full advantage that he could have got out of any benefit from public funds if only he had had a bit of hindsight. It seems to me that these two schemes are about as clear as you can make a complicated matter of this sort. One must remember that they are schemes to be worked in conjunction with the building societies. I would not accept that either the Government or the building societies dictated to one another over it. It is a clear case for taking a scheme which can be worked. I do not regard it as unnecessarily complicated.
My Lords, to sum up—and I hope I have not been too long—I think the Government have hit on the right method of subsidy. It is more elastic than the old one; and Lord Brooke of Cumnor's subsidies of £8 and £24 drew a sharp line at one particular point. I do not think they worked very well. I think also that the rise in the cost of land and building since then has made those sums of money inadequate. I hope that Dr. Jekyll will agree with me that on the whole this is a pretty good solution of a rather difficult problem. It is one of several solutions. One of them was the Rent Act, which I think was remarkably good; the other is this Bill about housing subsidies—not bad; pretty good, in fact.
My Lords, so much for that side of the Bill. As for the private side, it is obviously hard to tell how this is going to work out; and a certain amount of water will have to flow under the bridge between now and the time when it comes into operation. There is a budget coming on in a few weeks' time and there will be another before the first of these two schemes comes into operation. So one can say no more than that the solution is right; it looks workable. It looks the kind of thing which might encourage not so much the builders as the developers
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to get on with more private building than they have chosen to get on with in the past.
I do not believe in the theory that builders or developers sit back and say to one another, "This is a horrid Government; we are not going to build." What they do is to look to see what they can make out of it. I think that this will help them in that respect. I recognise that they have had their difficulties. I recognise with the noble Lord, Lord Hawke, that the building industry badly needs looking at; that it is not as good as it might be. I think this Bill is a step in the right direction. Therefore, without any reservations at all so far as I am concerned, I welcome this Bill as a pretty good one, the best, I think in the field of housing finance that we have had for many years.
5.48 p.m.
LORD ST. HELENS: My Lords, I should like to say at the outset that I too welcome this Bill, so far as it goes, and that, like your Lordships, I have read the Hansard of the debates in the House of Commons where the Bill was dealt with in great detail. I should like also to thank the noble Lord, Lord Sorensen, for his extremely painstaking and lucid description of the Bill in your Lordships' House this afternoon. I must say that I was amused when listening to the dialogue between my noble friend Lord Brooke of Cumnor and the noble Lord, Lord Mitchison. It took me back many years to when this used to go in the House of Commons. I thought my noble friend was absolutely right, if I may say so, in calling attention to the failures that form the background to this Bill.
It is true that the Government, in two successive years, have failed each time to reach their much-proclaimed housing target by about 20,000 houses; and this fact deserves to have attention called to it. It is not just a question of bricks and mortar; it is also a question of extreme disappointment and misery among people who had expected to get the houses that the Government had promised they would have. It is also a question of rising cost and increased rates of interest. I think it is right that attention should be drawn to these factors as it was in the House of Commons. I said that I welcome this Bill, so far as it goes, but, of course, it

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does not by a long chalk go the whole way. It does not help the homeless, or the very poor, or those people who are living in the squalor of the slums.
My Lords, I have one or two general criticisms of the Bill—general because, as my noble friend Lord Brooke of Cumnor, said, this is really a House of Commons Bill and we do not need to go into all the financial implications. I feel that the Government are going through something of a crisis of leadership specifically in relation to the squeeze, mention of which by my noble friend Lord Hawke I very much welcomed. When I was a young man I was told that if you wanted to be a leader it was no good pointing the way, telling people what to do and then doing something completely different yourself. I was brought up to believe that if you wanted to be a leader, you explained to people what you wanted them to do and then you said to them, "Follow me", and showed by your own example how it should be done. This is specifically what the Government have not done.
The Government have instituted a crippling squeeze on the private sector of the industry and the country, but at the same time the Government are setting an appalling example by increasing their own public expenditure to the tune of £660 million. I will not continue on this aspect, because I gather from the newspapers that we are likely to debate the matter some time very shortly after the Budget Statement; but I feel that a Government who make others economise and then spend more themselves will very shortly lose the respect of the community; and this is precisely what the Government are doing in respect of this Bill.
I do not criticise the Bill, but I most emphatically criticise the timing, because under this Bill the Government are proposing to spend a great deal more money—we had the figures given earlier—at a time when they are squeezing the private economy; and, frankly, such action finds no support from me. There has been a talk about overall subsidies. I feel strongly about this matter, though possibly not many people will agree with me. I believe that if you subsidise things you will always waste your money. The only way to use subsidies economically is to concentrate them where the need is
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greatest; and you can do that, not by subsidising things but by subsidising people. This view is, I know, anathema to a Socialist Government, so I will not even bother to expound the argument.
LORD MITCHISON: My Lords, may I point out to the noble Lord that this Government, to do them justice have, like his own, done a great deal in the way of national insurance. Is not that subsidising people?
LORD ST. HELENS: Fair enough, my Lords. I am not saying that everything is black or that everything is white. On the other hand, in relation to housing the Labour Party have given massive subsidies which I believe, under a different system, might much better have gone to the occupants of the houses.
My Lords, mention was made earlier—I cannot remember by whom—of what happens to private landlords. We all know, unfortunately, that a former Minister of Housing has expressed a natural prejudice against the private landlord—indeed, much of the legislation which has been passed by this Government lately seems to me either designed to discourage or entirely to ignore the private landlord. I think the Government would do well to remember the examples provided by Europe, America and other countries, where the private landlord is looked on with extreme favour and is asked to co-operate as much as he can in housing schemes. I would remind the Government of the debate we had on the Milner Holland Report. Milner Holland said that one-third of the dwellings in London contain two-fifths of the population. It may be a political dogma not to like the private landlord, but I should have said it was wholly impractical riot to seek the closest possible co-operation with the private landlord. Unless that is done, there will be a large fall in the number of houses for renting. It seems to me that the Government are trying to place nearly the whole of the burden of providing rented housing on State building and not on private landlords.
Turning briefly to Part II of the Bill, I strongly support the mortgage option scheme but I cannot understand why, if subsidies to the local authorities are being ante-dated to November, 1965, the mortgage option should be post-dated to April, 1968. It seems to me that this is a rather

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illogical action by a Government who proclaim themselves so much in favour of home ownership. I think it must be extremely frustrating, as was said by my noble friend Lord Brooke of Cumnor, to young people, who are getting married, and hoping to bring up a family, to have to wait until April, 1968, before they can obtain their mortgage, or before they can secure the loan included in the mortgage to help them pay their deposit. For young people who are setting up, or hoping to set up, a home, the great stumbling block is nearly always finding the deposit. Anyone who has been a member of Parliament for a poor constituency will remember how onerous was the task of interviewing young people who wanted help in getting a home, and, after asking them how much they had for a deposit, having to tell them, "I am sorry, but there is no hope unless you can raise a deposit".
Those Members of your Lordships' House who spoke at Election meetings during the 1966 Election will recall the enormous vote-catcher which the document circulated by the Ministry of Housing proved to be when it hinted at 100 per cent. mortgage rates immediately after the Election. It was a very strong vote-catcher, and I deeply and bitterly regret that this help with deposits will not be forthcoming until April, 1968, which is too far ahead.
My Lords, I said that I welcome the Bill, so far as it goes. I should have liked it to go further. I wish to conclude with a plea for good public relations in this matter, so that people may know what is available for them in the provisions of this Bill. So often I used to find that people were ignorant of the resources and facilities available to them. The fact that this might have been technically their own fault gave them no satisfaction or consolation whatsoever. I feel that in this Bill the Government have taken steps, if not to the extent that I should have liked, to improve the conditions of people. I hope that they will follow it up by making quite certain that the people are informed by every possible means of the resources that are available to them.
5.59 p.m.
LORD POPPLEWELL: My Lords, I am very interested in the trend which this debate has taken. There have been three
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speakers from the Benches opposite and all of them professed to give a welcome to the Bill. But the observations in at any rate two of these speeches seemed to be a condemnation of the principle of subsidies within the Bill. The noble Lord, Lord Hawke, differed somewhat from his colleagues in this respect. I could not help reflecting that the Opposition are facing a large number of difficulties. Noble Lords opposite realise that this is the natural sequence of events in dealing with housing over a period of years, and they are annoyed that they themselves did not take a similar line on both private and council house development. They dare not oppose the principle of the Bill, but they have done their level best to condemn the Government for their record and their line of approach. In my opinion, the present line of development is a modern approach to supplying the social needs arising from the past.
It was the late Lord Addison, father of my noble friend Lord Addison, who brought about the first big change in the housing situation of this country. His 1919 Act, which dealt with the housing shortage created by the First World War, adopted the principle of giving subsidies for rented houses, assistance being given by both the central Government and local authorities. From that time onwards this principle, with some modification, has remained the basis of our housing legislation. Lord Addison's aim was to provide houses at a reasonable rent for the working-class population. The Wheatley Act of 1924 gave more generous subsidies on a rather different basis, but also laid down a higher standard of housing than the 1919 Act. Many houses were built by local authorities under the Wheatley Act. I remember taking a major part in my own local authority in seeing that houses were built under that Act. They were chiefly to meet the needs of the normal growth of population and to provide better accommodation.
The Statute Book is littered with Acts of Parliament dealing with housing since 1919, and I have no intention of mentioning them all. The Chamberlain Act, because of the complexion of the Government, had a different line of approach. It gave a subsidy of £100 to the private builder for every house he built—one of the terms now pressed by the noble Lord,

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Lord St. Helens, to encourage the private house-builder. That Act was not very successful. In 1931 we saw another great change in the approach to housing, with the new slum clearance provisions. I remember sponsoring one of the first schemes under the 1931 Act, under which, instead of a subsidy being given per house built, it was given according to the number of persons rehoused. That Act is known as the Greenwood Act, after the father of the present Minister of Housing and Local Government.
The next developments in housing took place after the war, under Nye Bevan. He adopted the principle of a subsidy from both sources, but based on the local authorities' financing their share from the general rate fund. He insisted on an improved standard of housing. I think that the nation owes a debt of gratitude to Nye Bevan for his far-sighted approach to housing. To him it was not just the building of brick boxes as breeding places: he attempted to provide a standard of housing, with higher rooms, cupboard accommodation and kitchen accessories, of which the nation might be proud.
We hear a good deal to-day about the Tory Government building their 300,000 houses in one year under the Macmillan-Marples housing drive. It is interesting to analyse this to see just what was achieved. The standard of housing built under the Macmillan-Marples régime was considerably inferior to that established under the Bevan régime. There was less cupboard space, lower ceilings, less shelving and less decent kitchen equipment. In addition, there were more two-bedroom and one-bedroom units, to use that awful word. It is as well to have this in mind when we are taunted about the present Government's not having achieved the target of 400,000 houses last year. As my noble friend Lord Silkin pointed out, little is said by the Opposition about the fact that last year's achievement of 382,000 houses was the highest on record. These target figures, important as they are, must be taken in relation to the types and standard of houses that are built. We find, if we do that, that the houses constructed since 1964 are of a higher standard than those built previously. It is as well to get these things on record.
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Between 1951 and 1960 the Tory Government stopped housing subsidies to local authorities completely, except for certain types on more expensive sites. They also insisted upon a change in the basis of local authority financing, and instead of giving assistance from the general rate compelled the housing revenue account of local authorities to bear the full costing on all houses. One has seen, consequent upon this type of development, how the rents of houses built after the First World War, in the 'twenties, under the Wheatley Act, have been rising to a startling degree in order to assist local authorities to balance their housing revenue account, thus making more expensive the rents of modern houses. All these things must be kept in mind when we are talking about a Bill of this description.
This Bill once more accepts a social obligation to provide better homes. The noble Lord, Lord St. Helens, said we should encourage the private builder to build houses to let. But were the Tory Government between 1961 and 1964 more successful in that direction? We all know that in the post-war years comparatively few houses were built to rent. Most were built for owner-occupiers; and I do not complain about that, because it is as well to encourage owner-occupation. We also know that the record since the end of the First World War shows that few houses have been built by private enterprise to rent. There may be a variety of reasons why this has been so; but it is an established fact.
All houses approved to be built after November 25, or actually completed, will rank for this new method of financial assistance based upon the interest charges. The local authorities will now be able to plan ahead. They will be able to formulate their schemes knowing full well that their housing costs will be based upon a 4 per cent. interest, the remainder coming from the central Government. The Opposition have talked in the days gone by about a "property-owning democracy"—at one time we heard that phrase ad nauseam—but under this Bill a real effort is being made to encourage people to build their own homes, and they will receive financial assistance under this new arrangement that has been entered into with the building societies. This is a real effort to assist in the establishment of a

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property-owning democracy, as distinct from mere words.
Previously, those who used this slogan during election campaigns have done their utmost to make it more difficult for local authorities to build houses, and in this way compelled many people who could ill afford it to pledge themselves ahead to buy a house. Many of us have seen cases where people buying a house have been unable to keep up their mortgage payments. If you go in some of these private housing estates you find any number of notices saying, "House for sale". People have hit a bad spell, and they are in difficulty because of the heavy costs involved. Under this Bill, assistance is being given in this direction.
The noble Lord, Lord Hawke, and my noble friend Lord Silkin, mentioned the question of costs. I think this is most important, because under Clause 3 of the Bill, with its yardstick of costs, one can see that careful thought will have to be given with a view to keeping costs at a reasonable level. With regard to the steep increase in housing costs on the sale of new houses that have gone up in this last two years, I am not satisfied that the selling price is fully justified. I think that a nice rake-off which is quite unjustified is being taken somewhere. Therefore, I think the Government will have to be careful in this connection.
I am delighted that the building societies have fallen into line and are taking part in the scheme of the National House Builders Registration Council. This is an effort by some of the best type of builders to ensure good standards of workmanship. That the building societies are now coming in and taking an active part in this, as it were, tidying up and trying to stop the jerry-builder is an interesting step forward. We all know that only a few years ago the spate of jerry-building that occurred between the wars had re-commenced, and the unfortunate purchasers of houses from some of these developers were faced with untold difficulties, because there was not this good standard of building. I look forward to this National House Builders Registration Council being more effective; and I sincerely hope that more authorities, in letting tenders, will let them only to builders who accept the stiff regulations laid down by that Council.
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Under this Bill the Government pledge themselves to do what Labour Governments have done previously; namely, to establish a good standard. They are pledging themselves to work in accordance with the Parker Morris standard that has been laid down. I cannot see the time when the Tories will come back into power, but if they ever do, I sincerely hope that they will not take the step, as they have previously, of reducing the standards that have been established for houses. Houses, as I have said, are something more than brick boxes. A housewife wants good appliances in her house, so that her work is made easier, with good storage accommodation, in order that the family may be a little tidier in their habits.
I am delighted with this Bill, too, because it brings in assistance to housing associations. I remember after the war, when it was difficult to get permits for building houses, a small association being formed in my constituency, and the arguments that I had to influence the Minister at the time to grant a licence for this to go ahead. Eventually this was achieved. I welcome the bringing in of housing associations in so far as financial inducement is concerned. For the first time we have heard a lot about helping the private owner. In the past, the poor fellow who had never been on the level at which he paid income tax had to meet that full cost if he wanted to own his home. On the other hand, of course, the person who paid income tax received a rebate. Under this new method he may opt for whatever scheme he desires, but it will mean that the man who is "near the bone" in trying to buy his own home will be assisted by virtue of the fact that he will pay only a rate of about 4 per cent., instead of the present market rate of interest charges.
LORD BROOKE OF CUMNOR: My Lords, may I interrupt the noble Lord? It is important to realise that the mortgage rate at the moment is 7⅛ per cent., and therefore the best a man can hope for, so long as it remains at that figure, is to borrow at a rate of 5⅛ per cent.
LORD POPPLEWELL: My Lords, I thank the noble Lord for proving my case. I mentioned 4 per cent. The rate at the moment is 7⅛ per cent., but the man will be getting a 2 per cent. rebate,

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according to the noble Lord's reckoning, whereas previously a man in that position would have received no rebate at all. Therefore for the first time he is getting some assistance. The figures will naturally change according to the investment rate, and we can see the present trends, including the downward direction of the bank rate. We know that at present the building society rate is 7⅛ per cent., and although they say that they do not tie their rate to the bank rate one would hope that, with the passage of time, the 7⅛ per cent. which is only just coming into operation will follow the general downward trend of money.
I should like to mention one point in connection with the question of costs it is a vexed question. The industrialised building of houses has not quite come up to our expectations. We had hoped that by more mass production of house-building there might have been a reduction in cost. I am still hopeful that this will come about, but it involves heavy capital costs. Of course among the larger builders there is a desire to eliminate waste, and the smaller builders cannot afford the high capital costs necessary to provide the more modern machinery. However, I think they could go a good deal further than they have done at the moment, and therefore I hope that the Government will insist on a most searching investigation. Finally, may I say most sincerely that I commend this Bill, and I trust that the Committee and other stages of the Bill in this House will be expedited in order that it may become an Act as quickly as possible.
6.25 p.m.
LORD KENNET: My Lords, I do not think there is much more to say in regard to the body of the Bill after the full account of it given by my noble friend Lord Sorensen at the beginning of the debate. I should correct one thing he said, and I do this without too much compunction since I misinformed him on it. It is that the representative rate Order, which he said was subject to Negative Resolution procedure, was in fact amended on the way through another place and it will now be subject to the Affirmative procedure. I beg the pardon of the House for this slip.
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The noble Lord, Lord Brooke of Cumnor, asked me about the words "reasonable" and "unreasonable" in Ministerial parlance. Would he leave that over so that we may have a discussion on it on the question, "That the clause stand part"? The noble Lord also complained that the new subsidy is not selective enough, and that it takes no account of the differing financial positions of the local authorities. As a matter of fact, Clause 5 makes some such provision for a supplementary subsidy where the authority's housing costs are high in relation to its resources. The White Paper on Housing mentioned that this would be of particular assistance to local authorities in Wales.
LORD BROOKE OF CUMNOR: My Lords, I appreciate that it was relevant, but there again one gets into the difficulty of "reasonable" and "unreasonable". However, I agree that it should be left until the Committee stage.
LORD KENNET: My Lords, whether one local authority's resources are reasonably lower than another's, or unreasonably higher, is something that we can discuss at Committee stage. The noble Lord, Lord Brooke of Cumnor, also asked whether there would be a special yardstick for industrialised building. There will not, but the unified yardstick will permit industrialised projects which cost about as much as traditional ones, and there will be no financial discrimination in favour of any particular form of construction.
The last point brought up by the noble Lord, Lord Brooke of Cumnor, was with regard to S.E.T. I think I should correct him—or, if he demurs at that word, I should fill in the details of what he correctly said, which gives a slightly different impression. He complained that this tax would add £150 to the cost of a house. If it were all passed on to the consumer (which it is not always) it would add 2 or 3 per cent., which would be £70 or £80 added to the cost. What is true is that an addition of £70 or £80 would increase the mortgage repayments by about £130 over 20 years, provided that the mortgagor was getting no tax relief or additional mortgage subsidy, which of course he will be.
The noble Lord, Lord Hawke, complained that there was not enough sense

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of priorities. I feel that this is unjustified. The Building Control Act and the office development control by the Board of Trade are both designed to allocate priorities. Within the field of housing itself we have for the first time introduced a completely firm priority arrangement by picking out 130 local authorities and in effect saying to them, "You build as much as you can". This was also referred to by my noble friend Lord Silkin. We want to make sure that we get houses in the right places—not in Eastbourne, Bournemouth or London, but precisely where the need is greatest. I think this Government can claim that they administer very firm priorities indeed in regard to building.
In replying to the debate I should open by saying a little about the housing associations. Clause 12 provides subsidy for housing associations which are converting and improving existing property. It was added to the Bill in its passage through another place. It has not generally been the practice to pay housing subsidy, whether to housing associations or to local authorities, to help with the purchase of an existing property, although improvement grants are available. In most of our towns and cities there are areas of Victorian property which, properly handled, would be capable of giving many years of useful life. This is the sort of property which is often the basis of the traditional bed-sitter areas, and much of it is being converted and will provide reasonably satisfactory homes.
However, again, often it has been allowed to deteriorate over the years. Sometimes it has been misused in that it has been let off without proper conversion to far too many families without adequate facilities. This sort of treatment by landlords intent only on "sweating" the property only serves to hasten its final deterioration. Some excellent work is being done in some parts of London, and in one or two places in the provinces, by housing associations and trusts who are buying up property of this type, repairing it, converting it into two or three separate dwellings with the necessary facilities and letting it at rents which reflect no more than the cost of the operation. This is a field in which a determined and competent housing trust
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can make an extremely useful contribution towards the solution of some of our housing problems.
The difficulty is that, after adding the costs of conversion and improvement, even allowing for the Government improvement grant—that is, the old improvement grant—and for some charitable help which often exists, the rents which have to be charged to meet the loan charges, management and maintenance, are often beyond the means of those families whom the associations are created to help. Unlike local authorities, few of the associations concerned have any pool of existing property acquired in the past at lower prices to offset the higher costs of acquiring at present-day values and their rents usually come out a good deal higher than a local authority would expect to charge for comparable accommodation.
Clause 12 seeks to meet this difficulty by providing that the Government improvement grant payable to housing associations, which is at present three-eighths of the loan charges arising from the cost of improvement and conversion (subject to a maximum of £800 per dwelling), shall be increased to cover the cost of the acquisition of the property as well. The maximum is increased to £2,000 per dwelling. The subsidy will be paid through local authorities to housing associations, which are working under the approved arrangements which all of us who work in this field know so well.
The subsidies to local authorities for which Part I of the Bill provides will be equally available to those housing associations undertaking new building under authorised arrangements with local authorities. It is not perhaps generally realised that something like 70 per cent. or 80 per cent. of all housing association building in the past comes into this category. In the future, they will get the increased subsidies for which Part I provides.
I should like to say a word about council housing and home ownership—the distinction between those two—because the noble Lord, Lord Brooke of Cumnor, and many other speakers have said this Government are kind only to council tenants. It is not a fair charge. Let me give some comparative figures of the cost to the Exchequer of local authority rented housing, on the one hand, and private home ownership, on the other.

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It is often alleged that every council tenant is subsidised at the expense of the taxpayer, whereas the home buyer is not. In fact, it is estimated that in 1966–67 the average Exchequer subsidy payable on each council house in the country was about £20 a year, whereas the average tax relief on mortgage payments by home buyers was about £36 a year. The total cost of local authority housing subsidies in that year (this time including Scotland) is estimated to be £100 million, whereas the total cost of mortgage interest relief is estimated to be £155 million.
Certainly some local authorities contribute to the cost of council housing from the rates, and this adds on average in Great Britain just under £10 a year per house to the subsidy on council houses. But the combined Exchequer and rate subsidy on a council house is still noticeably less than the tax relief afforded on mortgage payments.
LORD BROOKE OF CUMNOR: My Lords, I am very grateful to the noble Lord for the detail in which he is replying. But in fact I was not using the argument he was attacking. I was not questioning that there was assistance to the owner-occupier. I well realise that successive Chancellors of the Exchequer have thought it well worth while because it is such a good incentive to saving. What I was asking was why, if the Government are arranging for what is equivalent to an artificially reduced rate of interest on local authority housing, it is not logical to extend that to other local authority buildings such as schools and children's homes—a different point.
LORD KENNET: My Lords, I thought the noble Lord made both points and I thought I was answering one of them. Since the other one goes so far outside the scope of this Bill, perhaps he will agree to discuss that on another occasion, perhaps on the Third Reading of the Bill. I was not of course seeking to make any invidious comparisons of the private and public sectors. Both are fulfilling a vital social need. But it is wrong to suggest that one case is a drain on public funds while the other is not.
Let me come to another argument which has occupied us very much, and that is that subsidies ought to be paid only to those who need them and should
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not go to make life easier for council tenants who do not need them. It seemed that many of us were forgetting that the Government are not paying the subsidy direct to the tenant; they are paying the subsidy to the local authority. As to what the local authority ought to do, the White Paper had some forthright things to say. It said:
"Subsidies should not be used solely or even mainly to keep general rent levels low. Help for those who most need it can be given only if the subsidies are used in large part to provide rebates for tenants whose means are small. A number of authorities have had the courage to adopt thorough-going rent rebate schemes and have found that it does not entail raising general rent levels beyond the means of the majority of tenants. The more generous subsidies now to be provided create an opportunity for all authorities to renew their rent policies along these lines."
I thought that at one point the noble Lord, Lord Brooke of Cumnor, was agreeing to this sort of approach, and if I am right in that I hope he will help us to get local authorities to adopt this sort of policy by adding the weight of his wisdom to ours, especially in speaking to Conservative-controlled authorities.
I make no apology for repeating what was said in the White Paper, and I quote again from it:
"Rent policies are also for local decision. But if the extra subsidies now to be provided are to be used, as they should be, to relieve those with the greatest social need, these policies should reflect the fact that the financial circumstances of council tenants vary widely …".
As a matter of fact, the Labour Party has always taken this view and it is out of place to level the charge at us that we are encouraging local authorities to dish out subsidy money to tenants irrespective of their means. It is interesting perhaps to note that the father of the present Minister of Housing, when he was Minister of Health, not long before he was succeeded by my own father as Minister of Health and of Housing, wrote a circular in connection with the Housing Act 1930, in which he said:
"Rent relief should be given only to those who need it, only for so long as they need it."
That was the Labour Minister in 1930 and we have never changed this policy. The case to-day is as strong as it was them. The case can best be demonstrated by the fact that, according to the Ministry of Labour, about 30 per cent. of council tenants with household incomes of

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£500 a year or less were paying more than one-fifth of their income in rent, whereas almost 98 per cent. of those with household incomes of £1,050 a year were paying less than one-tenth of their income in rent. It is a very real problem.
There has been criticism—and how well we in the Government understand and sympathise with it—of the delay in the introduction of the option mortgage scheme. It is true that it has been delayed, and it is also true that no date at all has been fixed for the introduction of the guarantee scheme. There are two reasons for this delay. The more important, as we all know, is the economic situation. The housing White Paper for 1965–70, which was published in November, 1965, and first mentioned the Government's plans for bringing home ownership within the reach of more families, said:
"As soon as the country's economic situation allows".
It is a matter of judgment, and unfortunately it is the judgment of the Government, I expect shared by the Opposition, that "As soon as" is not yet quite reached.
Even apart from the economic consideration, a very long time is necessary to get the machinery set up because of its intense complications. I would say to my noble friend Lord Silkin that the reason why mortgagors cannot jump from option to regular type tax relief, and so on, and back again is that the building societies simply would not have it. They refused to consider the idea. They said it was imposing an impossible amount of work on them, and this was something which the Government regretfully had to accept. It was broadly true to say that if anybody was paying below the standard rate of income tax he would be better off with an option mortgage, and that would continue to be so whatever the price of money was. Beyond that there is a provision for a late change from one to the other in the Bill which is complicated, but we can talk about that in greater detail on Committee stage if it interests noble Lords.
My noble friend Lord Popplewell touched on the question of costs and standards. One thing I should like to add to that is to report progress on the achievement of Parker Morris standards.
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This is very good. In tenders approved in the fourth quarter of 1966, the last quarter for which we have figures, 53 per cent. of all dwellings were fully up to the Parker Morris standards, and on the two most important, space and heating, the figures were 75 per cent. and 87 per cent. This is splendid progress. I want to congratulate the local authorities and say that, as always, progress in this field must not mean any tolerance of runaway costs, a matter which we can consider at greater length later and for which the yardstick exists.
My Lords, I have not much more to say. I should like to touch for a moment on the question of the sale of council houses. I was expecting to hear a lot more about this in the debate. I do not know whether the Opposition dropped it, or thought it was a loser. I do not think this question of the sale of council houses to sitting tenants by local authorities is an issue of principle, unless indeed it is the principle of political morality in promoting the issue itself. "This wonderful scheme", in the words of the Leader of the Opposition, as the answer to the housing needs of the homeless, which it is not, is simply a question of common sense and housing management. The reality is much more prosaic.
A general ministerial consent to the sale of council houses has been in existence since 1952. It was revised and reissued in 1960. Between 1960 and 1965 sales averaged 2,300 houses a year out of a total local authority stock of about 4 million houses. Last year the total increased by about 50 per cent. This increase was entirely attributable to the sale of 1,138 houses in Birmingham in the last seven months of the year. But only 184 out of the 1,400 local authorities in England and Wales sold any council houses at all last year. For the past 15 years, therefore, local authorities have had discretion to sell individual houses in the normal course of housing management, and this has given rise to no difficulty, no complaint and very few sales. Then, suddenly, Birmingham, with 38,000 families on the waiting list, decide that they will sell at least 10 per cent. of their housing stock and engage in an extraordinary political campaign to persuade other local authorities to follow suit.

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The reasoning behind the Opposition's policy is misconceived and its motives remain obscure to me. They have chosen to treat it as a political issue rather than one of practical housing management. It is said, first, that the sale to the sitting tenant offers a benefit to the ratepayer, who no longer pays subsidy on the house sold—but there is no obligation on a local authority to subsidise a tenant who is capable of buying the house he now rents. Next, it is said that there is a further benefit to the taxpayer, who no longer pays the national subsidy. But Exchequer housing subsidies do not have to be applied solely to the benefit of the tenant who occupies the house on which the subsidy is paid. We have been talking about this in connection with rent rebate schemes. Council houses built years ago—and two-thirds of those sold in Birmingham are pre-war-can normally be let at a profit on their original cost, and the subsidies form part of a subsidy pool which is used, for example, to help meet the cost of rent rebates for needier tenants, or to reduce the rents of similar houses built more recently at higher costs. If you chop off the cheaper end of your housing stock, you get no help with lowering rents at the more expensive end.
Next, it is claimed that the housing account receives an advantage both in capital gain and a contribution to the revenue side. This should be the case, certainly, since the houses should not be sold at a loss. But the gain may not be as large as is often thought since, when the house is sold, the council lose the rental income, which in the case of older houses will normally show a surplus, and the Exchequer subsidy. These items have to be offset against the mortgage repayments, and the savings in management and repairs on the houses sold. Moreover, since very few of the houses will be sold for cash (for instance, the Birmingham scheme is said to offer deposits down to £5), the housing account has to continue to meet the loan charges on the houses sold. Council houses are normally financed by loans over a 60-year period, and when a house is sold, only a small part of its capital cost will have been paid off. So much, incidentally, for the Leader of the Opposition's assertion at Wolverhampton that,
"The scheme swells the local authority's housing fund by something like £2 million
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for every 1,000 houses sold and this releases money so badly needed to give the homeless new homes and new hope."
I do not like playing around with those words "homeless" and "new hope".
That £2 million—apart from any cash deposits—will only come in over the years as mortgages are repaid, and part of it will be needed to pay off the council's outstanding debts on the houses themselves. Nor, a fortiori, can any sale be enough to offset the cost of building new houses to replace those which have been sold. The fact remains that a council house which could be let at a moderate rent has been sold and the stock of rented housing has been depleted. Much has been made of the argument that there is no real loss since the tenant has a tenancy, in effect, for life. But in practice all councils meet some of their housing need from relets, and it is surely very likely that some of the tenants who are able and willing to buy from the council would otherwise have decided to move out and buy privately, especially if the council had helped them achieve this as enthusiastically as they have set about selling off the stock of rented housing. The tenants who are now buying were no doubt glad to be able to rent a council house at a time when they could not afford to buy. There are 38,000 families on the Birmingham waiting list, for most of whom the only hope of a decent home is to rent a council house.
My right honourable friend the Minister has made the Government's position perfectly clear on this issue. Until the demand in any area for houses to let at moderate rents begins to level off—and apart from the incidental sale of individual houses on grounds of estate management—houses that have been provided with the help of public funds to meet the need for houses to let at moderate rents should be kept available to meet that need. I repeat what the Minister has said on more than one occasion in the past month:
"In general local authorities ought not to sell their houses where there is still an unsatisfied demand for houses to let at moderate rents and where they intend to continue a substantial programme of building houses to let."
Arguments based on the profitability of the transaction are beside the point. It is not frightfully clever to make a profit

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on a house built before the war for £400. The real argument is about making the best social use of the housing stock, not about how to get the best possible commercial advantages from exploiting it—either by renting or by sale.
My Lords, this afternoon the local authorities are receiving from the Minister comprehensive advice in the form of a circular on this subject, and I should like to add my voice to his in recommending any local authorities who are thinking of following Birmingham's deplorable scheme to consider it most carefully, in the light of advice they are getting to-day, before deciding, to dispose of the assets created for general social use by themselves and their own predecessors.
LORD BROOKE OF CUMNOR: My Lords, the noble Lord has interpolated this political sermon on the selling of council houses into a debate in which the subject has not been mentioned, on a Bill in which it has not been mentioned also; and he has done so at a moment in the debate when he knows that I have no right of reply. All I will say is that the Birmingham scheme has brought a great deal of genuine social satisfaction to council tenants who have now become owners of their houses, and would, in fact, have lived in those houses indefinitely, occupying them, but as tenants and not as owners.
LORD KENNET: Well, my Lords, I wonder how much social satisfaction is brought to the 38,000 people on the waiting list. That is what is of great importance.
This Bill meets the housing situation as it is to-day. I will not go through its provisions again. It is the successor to a long series of Housing Acts over the years. Its scope is wider than any other Housing Subsidies Act passed since the war; but even so, it will not last for ever, and it may well be superseded by further legislation before many years have passed. Since the war the average life of Housing Subsidies Acts—the period of each Act before it was superseded by the next—has been about four years. There have been 16 Housing Acts of one kind or another since the war, not counting Rent Acts and Housing Acts related to Scotland, which has had her fair share. There is never going to be finality in
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housing finance. We shall never get the perfect system. It is for this reason that we are pressing forward with studies that will bear our next instalment in housing legislation.
I should like to mention one or two of these studies, particularly a study into the provisions of the 1961 and 1964 Acts about the control of multi-occupation, about which Lord Brooke of Cumnor asked. This study group has reported; the Minister has its Report, and he is considering it. In the field of older houses and the improvement grant structure there is a rather large series of studies going forward into deficiences in the present law, which we have already identified though we are not quite sure how to rectify them; into the economics of home improvement when compared with the economics of redevelopment in the twilight area, and into physical techniques for doing it cheaper by mass production.
There is also a national survey of the condition of the housing stock which, for technical reasons which I will not go into, will be a great deal more effective in its results than any other survey which has ever been undertaken. The results of that will be out in this month; we shall have them processed by the summer, and we shall fit these results into the economic, legal and physical studies that we are doing in order to get a completely new improvement and conversion policy not too long ahead. This is only one part of what is going ahead. I thought I ought to mention it, simply so that we shall be able to look beyond this Bill. I look forward to an interesting Committee stage on this Bill, and I want to thank the noble Lord, Lord Brooke of Cumnor, for his assurance that it will be an easy and expeditious one.
On Question, Bill read 2a, and committeed to a Committee of the Whole House.

MERCHANT SHIPPING BILL
Brought from the Commons; read 1a, and to be printed.
NATIONAL INSURANCE (INDUSTRIAL INJURIES) (AMENDMENT) BILL
Brought from the Commons; read 1a, and to be printed.
SLAUGHTER OF POULTRY BILL
Brought from the Commons; read 1a, and to be printed.
LICENSING (CERTIFICATES IN SUSPENSE) (SCOTLAND) BILL
Returned from the Commons, with the Amendments agreed to.

HOUSING (FINANCIAL PROVISIONS) (SCOTLAND) BILL
6.56 p.m.
Order of the Day for the Second Reading read.
LORD HUGHES: My Lords, we have just had a fairly lengthy debate on the English Housing Subsidies Bill which has made the noble Lord, Lord Drumalbyn, and the noble Lord, Lord Strathclyde, and myself wait patiently for the Second Reading of our own Bill. But I think that we shall gain an advantage from it, because while the two Bills differ in detail in relation to the subsidy provisions they are based on similar principles. Therefore, while I have no desire to curtail the speeches of noble Lords opposite into less than they feel is necessary, I myself do not propose to go over the full ground that has been covered by my noble friends in speaking to the English Bill.
As in England, the new Scottish basic subsidy for housing is based on two broad principles. First, public housing agencies—the local authorities, the new town development corporations, the Scottish Special Housing Association and other housing associations—should have funds for the provision of new houses available to them at a low interest rate of 4 per cent. Secondly, Exchequer subsidies should be related to the actual cost of providing these houses. The Government attach considerable importance to these two principles which involve a complete break with past housing legislation. Authorities will now have subsidies which are realistic and which adjust automatically as interest rates and building costs change. The subsidies will also give proportionally more assistance where the houses are necessarily more expensive to
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build for other reasons, for example, site factors.
It must be remembered that under the 1957 and the 1962 Acts authorities received subsidies which took no account of changes in cost or interest rates and which, as they worked out, were quite simply too low in relation to these costs. For example, the average amount of subsidy paid under the 1962 Act is £33 per house.
The Government's subsidy proposals are on a quite different basis so that no direct comparison is really possible. However, assuming that authorities have to borrow at an average rate of 6½ per cent., and that the all-in cost is £3,000 per house, the amount of Exchequer subsidy under the Bill will be £67. In what I think is a not unrepresentative example, subsidies will thus have been doubled.
This new system of basic subsidy has been fully discussed with the local authority associations. I can say that they generally welcome what is proposed, and not only because they see in it a more generous approach by the Government to housing finance. More important than this, they welcome the new subsidies because they will relieve authorities of the worries caused by fluctuations in interest rates and in costs, and they can now plan ahead in the knowledge that they can borrow the funds they need at the equivalent of a fixed interest rate of 4 per cent.
We have been encouraging local authorities to plan their programmes ahead to a greater extent than they have ever done before. We have asked them to work on a five-year rolling programme. Under the old arrangements it was unrealistic to expect local authorities to do this. It has been mentioned that we seem to get a new Housing Act, on average, every four years. Therefore, there was no guarantee to them under the old arrangements that they were planning ahead with safety. For that reason the Scottish local authorities have given a strong welcome to the security which they have under these new proposals.
They also welcome the advantages of a system which is based on the all-in cost of providing houses. This is now of particular importance in Scotland, where in many cases authorities are tackling their more difficult virgin sites or are

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facing up to the problem of housing in central redevelopment areas. We know that this is part of the facts of life. When local authorities start on these matters they do not, of course, look for the most difficult sites on which to build first. They have chosen the easiest sites in past years, and they are now facing difficulties which frequently are new to them. But in either case site preparation costs now form a much more significant part of their total expenditure, and these costs will qualify for subsidy.
Having said that, however, I should add that there is no question of an open-ended Exchequer commitment to subsidise housing provision, whatever the cost. The Secretary of State will continue to scrutinise all house tenders to ensure that local authorities are obtaining value for money. In addition, he is now in consultation with the local authority associations about the introduction of a system of cost yardsticks which will give authorities clear guidance as to the level of costs which will be accepted as reasonable for subsidy purposes. Once again the local authorities will benefit from this guidance, as it will enable them to plan ahead more accurately and to develop their schemes on sound cost planning principles. An added benefit is that we hope this will enable us to formulate procedures with local authorities that will expedite considerably the approval of tenders, because all discussions will take place in advance, as schemes are being prepared, and this will in many cases greatly reduce the actual tender approval to something approaching a formality.
May I now go on to speak about the details of the Bill? Clauses 1 to 3 contain the provisions for this new basic subsidy which will be payable on the aggregate cost to an authority of providing houses in a particular financial year. The new subsidy is available to all recipient authorities which are defined in Clause 1 as covering local authorities, new town development corporations, housing associations and the Scottish Special Housing Association. The subsidies will be payable in respect of houses for which proposals were submitted for the Secretary of State's approval on or after November 25, 1965. This date was chosen in accordance with the normal practice in housing
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legislation of introducing new subsidies with effect from the date of publication of the Government's White Paper. In addition, however, the Government have decided that in view of local authorities' housing difficulties they should also provide for an exceptional measure of retrospective subsidy. Clause 1(2) of the Bill accordingly provides for the new subsidies to be paid also on houses for which proposals are submitted on or after January 1, 1965, by those local authorities who are considered to have inadequate resources. The test of a particular authority's resources will be that laid down in the 1962 Act: in the authorities eligible for retrospection would be those who have otherwise qualified under the 1962 Act for rates of subsidy above the low rate of £12.
Clauses 4, 6, 7, 8 and 9 of the Bill provide for the continuation with various amendments of supplementary subsidies for houses provided for special needs—for example, overspill and the needs of industry—or houses with high costs which may be justified in special circumstances—for example, multi-storey blocks or houses designed to fit in with their surroundings by the use of special materials such as stone or slates. In some cases the supplementary subsidies have been reduced—for example, the special multi-storey subsidy has been reduced from £40 to £30. It must be remembered, however, that in each case the houses will also qualify for the greatly enhanced basic subsidies. The combined effect of basic and supplementary subsidies under the Bill will mean that in every case authorities will be better off now than previously.
Clause 5 and Schedule 2 provide an additional subsidy for local authorities in special financial difficulties having regard to the state of their housing revenue accounts. I admit that the Schedule 2 calculation appears to be complex, but the principle is that the authorities which are significantly worse off than average in a particular financial year should in the following year qualify for additional subsidies, varying from £15 to £75 a house While the calculation appears complex, because of the need to put the Schedule into Parliamentary language, it is not so bad as it looks. I am certain that if the noble Lord, Lord Drumalbyn, were writing it down in an attempt to make it clear to me, he would be able to put it in a very clear form, and I should

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have been able to understand it much more easily at the end of the day. But the actual working out of the scheme is reasonably simple, given all the necessary verbiage to make it possible.
Clauses 10 and 11 provide machinery for general review of subsidies and to allow for the termination, transfer or alteration of subsidy in certain special circumstances. I think I am right in mentioning that in this case we have taken provision to vary upwards subsidies which may have been reduced. One of the difficulties which was found with past legislation was that once a subsidy had been reduced and circumstances changed, so that it was desirable to have an increased subsidy, there was no power to increase the subsidy again.
Clause 12 substantially increases the hostel subsidy from £7 to £15 per bedroom, and this change will be welcomed particularly by the voluntary bodies working in this field. Clause 15 makes continuing financial provision for the activities of the Scottish Special Housing Association. Noble Lords will remember that the limit was recently raised from £110 million to £120 million. This Bill takes it up to £145 million, with provision, if need be, for a further increase to £170 million.
Part II of the Bill is non-financial and not connected with housing subsidies. Clause 18 provides for the relief of outstanding liabilities of persons unfortunate enough to have purchased houses which are subsequently declared to be unfit so that compensation is restricted by Statute. This can cause some personal hardship and the clause empowers the sheriff to consider all the circumstances of the case and, if he considers it justified, to modify or cancel outstanding liabilities arising from a mortgage or a hire purchase agreement relating to the house.
Clause 19 is a rather interesting little clause. It restores the requirement in the Rent Act 1957 for the provision of rent books by landlords of furnished accommodation. This provision was inadvertently repealed for Scotland by the Rent Act 1965. We are following the simple expedient of putting back into law what was taken out by mistake two years ago. This Bill will be of considerable importance in enabling the Scottish authorities to deal energetically
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with the considerable housing problems still before them.
It would be foolish to pretend that the problem is other than immense and, as the Government's White Paper on The Scottish Housing Programme 1965 to 1970 made clear, a target of 50,000 new houses a year by 1970 will be only a first step towards meeting Scotland's total housing needs. The Scottish Housing Advisory Committee's recent Report on Scotland's Older Houses has made painfully clear that the Government's earlier estimates of housing needs, as set out in the White Paper, were indeed accurate.
The Committee estimated that 144,000 houses in Scotland can be immediately declared unfit, that 129,000 houses have a useful life of not more than 10 to 15 years, and that 193,000 houses are substandard and will have to be cleared in the 15–29 year period—a total of 466,000 unfit or sub-standard houses, which is not so very far away from the 500,000 figure which the Government took in the housing programme. There is no doubt that by far the greatest share of the burden of providing new houses for the slum clearance drive and for all other needs, such as the expansion in population, will fall on the public housing agencies.
I should perhaps mention something at this stage. Noble Lords may wonder, after the emphasis which my noble friend Lord Kennet has laid on Clause 12 of the English Bill, why there is no similar provision in the Scottish Bill. I should perhaps explain that the purpose of Clause 12 of the English Bill is to make it possible for local authorities in England and Wales to pay to housing associations, which have entered into authorised arrangements with them, improvement grants which will cover the cost of the acquisition of the property as well as the cost of the improvement works. Between 1949 and 1959 these improvement grants covered acquisition costs, but when the English grants were recast in Section 18 of the House Purchase and Housing Act, 1959, they were restricted to the cost of works only. The new clause therefore revives the pre-1959 arrangements.
In Scotland the payment of grants on acquisition costs was never dropped. When the Scottish grants were recast by Section 62 of the Housing Act, 1964,

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grant aid for acquisition costs was specifically retained in subsection (3) of that section, and subsection (2) of the new clause is in similar terms. Section 62 of the 1964 Act covers grants to local authorities, but subsection (8) provides that the same grants are payable to housing associations. Clause 12 of the English Bill, therefore, does not provide any assistance which is not already available in Scotland, and this is why it is not necessary for us to have a similar clause in the present Bill.
There is one direction, however, in which Clause 12 differs from the Scottish provisions, in that it places a limit on cost of £2,000, whereas the provision in Section 62 of the 1964 Act for Scotland is £1,400. Following the Cullingworth Report we are reviewing all the improvement grants, and are discussing with the local authorities and other bodies what changes should be made. If these investigations show that a change should be made in the £1,400 limit, the Secretary of State has power to do this by an Order under Section 62(4) of the 1964 Act. I would remind your Lordships that, at the Report stage in another place, my honourable friend Mr. Buchan gave an undertaking that, if these investigations or any subsequent studies showed that the figure should be revised in Scotland, an Order would be made.
The Bill's subsidy provisions give the public authorities the financial means to tackle the problems. Indeed, there is already evidence that the improved subsidies offered by the Bill are having their desired effect in encouraging local authorities to expand their house building programmes. If the figures for last year were in some respects disappointing, it is good to know that the flow of new work, as evidenced by tenders submitted for approval, is now encouragingly high. For example, the number of houses in tenders approved in the last six months of last year was 30 per cent. higher than the number approved in the first six months.
Again, the number of houses in tenders approved in the first two months of this year (local authorities, Scottish Special Housing Association and new towns) was 4,830 compared with 3,389 for the corresponding two months of 1966. The number of houses started in the public
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sector in these two months was 4,825 against 1,875 in 1966. Given, too, that 41,690 houses were under construction at the end of February, and nearly 16,000 houses were in approved tenders awaiting start, it is clear that we have every prospect of improving considerably on the figures of houses started last year. Indeed, these numbers, amounting as they do to nearly 58,000 houses in hand, constitute a good step forward towards the target for 1970.
If in the interests of conserving time I have concentrated in these remarks on the effects of the proposals in relation to the public sector, it is of course because the Bill is concerned principally with the subsidies which are available in the public sector. But I can assure your Lordships that, in relation to the housing problem, the Government place no less reliance on the importance of getting an adequate increase in the contribution in the private sector as well. Discussions which my colleague had towards the end of last year, and which I have continued during this year, will, we hope, result in ensuring the maximum co-operation between that sector of the industry and my Department.
Finally, on the subject of improvements, which is the reason why I mentioned the existing powers, these enormous figures which I have quoted of houses which must remain in occupation for a considerable time, impose on Government, local authorities and associations alike a need for doing everything possible to make certain that a house, which can be modernised to a satisfactory standard for continued occupation, should not he permitted by continued neglect to become one of the slums with which our successors will have to deal 15 or 20 years from now. I beg to move.
Moved, That the Bill he now read 2a—
(Lord Hughes.)
7.18 p.m.
LORD STRATHCLYDE: My Lords, first of all I wish to thank the noble Lord who has just resumed his seat for the very clear and concise manner in which he has explained this Bill to us. It is a Bill which I personally welcome very much indeed; that is, in so far as it encourages the housing authorities to go ahead even more energetically than hitherto with housing or, it may be,

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rehousing their constituents. I have always maintained that every family should have a home in which, according to its size, it could live with every decency and at a rent in accordance with what the family income will support.
I seem to recall reading about a time when Mr. Disraeli was accused of running off with Mr. Gladstone's trousers. It seems to me, from what I have listened to this afternoon, that the present Government are about to steal, or have in fact stolen, Mr. Macmillan's trousers, and it may well be Sir Winston Churchill's as well. My hope is that they will find that they are large enough to fill them. In that connection, perhaps I may be allowed to recall the Conservative Party Conference which was held at Blackpool in the autumn of 1950, when the Conference insisted that in the Party's policy statement there should be included a housing target of no less than 300,000 houses. That target, as we well know, has been surpassed on many occasions. Although the then Government said that that target was impossible of attainment, and even stated that to put forward such a figure was to mislead the people and was accordingly dishonourable, I understand—and it has just been confirmed by the noble Lord—that the present Government's target is somewhere between 400,000 and 500,000 houses a year, and 50,000 houses in Scotland. I most sincerely hope that one or other of these figures will be attained.
Perhaps I might remind the noble Lord, Lord Hughes, that in Scotland the record number of houses completed in any one year was in the year 1953, when my noble friend Lord Stuart of Findhorn was responsible for Scottish administration. In that year the number of houses completed fell just a little short of 40,000. I feel it is high time that that record was beaten. In the circumstances of these latter years, it has stood for far too long; and it is my hope that the provisions of this Bill may help to create a new record. I shall be delighted when the noble Lord comes to this House and informs us that that has been achieved.
It may well be asked why we have fallen behind the record set up in 1953. A number of suggestions have been put forward as to why that should be. One was that many of the housing authorities
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had indicated that they had completed their programmes; that they had provided all the houses that were required for as far as they could see ahead. Another was that it was very difficult, in these circumstances, to concentrate the resources which had been set free on these few places, such as Glasgow, where a housing situation of proportion unprecedented in this country, or I believe in Europe, existed, and was calling for urgent action. Indeed, it may be that insufficient effort has been made towards that end.
Nevertheless, my Lords, in my opinion one of the outstanding causes of this falling behind has been the unreasonably low rents charged by local authorities for their houses in Scotland. That policy has discouraged those who in other circumstances would have built houses for themselves but who, faced with the difference between the amount they would have to pay in interest on their mortgage and the rent they would have to pay for a corporation house, very naturally, I think, put off building their own house in the hope that a council house might be allocated to them. Then, of course, the private provision of houses to let was completely ruled out, for few, if any, would pay the economic rent that would be demanded when a council house with adequate accommodation could be had for much less.
Over and above these considerations it has always appeared to me to be utterly indefensible that people who can afford to pay far more in rent than the local housing authorities were charging should be subsidised by people with much lower incomes, living—indeed, forced to live—in inadequate and sub-standard conditions. That such a situation has been allowed to continue for all these years seems to me to be not only indefensible but also amoral. Rents, as I see it, should be charged, to those who can afford them, up to the economic limit; and the economic limit should be the standard rent, with rebate schemes to reduce that rent to suit the means of those with lower incomes or family responsibilities.
The noble Lord may well say to me, "You were a member of two or three Governments. Why did you not do something about it?" The argument which was always put forward in the

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first place was that housing was a local authority responsibility, and that it was not right for the Government to interfere. It was said that they should not order, but should endeavour to influence the local authority in the right direction. No doubt the noble Lord also will be subjected to that argument. Little has come from that approach, however, and I would maintain that, while the local authorities should be responsible for the administration of their houses, it is for the Government to insist on a reasonable rent policy, so that the taxpayer, the ratepayer, the owner-occupier and those who live in private property are protected and given a fair deal. Meantime, of course, these tenants of local authorities who can afford to pay a reasonable rent but are not doing so are being subsidised unnecessarily both by the taxpayer and by the ratepaper.
Your Lordships may not realise the position in Scotland as compared with that which exists in England. My information is that here in the City of Westminster the basic rent of a three-apartment house is no less than £4 8s. a week, with an additional £1 9s. 5d. for rates. With a rebate scheme operating, there is one particular case of which I have knowledge where the rent has been reduced from £4 8s. to £2 16s. 6d., with, of course, the addition of £1 9s. 5d. in rates. When I look at Command Paper 3194 and see the position in Scotland, it is really absolutely shocking in comparison because there is not so much difference between what people in industry in Scotland are earning and what people in industry in England are earning. On page 5 I find that the average weekly rent in the cities in Scotland is 17s. a week; in the large burghs, 15s. 5d.; in the small burghs, 16s. 9d. In the counties it is 16s. 2d; and, taking the whole of the country, the average is 16s. 5d. Then I turn to page 10, and I find—and I contrast this with the three-apartment house which I have just quoted in regard to the City of Westminster—that in Aberdeen the three-apartment house rent is 14s. 4d. In Dundee it is 19s; in Edinburgh, 19s. 10d; in Glasgow, 16s. 2d. The average for the country is 17s. 1d.
These figures seem to me to speak for themselves, and I just wonder whether or not it means that people here in Westminster are contributing to the subsidies
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which are enjoyed by the people in Scotland.
LORD HUGHES: Would the noble Lord permit me to interrupt for a moment? He is not, I presume, suggesting that the figure which he has quoted for Westminster is an average figure for England and Wales.
LORD STRATHCLYDE: No. I have stated quite definitely—
LORD HUGHES: It is an exceptionally high figure even for this area, is it not?
LORD STRATHCLYDE: I have stated quite definitely that the figure is for Westminster. I am merely drawing attention to the fact that, as it seems to me, these people in Westminster are helping, through taxation, to provide the subsidies that we enjoy in Scotland. I do not think my countrymen would really appreciate this. No matter what people may say about the thrift of the Scots, I think that many of them would deeply resent it.
It may be, of course, that to increase rents to what any Government would consider to be reasonable would be so unpopular that no Government would attempt to do it. If that is so, I would suggest to the noble Lords opposite that they might bring to the notice of their right honourable friends that it would possibly be in the interests of the whole country for the two Parties to get together to see whether they could produce an agreed and common rent policy. But, my Lords, most of all I want to see good housing conditions established throughout our country; and as it appears to me that the provisions of this Bill may well help to that end, I give it my most warm support.
7.29 p.m.
LORD DRUMALBYN: My Lords, I find myself in the position of having opposite me the noble Lord who is now responsible for housing in Scotland and behind me—and we have just had an excellent speech from him, if I may say so—my noble friend who was in charge of housing in Scotland some 12 or 13 years ago, I think it was.
LORD STRATHCLYDE: A long time, anyway.
LORD DRUMALBYN: At any rate, the very last speech I made in your Lordships' House on housing, I know, was made when my noble friend was at the Dispatch Box, and since then I have not been associated with housing in any way. My only reason for standing at the Dispatch Box is because unfortunately my noble friend Lord Dundee has gone into hospital to-day. I do not say that by way of excuse, but by way of explanation.
Like my noble friend I would express a welcome for the Bill. As the noble Lord said, the main basis of the Bill is of course the same as that in Part I of the Bill we have just been considering; and I would not have expected otherwise. I think the basis of subsidy on both sides of the Border should be the same, even though the housing situation on the two sides is in many respects different. Because of these differences it is to be expected that there should be differences in particular respects. For example, the noble Lord mentioned subsidies for blocks of flats and subsidies to meet special needs. I do not quarrel with that in principle, although opinions may differ as to whether the Scottish Office has chosen wisely in every case. For example, they have preferred to have no additional subsidy for four-storey or five-storey blocks of flats, but a rather higher rate of subsidy for blocks of six storeys or more. I suggest that even the hardy mothers of Scotland will be the better for a lift if there are four storeys or more—not only if there are six or more. I imagine that the extra cost is largely the cost of the lift. However, that is a detail.
There are three factors which distinguish the housing situation in Scotland as compared with that of England and Wales. They are, first, the comparatively small proportion of private houses in relation to the total number of houses built each year. In England and Wales the proportion last year was 57 per cent. private housing; whereas in Scotland it was under 22 per cent. Indeed, of the 1,750,000 houses in Scotland, I believe that fewer than 400,000 were owner-occupied. The second large difference is one to which my noble friend referred. I am not certain that he compared like with like entirely, because the rent in Scotland does not include rates. I am
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not certain that that would be so in the case of Westminster or not.
LORD STRATHCLYDE: My Lords, it does not include rates; rates are additional.
LORD DRUMALBYN: I am obliged. In any case, the figures that he quoted are quite startling. Of course, they are average figures. I believe the prize is gained by Orkney, with an average rent of 7s. 8d. a week for houses. Even in the constituency of the Secretary of State the average rent of a house is 12s. The third point—and I think it is important—is the special problem of distribution and redistribution of population which they have in Scotland. I imagine that this gave birth originally to the Scottish Special Housing Association, which has proved of great benefit to Scotland.
The question is often asked: Why are the rents so low? I think it is basically because of the combined effect of rent restriction during and since the First World War; secondly, because of the great increase in the services that local authorities are expected to undertake; thirdly, a system of dividing rates between occupier and owner, that pernicious system to which my noble friend, in conjunction with my noble friend Lord Stuart of Findhorn, had the courage to put an end. The effect of this was to draw down local authority rents as well. Obviously, if you had very low rents for privately-owned houses this was going to affect local authority houses. Perhaps my noble friend did not make quite as clear to our English friends as he might have done—this is not a criticism—that the point is here that the rents have been held down in that way. Progress is now being made at any rate in raising them. According to the White Paper, they have more than doubled in the past seven years ending in 1965. In 1966 they went up a little further, but in view of the prices and incomes policy the increase was only 4 per cent.
I think my noble friend was right in saying that, so long as rents for local authority houses remain as low as they are, there is bound to be a disproportionately heavy burden on the rates in Scotland. That in turn will have its effect on industry and commerce in inducing industry to come to Scotland. I think also

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that the lowness of the average rents constitutes a very strong disincentive to building for owner-occupiers. I was interested in what the noble Lord said about the talks he has been having with what he called the private sector; and I shall be interested to hear from him when he winds up what encouragement can be given to the private sector in these circumstances.
The fact is that the average number of houses built over, I think, the last five years in the private sector has been only about 7,500 in Scotland; and with the additional encouragement given to the public sector it seems to be dubious whether one will get very much more in the way of private building. One thing I would suggest as very necessary is that the land should be made available for it; and made available in quantity and in areas where it is possible for houses to be provided in quantity, and not just one by one. I think one of the great difficulties in Scotland has been that by and large insufficient land has been made available to the private sector. Local authorities have tended to want to provide much of the housing themselves.
I think it is relevant to ask this question: What are the ultimate objectives of this Bill for Scotland? The White Paper, published in November, 1965, stated the estimated requirement; that is, at least 30,000 houses to meet the present shortages and up to half a million houses to replace slums and obsolete dwellings. In addition to that, 25,000 a year are needed to replace other losses. I was interested in the fact that the noble Lord seemed to be spacing out the replacement of these slums over 30 years. I do not know whether this was intended, but he referred to up to 466,000 houses, including 190,000 houses which were to remain in use for up to 30 years.
LORD HUGHES: If the noble Lord will permit me, I was quoting from the Cullingworth Report. This was the way the Report divided up the likely needs for replacement. It started off with those houses which were so bad that they really needed replacing immediately; then they took the next group, those that were a little more satisfactory but were still dreadful and ought to be replaced in ten years. Then the Report said that
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there still remained this sector which would have to be done in the twenty years thereafter. These are their figures.
LORD DRUMALBYN: I realise that, but the noble Lord was equating those figures with the estimate of 500,000 houses that would have to be demolished over the course of the next few years. I was merely pointing out that while I personally gathered from the White Paper that it was intended to deal with these 500,000 houses in a shorter period of time than that, the noble Lord was equating the figure of 500,000 with the figure of 466,000 (or whatever is the figure) in the Cullingworth Report, the life of which extends over 30 years.
LORD HUGHES: No, my Lords, I think it would be reasonable if we took what Cullingworth required as being done in the ten years and related that to the proportion out of 50,000 houses which would be available for these purposes—and we get pretty nearly the same thing. The figure of 25,000 which the noble Lord quoted for all other purposes is in fact, as things are turning out, probably to be met by slightly less. We would, on Cullingworth, if our original calculation of 25,000 for other purposes remained factually correct, be 2,000 short of what Cullingworth is calling for; so in fact we are just about right. But the problem to be dealt with after that ten years remains.
LORD DRUMALBYN: My Lords, I am obliged to the noble Lord for clearing up that point. The new system will, as the noble Lord said, increase the subsidy very considerably. He gave us an indication that on a £3,000 house, at the rate of 6½ per cent cent., the subsidy would just about be double; and, of course, for the more expensive houses the subsidy would be higher still. But, as the Bill is drafted, the new subsidy would disappear entirely if the interest rate fell to 4 per cent. That may be considered to be totally hypothetical and extremely unlikely, but the point I am trying to make is that, in effect, what the Government seem to be saying at one time to the local authorities, the development corporations and housing associations is, "Hurry up and build while the borrowing rates are high. If interest rates drop, you will get little or nothing, at least by way of standard subsidy". Is this what the

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Government wish to say? Because at the same time they talk about the number of times the housing legislation has been changed over the last few years. The noble Lord, Lord Kennet, spoke about it. The Government gave an indication that this is by no means final.
This is not necessarily a new principle which is to be lasting. It may just be an expedient to carry us over the next few years. What we should like to know is whether this is a principle which the Government intend to be lasting. I do not think we shall get that confidence and continuity which the Secretary of State wanted to result from this Bill unless the country can know exactly where it stands, and local authorities in particular can know exactly where they stand, with regard to the expectations for the future. The noble Lord was talking about planning for five years ahead. Sometimes when listening to the noble Lord, Lord Kennet, I wondered whether they were safe to do so.
What is very significant is that the Bill gives no encouragement whatsoever to those who build for owner-occupation. The only help to be available for them is afforded by Part II of the Housing Subsidies Bill through the mortgage option, and, in spite of what was said by the noble Lord, Lord Kennet, I regard that as not so much help as the removal of a tax hindrance. It seems a pity that more is not done at least to encourage private landlords to keep their houses in good repair and indeed to improve them. The noble Lord said something about this and stressed the importance of doing so, but he gave no additional indication of what was to be done to encourage landlords to do so. They certainly cannot improve their houses unless they get an acceptable return on what they spend. Has the noble Lord made any estimate of what contribution is likely to be made to the target of 50,000 houses by private building? As I said, the average has been running at roughly 7,500, but if it is to continue at that level it means that only 15 per cent. of the total houses built would be for private occupation. This could hardly be regarded as satisfactory.
In my view, the long-term objective policy should be to restore a reasonable balance between private and public ownership of housing in Scotland. I agree that in the short term the main thing is
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to get built the houses that are so badly needed, to replace slums and to fill the deficiency. But we must not lose sight of the long-term objective. I regard it as important for the moral as well as the economic health of the country that too high a proportion of the nation's houses should not be concentrated in public ownership, because choice is a vital element in a free society.
The noble Lord will recall from his vast experience of this matter, including that in his capacity as Lord Provost of Dundee (I think he was Lord Provost at the time when the previous Government enunciated them), the twin principles, first, that those who can afford to do so should pay the economic rent of the houses they occupy and, secondly, that nobody should be denied a house merely because he is unable to pay the economic rent. These were the twin principles which were stated. I know that one of the local authorities, the main one in fact—Dumfries County, which constituency I represented—was the first to try to implement these principles. The system of rent rebates introduced under a Conservative Government is being more and more applied by local authorities, and now, I understand from the 1965 Report—no, it was stated by the Under Secretary for State in another place—covers some five-sixths of the houses owned by public authorities in Scotland.
Would the noble Lord agree that ultimately the time should come when rent rebates constitute virtually the only burden on the rates so far as housing is concerned? As was said by my noble friend Lord Strathclyde, there is no justification for requiring those who provide houses for themselves, or rent them from private owners, to contribute through the rates towards the rents of those who have been allocated houses by public authorities and can well afford to pay the full rent themselves. By all means have rent rebates for those who cannot, but those who can afford to pay the full economic rent should pay it.
It may well be that supply and demand in housing will never come into balance in this century. The shorter-term objective, in my view, should be to bring them as nearly as possible into balance and eliminate the hardship and social evils inherent in the existence of bad homes and the fact that there are too

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few houses. But in achieving the shorter-term objective—and this is where I am trying to get the noble Lord's long-term feeling—I believe we should always have in view the longer-term aim of these twin principles to which I have referred. I do not think it matters so much who provides the houses. No doubt public authorities are in a position to provide most of them more economically because of the scale of their operations. It is a good thing that they are combining together more and more to do so, for example, under the auspices of what I think is called "SLASH"—the Scottish Local Authorities Special Housing Group. They are making increasing use of industrialised methods in that over one-fifth of all tenders approved for public authorities in 1965 involved industrialised methods. I wonder whether the noble Lord has more up-to-date figures than that.
It does not follow that those who provide houses should necessarily build them. It is important to maintain a strong and healthy independent building industry in Scotland and to see that its confidence in the future is maintained. Nor for that matter does it follow that all houses provided by public authorities should remain in their ownership. For example, why does not the Scottish Special Housing Association sell more of the houses it builds? I do not think that the argument we heard about Birmingham can be applied there at all. The 1965 Report of the Scottish Development Department said that the rate of building was to be doubled, yet the tenders approved in 1966 were less than half the level in the years 1963 and 1964. The Association has been doing a very good and necessary job at places like Linwood, Fort William and Glasgow, and it also serves a very useful purpose in that the more it builds, the more the rents of local authorities will tend to approach the economic level excluding Exchequer subsidy.
My Lords, I welcome also the provision in the Bill making the Exchequer subsidy available to housing associations on the same terms as for local authorities. I must say that I did not fully understand all that was said by the noble Lord, Lord Kennet, and I shall look at that again; but I think that what he said also applies in the main
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to Scotland. Perhaps the noble Lord, Lord Hughes, will confirm that also so far as the housing associations are concerned.
LORD HUGHES: My Lords, unfortunately, I was not present during the whole of the speech of my noble friend Lord Kennet. While I think that the noble Lord was probably right, I should like to follow his example and read to-morrow what my noble friend said.
LORD DRUMALBYN: My Lords, the noble Lord will find that interesting. Perhaps we can revert to this question later.
I should like to mention the problem of making the best use of the national stock of houses—a matter to which the noble Lord, Lord Kennet, also referred. Under-occupation in some subsidised houses makes overcrowding in other houses and the maintenance in use of bad accommodation. I believe that an inquiry about this was initiated by the Government in Scotland, and I wonder whether the results are yet available. Under-occupation cannot be dealt with unless there are numbers of small houses. I am glad to see that between one-fourth and one-fifth of the tenders approved in 1965 were for one and two-apartment houses. The difficulty is getting people to leave the houses they are in and go into smaller houses. This goes for the younger bachelors and spinsters, as well as for the elderly.
There are only two ways, other than by pure persuasion, of getting them to move: either by charging extra for unoccupied rooms, as is done in some countries, or by making allowances towards the cost of moving. This is the old story of the stick and the carrot; and, by and large, we in this country prefer the carrot. I would ask the noble Lord whether some means cannot be found of giving encouragement to local authorities to take people out of their houses in this way. If it is possible for the Ministry of Labour to make transfer allowances, why should not the housing authorities also do so? I know that they have power to do so, but the power is not often used.
In introducing this Bill in another place, the Secretary of State said that what is needed is confidence and continuity. This Bill would have increased confidence if only the Government spokesman had not then thrown doubt on the

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continuity of the measure by saying that the whole thing would have to be reviewed in three or four years' time. We are glad to hear of the growing number of tenders approved and of houses under construction. We hope that it will soon be possible to achieve the target the Secretary of State has set. One would like to feel that, now that something that looks like a principle has been devised for paying a basic housing subsidy, it will be treated as a principle for continuous application and not just as another expedient. If we are in for a long period of high interest rates, this will undoubtedly be expensive. It means giving housing an overriding priority, but I believe that that will have the support of the country. I also believe that if we give housing this priority, other things may have to suffer.
7.54 p.m.
LORD HUGHES: My Lords, I had thought that my reply to the debate would be commendably short, but I regret that it is not likely to be as short as I anticipated. Although only two noble Lords opposite have taken part, they have given such a generous welcome to the principle of the Bill that it would be ungenerous in me if, in return, I were not to try to answer some of the points they have made. The noble Lord, Lord Strathclyde, indicated that because of other commitments he would not be able to stay, but I think that I should not make his absence a reason for not answering the points that he made.
The concluding words of the speech of the noble Lord, Lord Drumalbyn, brings me right back to the opening words of the noble Lord, Lord Strathclyde. The noble Lord, Lord Drumalbyn, said that he thought the country would back a policy of giving housing an overriding priority, but that it might mean that other things would have to suffer. The noble Lord, Lord Strathclyde, started off by reminding us that the 1950 Conservative Party Conference insisted, against the wishes of the platform, in writing into the decisions of the Conference that there should be a target of 300,000 houses. The Government said that that was impossible and that it was dishonest to hope that it could be done. What the Government overlooked in 1950 was that there is more than one way of achieving
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a target; they were looking at the matter on the basis of building 300,000 houses of the type which the Government were then providing.
The Conservative Party did two things to implement that decision. First, they cut down on other things. The noble Lord referred to my experience of local government in Dundee. I remember fighting a municipal election in Dundee when one of the main questions was that children living in the Fintry housing scheme attended 26 different schools throughout Dundee. The only place where they did not go to school was in the Fintry housing scheme, because, in the urge to get houses built, the Government would not allow schools to be built. That was one way in which the Conservative housing target was reached. This was a mistake which I am certain the Conservative Party would not repeat to-day, and certainly it is something which the present Government do not intend to repeat. We must achieve our housing target without abandoning other reasonable objectives, though it follows that if we accept that housing must be priority No. 1, everything else cannot have the same priority.
Secondly, in 1950 the Government had been devoting a considerable part of their activities to building larger type houses, four and even five bedroomed houses, to meet the needs of large families. There was an immediate and rapid change over to two and three bedroomed houses, and at the same time standards were reduced. It was possible to provide a greater number of houses by concentrating a smaller amount of material and labour into the building of each given unit. I am not saying whether that was good or bad, but I am saying that it is not a comparison of like with like, of circumstance with circumstance.
It is true, as the noble Lord, Lord Strathclyde, said, that the 1953 figure of 40,000 houses in Scotland has never been exceeded. But I do not think that that is something on which noble Lords opposite are entitled to congratulate themselves. After 1953, the figure continued to decline. The noble Lord, Lord Strathclyde, asked why we had fallen behind. One reason was that the local authorities, who, as Lord Drumalbyn has admitted, are the main providers of houses in Scotland, were not given active

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encouragement by the Government. The basic subsidies of £12 or £32, given the rate policy which was operated at that time, meant a subsidy of £100 upwards had to come from the rates. So it is not surprising that many of the small authorities in Scotland cut their building activities down to the very minimum. We do not need to look far for the reasons for the fall in these years after 1953.
The noble Lord, Lord Strathclyde, referred to the rents. I do not think that any useful purpose is served by going back over the years to ascertain why rents are as they are; why the Government did not then take the steps which the noble Lord, Lord Strathclyde, honestly admitted it was difficult for him to take when he was Minister, but which he found it much easier to urge upon me as a Minister. It is no easier for the Government at present to tell local authorities how to do their job, or to compel them to do their job in a certain way. We give them encouragement. We take steps to indicate the lines that they should follow. As the noble Lord, Lord Drumalbyn, has said, the level keeps on rising. It may rise more slowly than some people would like, but I suggest to noble Lords that although a policy of increasing rents gradually over a period of years may compel us to take longer than some people would think desirable in reaching a satisfactory rent level, it can probably be done with greater acceptance to corporation houses than by attempting large slashing increases at infrequent intervals. If, over the years that have gone by a policy of small, fairly frequent rent increases had been followed, we should be at a higher level than we are to-day. But I do not want to go back. What I want to say is that we are giving encouragement.
The noble Lord, when he sees the Scottish newspapers to-morrow, will discover that there has been issued to-day in Scotland a statement by the new town development corporations indicating the rent policy they propose to apply, and, as they will indicate, this has been done with the encouragement of the Secretary of State. We are seeking to do what has not been done before; that is, to equate conditions in one new town with those in the others. We are not going to have in four new towns four different rent policies operating. They are being
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equalised so that they may progress together over the years to a satisfactory rent basis.
Apart from this, I must say that in existing circumstances we have to accept that Parliament has agreed (and the local authorities would very much resent it if we attempted to differ from it at this stage) that the letting of houses and the fixing of rents is best done by local authorities. I do not think we should achieve any useful purpose if we attempted to dictate to local authorities the rents which they should apply. I think this is one thing on which successive Secretaries of State have been in agreement.
LORD DRUMALBYN: My Lords, neither my noble friend nor I suggested that we should dictate rents. What I was trying to make clear was why rents were what they were, and how they are now being increased greatly, and I was asking where it was intended ultimately to go in this matter.
LORD HUGHES: I take no exception to what the noble Lord, Lord Drumalbyn, said, but I think if he reads to-morrow what his noble friend Lord Strathclyde said he will find that he was asking for something a little more specific in telling local authorities what should be done on this matter than mere advice and exhortation. At least, that is how I interpreted his remarks.
I will now pass to the points raised by the noble Lord, Lord Drumalbyn. First of all, I should say that I regret that the occasion of his taking part in this debate should be that his noble friend Lord Dundee has had to go into hospital, and I am certain it is the wish of my colleagues that his stay there will not be prolonged, and that its object will be satisfactorily achieved.
The noble Lord, Lord Drumalbyn, queried why it was only on six storeys or more that the extra subsidy for high flats was paid in Scotland, whereas it is four or more in England. Well, he gave the answer himself when he started off by saying that it was some 12 years since he had had anything to do with housing. The present position evolves from 1950. From 1950 to 1957 there was an additional subsidy of £7 per house payable towards the additional expenditure on lifts in blocks of four storeys or more.

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In practice, however—I am talking about the Scottish position, with perhaps a certain economy which the previous Government encouraged and which we are not doing anything to discourage—lifts were not considered necessary in blocks of four storeys; nor were they considered necessary in blocks of five storeys if the top two storeys formed a maisonette.
However, in 1957 a new subsidy was introduced, and this was payable in Scotland on blocks of flats of six or more storeys. The average subsidy paid under this formula was £39 15s. On the basis of that 1957 experience, the 1962 Act stabilised the additional subsidy for flats at £40 per house. The difference is a matter of varying experiences in the different countries. In England and Wales tenders for two and three storey flats cost about £2,200, and for four and five storey flats about £3,450. These English figures relate to superstructure, substructure and external works. So we have no basis of direct comparison with Scottish figures. What we know, however, is that in Scotland the marked change in costs does not occur in this type of structure, but in houses where they are six storeys or more. This is what our predecessors found between 1957 and 1962; this is what they consolidated in 1962, and we have found nothing in the last two years or so to cause us to depart from that decision. It is just a straightforward matter of the actual costs of building which dictates that.
The noble Lord asked what kind of encouragement we were going to give to the private sector. In the first place, so far as the building of new houses is concerned, the provisions in the previous Bill are applicable on a United Kingdom basis for the mortgage option—although the noble Lord rather wrote them off by saying that we were removing an obstacle rather than giving an incentive. I was taken to task for having said in Scotland something which the noble Lord, Lord Silkin, said to-day; namely that it was not the Government who built houses. I said that Governments do not build houses, and went on to say that what Governments did was either to create the conditions which encouraged houses to be built, or to place obstacles in the way which prevented houses from being built. Removing an obstacle can be just as effective in enabling more houses to be
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built as giving encouragement. I think this will undoubtedly be a help.
In relation to the other sector, of improving houses, this is something about which much more will be said. It is difficult for me to say much at the present time, because the Cullingworth Report is now being considered, not only by my Department but by the local authority associations. But one of the things which have emerged is that there has been disappointingly little done in Scotland in improving existing houses. Cullingworth suggests a variety of solutions: that the grants to private owners may be increased; that the private owners may be permitted to charge more reasonable or realistic rents for the resulting modernised houses; that steps be taken to facilitate this programme by the decanting of people from the existing houses.
Not every private owner has a stock of houses into which he can put people while, say, 12 unsatisfactory houses are converted into 8 completely satisfactory houses. This is obviously a direction in which there may well be co-operation between local authorities and private owners. All these matters are being looked into at the present time, and I am certain that it will not be long before the Secretary of State for Scotland will be able to arrive at conclusions as to the most satisfactory way in which this particular aspect of the problem can be dealt with.
The noble Lord said that another way to help in the private field was to make more land available to the private sector, some of it by the local authorities, who tended to conserve stocks of land for their own uses rather than divide it between the private and public sectors. The information we have is that the private builders in Scotland are confident that there is a demand for houses to be purchased and that this will be increased by the option mortgage scheme. Land is a major problem and there is a Joint Working Party between the Development Department and the Association of House-builders, set up by the Secretary of State for Scotland, which is making a detailed study of the land available for private building, and I do not expect we shall have long to wait for the joint conclusions of what might be done about this matter.

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Perhaps I may jump on to the point made by the noble Lord, on what is the extent to which we expect the private sector to contribute to our target of 50,000 houses. The present figure is just under 8,000. We are looking to the private sector in 1970 to contribute not fewer than 10,000 houses, and we should be happier still if they got that figure up to 12,000. If one looks at this, a 50 per cent. increase seems to be very large, but as the number of houses will be going up from 8,000 to 12,000 in three years it seems to me that it is an objective well within the reach of the industry in Scotland, and I can assure the noble Lord that they will receive every encouragement from the Scottish Office.
I am conscious of the fact that the hands of the clock keep moving round, and in fairness to my colleagues I shall not answer all the points, but there is one point to which the noble Lord, Lord Drumalbyn, referred and with which I will conclude. In giving a welcome to the new principle on subsidy, he pointed out that if interest rates were to fall to 4 per cent. the subsidy would disappear. He asked whether the new subsidy was to be a principle or an expedient. When my noble friend Lord Kennet indicated that there might be a revision of this some time in the future, he pointed out that the average life of a Housing Act had been something like four years. That does not mean that the Government expect in any way to depart from what they believe to be a new principle and what they believe will prove to be a satisfactory method of assisting the building of houses in the public sector.
It is a long time now since the rate of interest was below 5½ per cent. While in many ways it would be desirable to see a return to low interest rates, as distinct from lower interest rates, it would be a rash person who would predict at what stage interest rates will go into the region where the present principle would not be of any interest to local authorities. What my noble friend was trying to do, and I would certainly wish to do was
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to make it perfectly clear that we are not regarding our housing laws as being like the laws of the Medes and Persians and not subject to change. If circumstances require a change, if for instance there was such a radical alteration in interest rates over a period of years that 4 per cent. was no longer a valid dividing line, then the Government would be foolish not to look at the matter again.
I give this firm pledge. We believe that we have found a new principle in relation to housing subsidies which will prove to be acceptable to everyone concerned, and that it will not be abandoned unless it is clearly demonstrated that some refinement or alternative to it in the future becomes more acceptable. We will give the pledge that we will only change for the better, and we are certainly not embarking on any expedient in this Bill.
My Lords, there will be further opportunities for elucidating some of the points raised by the noble Lord when we come to the Committee stage, because if form is followed we shall have at least one or two Amendments put down for the purpose of probing the Government's intentions. If the noble Lord should embark on that course, I can assure him of my wholehearted co-operation, provided that at the end of the day he does not press any Amendment which Her Majesty's Government find unacceptable.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

POST OFFICE (BORROWING POWERS) BILL
8.18 p.m.
House in Committee (according to Order).
House resumed: Bill reported without amendment; Report received.
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of March 16) Bill read 3a, and passed.

ARMED FORCES NATIONALITY RULES
8.19 p.m.
LORD RUSSELL OF LIVERPOOL LORD RUSSELL OF LIVERPOOL rose to call attention to the nationality rules which are applied to those wishing to join the Armed Forces; and to move for Papers. The noble Lord said: My Lords, I shall be as brief as possible at this late hour, but I am afraid that I shall detain your Lordships for a little longer than the Bill which has just passed your Lordships' House. That was one of the shortest and happiest moments I can remember in this House. The object of my Motion is to draw attention to the nationality rules as they apply to the British-born sons and daughters of Polish and Czech naturalised British fathers married to English women. These rules are applied, as I think your Lordships know, before these people can be admitted to one of Her Majesty's Services.
In case your Lordships are not aware of the rules perhaps I may explain them briefly. I think I have them right, because I got the information from the Ministry of Defence; but the noble Lord, Lord Shackleton, who is to answer this Motion on behalf of Her Majesty's Government, will correct me if I am wrong. The rules cover all new entrants except those enlisting as other ranks in the Army. They require that both of the applicant's parents should be either British subjects or citizens of the Irish Republic, or otherwise should have been born in a Commonwealth country or in the Irish Republic. I also understand—and this information I have received from the Ministry of Defence—that the rules are not inflexible, and that it is possible for these requirements to be waived, on the authority of the appropriate Minister of Defence. This is in fact, I understand, frequently done, and each request for this special dispensation is carefully considered on its merits.
I am also informed that the rules are intended to be in the interests of the applicants themselves, and that the reason for applying them to future officers and noncommissioned officers in the R.A.F., and petty officers and warrant officers in the Royal Navy is that, if accepted, applicants cannot be offered a full career without at some time or other having
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access to classified information; and when that occasion arises they will, of course, be subject to security inquiries, security checks, in order to establish their reliability.
There is special consideration in respect of persons whose fathers are of alien origin, in case they might be liable to pressure through having relatives living behind the Iron Curtain. I should have thought, from the number of unfortunate cases which have occurred in this country during the past few years, that it was not only persons of alien origin who should be suspect in this respect.
No one would dispute that it is most important that those who have access to classified information should be reliable, but in my opinion they are not more likely to be unreliable simply because they have a father of Polish or Czech origin, or even some relative living behind the Iron Curtain. As I have just said during the past few years we have had a large number of cases of British subjects of British birth, and with British parents, either defecting or betraying their country's secrets, so that we must not be too smug about this matter; and, so far as I know, there has not been a single example of family blackmail being responsible for these defections or for these betrayals. Greed, criminal activities, sexual perversion, reckless spending have mostly been the actuating motives in the modern history of espionage.
I do not know what your Lordships think about this form of discrimination, but I can tell you what the Poles and the Czechs living in this country, now British subjects, who fought so gallantly for us during the last war, and particularly during the Battle of Britain, think of it—and I, for one, agree with them. They think it quite wrong that a citizen of this country, born in this country and brought up as British, should be subject to discrimination, not because of his or her conduct, not because of his or her activities or his or her attitudes, but because of something over which he or she had no control whatsover; that the fact of the previous nationality of one of a man's parents pre-judges his individual rights as a British subject.
I believe that as recently as last October the Prime Minister expressed the view that the Polish community in this country—

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and I am going to quote from the words which I understand he used:
"should cease to be treated as a separate entity and should be increasingly integrated into the wider British community."
I have no reason to suppose that the Prime Minister did not mean what he said; and, assuming that he did, those Britons living in this country who are of Polish origin, or one of whose parents is of Polish origin, may be forgiven, I think, for wondering whether the application of these nationality rules is the best way of achieving this integration into the wider British community which the Prime Minister apparently desires. We must not be surprised, surely, if they come to a very different conclusion; namely, that they are, and are to remain, a separate entity, and are treated as such by their British-born compatriots.
These men and these women can surely be excused if they are discouraged—I might even say embittered—by the realisation that they are second-class citizens to whom, whatever their individual merits may be, some careers are closed for ever—until a national emergency arises, when their services doubtless will again be needed as those of their fathers, or perhaps their grandfathers, were needed and who volunteered in the stark years now over a quarter of a century ago.
With your Lordships' indulgence, I propose to give a few particulars of the many cases in which the British born children of a naturalised Polish father and a British born mother have been refused entry into one of Her Majesty's Services. I have, of course, already given the particulars and the names to the noble Lord, Lord Shackleton, who is to reply to this Motion on behalf of Her Majesty's Government. One concerns the son of a well-known Polish born journalist now in this country, who merely wanted to join the R.A.F. University Squadron in Oxford, but who was rejected after veto by the Air Ministry. In his case there was not even the excuse that his family have relations behind the Iron Curtain, because they have none.
Some of the other cases are as follows: James Marczynski—and I am sure those who speak the Polish language better than I do will pardon my pronunciation or mispronunciation of some of these
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names—was refused entry into the Royal Navy merely because his father is Polish born. Helena Dudzinski was refused entry to the W.R.A.F. for the same reason, although her father has been naturalised for 16 years. Jan Sobczak was refused entry to the R.A.F., and yet his sister, Marsha, who has, of course, exactly the same family background—and this would seem to show that the rules are not always worked very sensibly—was accepted as a nurse in the Royal Navy. Then there was Michael Paradowski, who was refused entry into the R.A.F. His father was Polish born and his mother British born. This boy has been serving as a corporal in the 56th Squadron of the Air Training Corps, and thought and talked of nothing but the Air Force.
Then there was Neil Karpowicz, who was refused entry into the R.A.F. as a security risk, although he had been an Air Force Cadet since he was 12 years old. He was so upset about this that he has since emigrated to Australia under what I believe is known as the Big Brother Movement. He has two younger brothers, and his mother is wondering what the position is going to be about them, because they, too, want to do what their father did and serve in the British Air Force. The case of Neil Karpowicz seems to me particularly absurd, because although the son was regarded as a security risk the mother, just because she was British born, was accepted as a prison officer and worked in the prison service for 18 months, during which time she was in constant touch with two prisoners as well-known in espionage circles as Helen Kroger and Ethel Gee, which surely is a rather Gilbertian situation.
From time to time I have heard the Prime Minister animadvert against the brain drain, and pour scorn on those who have been and are so unpatriotic as to leave this country because the prospects here are, if I may use a British understatement, "not too bright". It is a sobering thought that, had these regulations been in force many years ago, neither Winston Churchill nor Harold Macmillan could have been officers in the Army without full inquiry as to their antecedents. Mr. Shinwell could not have served even as a rating in the Navy, let alone become Secretary of

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State for War, without a similar inquisition being carried out.
My Lords, in my opinion there is really no justification for such discrimination. In Britain, in France, in Canada, in Australia and, above all, in the United States of America, there are masses of young people whose parents come from Eastern Europe and who still have relatives there. In the United States' Armed Forces alone there must be hundreds of thousands of such people. Yet there have been no known cases of attempts to bring pressure on such people by blackmail concerning their relatives. In any event, as one distinguished subject of Polish origin has recently said:
"The children of people who came to this country and remained here because of their love of freedom are much less susceptible to Communist propaganda than many of their British born compatriots with British born parents. Why should Soviet agents in search of military secrets look for somebody with an aunt in Poland, a sister in Czechoslovakia, or a cousin in Hungary, when they can probably find many young people belonging to the many subversive organisations that exist in this country to-day?"
Of course, no one will dispute the fact that those who are going to have access to classified information must be, so far as it is possible to ensure, persons unlikely to be a security risk, but is there any reason to apprehend that a British subject born in Britain whose father merely happens to have been originally of Polish or Czech nationality should be more suspect than the offspring of a British born father and mother? I think those who live in glass houses should not throw stones. May I remind your Lordships of one or two names, in case you have forgotten? Burgess, Maclean, Alan Nun May, Philby, Houghton, Ethel Gee, Bossard and Sergeant Allen. None of their parents were of alien origin but of true British stock. However, it does not seem to have made any difference.
I know the noble Lord who will reply for the Government will probably give several details of cases where we all know these rules have been waived. I hope he may be able to go a little farther than that and say there may be some revision of the nationality rules or their application in the future. I hope they may be discontinued and that some precautions will be taken in the future to ensure that the children of British born parents are suitable to join Her Majesty's
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Forces as are taken in respect of those whose parents happen to be of alien origin. My Lords, I beg to move for Papers.
8.33 p.m.
VISCOUNT COLVILLE OF CULROSS: My Lords, the noble Lord, Lord Russell of Liverpool, has dwelt a little upon this matter on the basis that there is discrimination. I know that in wide circles in this country to-day discrimination is a dirty word. But I think he must accept, and I believe he did, that there is another sort of discrimination which is justifiable, where security is at issue. I hope that when he was making those remarks he was not using the pejorative sense of the word, at any rate too forcibly, because if he was I fear I must most profoundly disagree with him. I think that above all those who are in charge of our defence and of our security must be allowed to make rules in order to protect those matters, although of course there is no doubt that noble Lords in this House, and Members in another place, may obviously be allowed to criticise them if they consider they are not right.
Again, the noble Lord, Lord Russell of Liverpool, I think dealt with this on a rather narrow basis of the rules for the Armed Forces. I think he correctly described them in saying they applied to all except other ranks in the Army. As I understand this matter—and I hope the noble Lord, Lord Shackleton, will tell me if I am wrong—the rules which apply to members of the Armed Forces under the nationality category are only a part of the general nationality rules which apply now and have for a considerable length of time applied to recruitment for the Civil Service. The particular rules to which the noble Lord has drawn attention are, I think, to be found in paragraph 12(2) of the nationality rules which, as I say, have been in force for a long time, although I think not necessarily overtly, in the case of the Civil Service, and these were then applied in 1965 specifically to entry to the Armed Forces.
The other point which should be borne in mind is that although the noble Lord has dealt specifically and especially with people from Poland or from Czechoslovakia, or whose origins were in those countries, neither in the case of the Civil Service nor in the case of the Armed Forces do the rules apply specifically to

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them. They apply to all who are of alien origin. If I may, I will deal with this on a slightly broader basis. I hope it will not be thought that I am in any way at all disparaging the Polish and Czech communities in this country. I was at school during the war and, therefore, perhaps this often passed me by a little more than other noble Lords. Since that time I have become fully aware of how much I and other citizens of this country are indebted to those who came to help in our Armed Forces, and elsewhere, from those two nations, and elsewhere; and I do not wish for one moment that anything I say should be thought to be a criticism of them, or in any way a lack of welcome to those in this country.
The first thing I should like the noble Lord, Lord Shackleton, to do, if he would be so good, is to try to put this matter a little in perspective. Of course this problem arises acutely in the case of Poles and Czechs who now live here, and their children. I have no doubt there are other applicants with nationalities different from theirs, or whose origins are different, who also fall to be dealt with under these rules, and perhaps he might give some details of this matter, so that we may see that it is not only these two nationalities which are involved.
I have done my best to study this matter, and the thing that seems to me a little obscure is this. I would, as I said, agree that the right sort of discrimination is essential in this matter. As I understand it, there are, as it were, two sieves through which applicants for these jobs have to pass. The same thing applies whether it concerns the Ministry of Defence or the Cabinet Office, or the Ministry of Public Building and Works, which are the Ministries now affected by paragraph 12(2), or whether it concerns the Armed Forces. First of all, in order to get in they have to pass the test of the nationality rules or else to obtain individual exemption from the head of Department concerned. As I understand it, that is not all. Even if they get in through the first sieve, that does not mean they are necessarily allowed to have access to classified information. Before anyone, whether he is of alien origin or British origin, is allowed to have access to classified information he is required to be cleared again by security.
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I think it was in anticipation of this second sieve (if I may so call it) that the Press release, which announced the introduction of these rules for the Armed Forces, had a certain amount to say. What it said was:
"In order to avoid embarrassment both to the Service, and to the individuals concerned, persons entering as officers, in all three Services, and as ratings or other ranks in the Royal Navy and Royal Air Force, must not he placed in a position where they may find they cannot be given a full and useful career."
Unless I have misunderstood this—and perhaps the noble Lord, Lord Shackleton could make it plain—precisely the same risk of embarrassment could arise in the case of a British national. He is allowed in without having to pass the sieve nationality rules because they do not apply to him, but nevertheless before he is allowed access to this classified information he is again subject to being cleared by security. If this is so, then he is in exactly the same position as a person of alien origin who has got that far.
Is there a difference at the earlier stage? An alien or somebody of foreign stock who has been admitted to the Army, the Navy or the Air Force as an officer must obviously get to a certain stage in his career without learning anything more than training matters and matters of general public interest. But at one stage or another the moment will come when he has to have classified information. Then he is put through the same security clearance I understand, as his British born colleague. If that is so why is it—I wonder whether the noble Lord can answer—that in the Services and in the Civil Service there has to be this initial check before that stage is ever reached? Is it found—and I wonder whether the noble Lord can give figures on this—that security clearance in fact rejects more people who have been passed through the dispensation because they are of alien stock than it rejects those of British stock?
Alternatively, are there large-scale exemptions from the nationality rules even for those people who are of alien stock? Do they have the further security clearance which may come in due course which allows them then to have access to classified information? Unless there is some point in this dual clearance

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system, I would suggest that it might have been done once and for all, and at the time which covers each stage of being given access to classified information. That was the time to deal with it. Or is the noble Lord saying that there is such a risk of embarrassment to people of alien stock that they must be prevented in the first instance from coming into the Service or Civil Service at all?
LORD SHACKLETON: My Lords, perhaps I might correct the noble Viscount on one point. This is only for information. This rule applies only in part of the Civil Service. A large part of the Civil Service is not subject to the more rigorous form of rule to which he is referring, and therefore this creates a wider area of flexibility.
VISCOUNT COLVILLE OF CULROSS: My Lords, I appreciate that. It is perfectly true that paragraph 12(1) of the rules which applies to the Departments other than those which I have mentioned is a wider one. Nevertheless, there are criteria laid down there which I imagine have the same raison d'être behind them, which could result in people of alien origin being rejected. Therefore it seems to me that we have these two methods of selection or rejection which might, I should have thought—unless the noble Lord can give some reason to the contrary—be reduced to a rather more simple matter.
I should be glad to hear what the noble Lord has to say, because I feel that if we find that those who get through the first exemption constitute the majority of the people who apply, then in fact these rules are not really observed more than in the disregard of them, and that we might just as well stick to the final security classification when the person reaches the rank when he should receive it. I am glad that my noble friend Lord Russell of Liverpool has raised this matter, if only for the fact that what seems a rather absurd method of administration might at least he made more plain to me, even if it is already quite clear to all other noble Lords.
8.45 p.m.
LORD ST. OSWALD: My Lords, I have no doubt, and I do not think anyone in this Chamber would have any doubt, that the subject of the Motion put down by
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the noble Lord, Lord Russell of Liverpool, needed to be raised. Naturally, and inevitably, a great deal of the ground has already been covered by him and by my noble friend Lord Colville of Culross. Nor have I any doubt that the noble Lord, Lord Shackleton, who is to reply, and ourselves (and perhaps I may say particularly myself) are bending our efforts, and by character must always bend our efforts, to exactly the same just end in this particular context, always commensurate with the proper security and protection of the Services and of the defence of the country.
The noble Lord, Lord Shackleton, on October 27, answered a much longer and wider debate with particular application to the Poles (to-day, of course, we are discussing other nationalities), and he was asked by my noble friend Lord Barnby whether it was true that British subjects born of Polish parents in this country were proscribed from commissions in Her Majesty's Forces. The noble Lord, Lord Shackleton, replied:
"I may as well correct the noble Lord right away by telling him that that is not true."—[OFFICIAL REPORT, 27/10/66; col. 385.]
This is a worthy and characteristic effort on the part of the noble Lord to be absolutely concise. But all efforts at being concise are liable to misconstruction. I have looked up the meaning of the word "proscribe" in the Oxford Dictionary, and I see that it means:
"To put out of protection of the law, to banish, to exile."
Of course, the noble Lord, in applying this meaning of the word "proscribed", was perfectly right: because no foreign national, no child born of foreign parents, has been put out of protection of the law, or banished or exiled, for applying to join the Armed Services of this country.
The other meanings of the word "proscribe" are "to reject", or "to denounce as dangerous". It seems to me clear that in some cases which the noble Lord, Lord Russell of Liverpool, mentioned, this meaning, and therefore this sanction, has been applied against them. I am not going to catalogue the cases that have occurred. The noble Lord, Lord Russell of Liverpool catalogued a number, and I think I was closely acquainted with one of them. I

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take it that it is too much of a coincidence to suppose that we were not thinking of the same one. Perhaps I might describe it in greater detail, since it is no longer before us: the problem is closed.
This particular case concerned a boy born of Polish Jewish parents who wished to join a university air squadron because, and precisely because, he wished to repay in some way what this country had tried to do for his parents' country. His application to join was refused. It was, in fact, during the time of the previous Administration, of which I was at the time a member; and I fought very hard indeed, totally unsuccessfully, to make this understood. In this particular case there was no question of a security risk. The parents' relatives had all been either killed in Poland, under the German occupation, or had escaped. The boy had literally no relatives still living in Poland upon whom pressure could be put; nor was it possible for his father or mother to return to Poland, because the father had identified himself to such an extent with the anti-Communist element of Poland that he would not dare to set foot in his native country. Therefore it was difficult—indeed, impossible—to see how the danger that pressure might be put on the parents could apply in this case. Yet despite all the efforts that I was able to make it was impossible to apply a waiver.
There have been various references to this matter in another place, and they have been referred to by my noble friend, so I shall not go very deeply into the matter as outlined there. But on November 10, 1964, a great deal of reference was made to the regulations protecting this country against the dangers engendered by bringing the sons, and I suppose the daughters, of foreign-born nationals into the Services. My noble friend has already referred to the way in which these regulations are applied. The main barrier seems to be contained—and I will not quote the whole regulation—in sub-paragraph (3)(a)(iv) of the Regulations applying to the Foreign Service, and I believe to the Armed Services. It says that the main waiver can be applied if he
"satisfies the Secretary of State that he is so closely connected with a country or territory within the Commonwealth either by ancestry,
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upbringing or residence, or by reason of national service, that an exception may properly be made in his favour"
and he may in fact be permitted to join the Armed Services. I do not think, from my own experience, that this waiver is sufficiently frequently or humanely applied. It is sad that this should be so wasteful.
My noble friend Lord Thurlow, in the debate on October 27 last year, spoke from personal experience of the value of Polish and, by implication, other citizens of allied countries in our Armed Services, some of whom have achieved great seniority and distinction in our Services since the war. It seems totally illogical to me that the children of such people, men capable of giving such worthwhile and valuable service to our country in the Armed Services, should be excluded without a proper understanding and appreciation of their wish to serve.
It seems to me that the regulations are in fact too rigid, both in their basis and in their application, too little thought out to offer an advantage on balance between what we need from those from other countries who live among us, and the danger that a tiny percentage of them might conceivably offer should they be engaged in the Armed Services. I feel that there is reasonable cause to institute a review of these regulations, certainly of the way in which they are applied, in order to bring about an improvement in the position of those who wish to serve this country and thereby providing an advantage to ourselves in matters of defence.
8.55 p.m.
LORD SHACKLETON: My Lords, I make no complaint at all about either the subject matter or the way in which this particular Motion has been moved, although I find some difficulty in answering some of the points which have been made. However, I will do my best to deal with all those which I am in a position to answer, and certainly to consider some of the particular arguments that have been used. It may be useful if I outline the recent history of nationality rules for the Services.
Before September, 1965, the published rules for entry to the Armed Services were broadly that candidates must be British subjects or citizens of the Irish

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Republic and the children of parents who were at the time of application (or at death, if they were no longer alive), British subjects or Irish citizens. In practice, however, the Services, and particularly the Royal Navy and the Royal Air Force, have found it necessary, for reasons which derive from the nature of Service employment, to be a good deal more restrictive. This gave rise to a situation which I, as one of the Ministers of Defence at the time, found rather intolerable. We found ourselves enforcing certain rules without their being published; and, furthermore, we found ourselves in the position of turning down applicants for the Services without ever having indicated on the application form the existence of these particular regulations.
I say this, not in order to justify the present Government but because this is a problem that faces all Governments. I am bound to say that when my right honourable friend decided to examine the operation of the nationality rules we took very much into account this question of allowing people to understand the realities of the situation. In doing so—and I would emphasise this point—we took fully into account not only the Services' requirements but also the position of an individual who wants a Service career. We thought it unfair to take a man into the Services if it was likely that his career would be restricted.
I listened very carefully to the interesting arguments put forward by the noble Viscount, Lord Colville of Culross, and the noble Lords, Lord St. Oswald and Lord Russell of Liverpool, but before I come on to deal with the other points, I should like to make clear that if a man is to have a full career in the Royal Navy or the Royal Air Force, or indeed as an officer in the Army, he will almost certainly at some time or other have access to highly classified information. Before he can have this access he will be subject at that time to security inquiries, to establish his reliability. Let me make clear that, when talking about reliability, I am not talking only in terms of an individual's own integrity, but also about the circumstances in which he may be situated and which may, in fact, increase the risk of pressure upon him. Persons who are subject to such risk are not given access to highly classified information
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unless a number of circumstances prevail which lead to the risk being discounted or otherwise minimised.
At this point I move into a field in which I shall have to ask your Lordships to accept that I cannot go very deeply, for I shall be impinging on the field of security. This is not to suggest that we should not take it as far as we can. I can only repeat again the argument that in regard to those people of foreign birth or of foreign parentage whose parents were born in another country or who were orginally of foreign origin and who have relatives living behind the Iron Curtain, there is assessed to be a distinct risk that pressure may be brought to bear on them, through their relatives. This is a threat that we cannot disregard. Noble Lords may say that this can be overestimated and that we in this country are not entitled to cast stones or to be too smug; and I would entirely agree. Certainly, I agree with the noble Lord, Lord Russell of Liverpool, in this matter. But the proposition which I am putting before your Lordships is: regardless of that, ought we, in fact, to widen the area of risk? I can only say to your Lordships that this is assessed as a threat which we cannot disregard.
When we considered this matter, and my right honourable friend had to take his decision against this background, he came to the conclusion that it was in the best interests both of the Service and of the individual to take this factor, where it was known, into consideration at the outset. It was therefore decided that in future, for entry into the Royal Navy—and I am putting this in very broad terms—and the Royal Air Force, and for officer entry into the Army, the Services should openly adopt the special nationality rules which have been operated for many years for civilian employment under the Ministry of Defence, and certain other Departments of State—and I stress "certain other Departments of State".
These rules require, broadly, that the candidate and his parents must be British subjects or citizens of the Irish Republic by birth, and have been born in a Commonwealth country or the Irish Republic. The rules are not inflexible: there is provision for them to be waived on the authority of the Secretary of State

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for Defence. And, in fact, they are waived in a considerable number of cases. The Army has a much higher proportion of non-sensitive posts than the other two Services, and it is therefore more easily possible to offer automatically a full career in a non-sensitive Arm to an other rank, though not to officers. Therefore, the restricted nationality rules, simply as rules, are not applied to applicants for enlistment into the Army.
It has, I think, been argued that we should take the applicant as he stands, and consider the nationality factor along with other factors when the time comes to make the full security inquiries which arise in relation to posts of a sensitive nature. The view which the Government have taken (and in the present circumstances I believe it is right) is that, on balance, it is better to have fairly strict rules, to make them clear—and let me repeat, again, that they were not made clear before—and that these rules should be waived in appropriate cases, rather than to accept everyone and then find later that they cannot be given a full and useful career.
It could be suggested that we should put all applicants through the security procedure at the outset. But I believe that this also would be objectionable; and it would be unacceptable to public opinion, I think, if we were to subject applicants to the security procedure where it was not necessary. It would also be bad security. There is here a quite fundamental clash in relation to the rights of the individual. Any Government Department—and the Service Departments, as noble Lords know, have the very closest regard to the welfare of those in the Armed Forces—and anyone in this situation must, on the one hand, weigh the national security, and, on the other, the opportunities for the individual in the Services.
It is quite easy—indeed, it is all too easy—in any administrative set-up to point to anomalies and to pour a certain amount of scorn on the application of the rules. I should like to touch on some of them. First of all let me make clear that, in practice, in the great majority of cases (although I have certain figures, I am not quite satisfied enough of their accuracy) of people who are not
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qualified, who have a foreign-born parent, whether their foreign parent be American, German or of any other country, the rules are waived. Indeed, it might be argued that we have bent too far in making the rules sound as restrictive as they are. I think that the noble Viscount himself would, in theory, be disqualified under the rules, but I can assure him that he, like Sir Winston Churchill, would undoubtedly have received the necessary waiver.
VISCOUNT COLVILLE OF CULROSS: I think, my Lords, that the only thing that would have to happen is that, if I wanted to go into the Foreign Service, I should have to become British. I am a Canadian citizen.
LORD SHACKLETON: My Lords, I did not realise that the noble Viscount is Canadian. I suspect he may have more than one passport. This is a fascinating topic which we might pursue on another occasion. There are a considerable number of interesting points on this matter. I had thought that the noble Viscount, like Sir Winston Churchill, had an American parent, but, as I say, I do not doubt that the Minister of the day would have exercised his waiver, as he would do in the majority of cases.
This brings me to the particular problem of those people who live in this country, many of whom are fully naturalised subjects but whose ancestry is derived from behind the Iron Curtain. Let me make clear that the rules are frequently waived in relation to those who are children of Polish or Czech parents. But we are particularly concerned about the situation of the Poles—and anyone who mentions the position of the Poles can be certain, particularly in your Lordships' House, of a strong and indeed emotional reaction, such is the feeling that we have for those very gallant people who were such faithful and determined allies under the most extreme conditions, and unto death, during the last war.
Let me say straight way that the answer to the point about the waiving of the rules in practice is that they are waived. And I put it again to the noble Lord that the children of Polish parents are able to enter the Services, and indeed to become officers. I have attempted to obtain some figures. Since these rules were published in September, 1965, and bearing in mind

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that before then these rules were not officially existing, 82 people of Polish connection have been taken into the Services. I have not been able to establish too exactly for all three Services how many of them were commissioned, but there were 13 commissioned into the Royal Navy and 9 were commissioned into the Royal Air Force.
At this point, let me say to the noble Lord, Lord Russell of Liverpool, that I appreciate his giving the details of particular cases, but I must say that in two cases he was slightly misleading in the sense that the parents had never in fact taken British nationality. I would not argue that this is a decisive factor, but none the less I am bound to say this. I am not aware of the particular circumstances of the individual who applied for one of the squadrons, and I think it is probably better that I do not comment on this.
LORD ST. OSWALD: My Lords, the applicant was of British nationality and had lived all his life in this country. I am not sure that the noble Lord, Lord Russell of Liverpool, made a great point of the nationality of the parents. He made a point of the security risk involved in receiving into the Services a British citizen of foreign parentage. I am sure the noble Lord, Lord Shackleton, is not trying to draw a red herring across it, but he must not, I think, pin anything on us that we did not say.
LORD SHACKLETON: The only reason I am pinning this on is because it is a point that was specifically made, not once but twice, by the noble Lord, Lord Russell of Liverpool. But it is not a point of major significance.
Of course some people are turned down because they do not meet the grade. These are very high entry standards, particularly for officer entrants. In the light of the figures I have given, I would suggest that there is no discrimination except where the judgment is that there could be a risk. We can argue about this as much as we like, but I can only say that this is held by advisers as a matter that should be properly taken into account; and it would be wrong to bring into the Services and into the Forces those for whom we thought it was likely we could provide only a restricted career. On the other
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hand, those who are accepted can be confident that they will be able to enjoy a full and useful career unless circumstances of a kind that may arise, as they can as much in relation to a British citizen, do arise and cast doubt on their reliability. Of course, it is possible that in certain circumstances a wholly British citizen may be regarded as not sufficiently reliable to be admitted to more highly classified information.
VISCOUNT COLVILLE OF CULROSS: My Lords, I wonder whether the noble Lord could just explain that a little more.
LORD SHACKLETON: No, I do not think I can.
VISCOUNT COLVILLE OF CULROSS: I am not sure that he may not be able to. Is he saying that once the nationality rules have been applied and account has been taken of the applicant's relationship or non-relationship to people in other countries abroad, he is thereafter on the same basis as any other person, any other officer or other rank in the Forces, when it comes to the second security screening; that there is no further complication at that stage because he is alien?
LORD SHACKLETON: I am talking about those who are already admitted into the sensitive field. That is, unless in fact their actions—which may in themselves, of course, not be acts of disloyalty—are of a kind to give rise to doubts as to their reliability. I hope I have answered the noble Viscount on that.
VISCOUNT COLVILLE OF CULROSS: Yes.
LORD SHACKLETON: I do not wish to go too deeply into this, but, of course, it is easier to grant a waiver where the applicant has no connection with countries behind the Iron Curtain. I should like to make it clear that the Services do not willingly turn away otherwise suitable recruits, but the difficulties I mentioned do force them reluctantly to reject some of them. I may say that I have considered cases where it has been only with the greatest reluctance that I have agreed that in fact the restriction should stand.
At the same time, let me make it clear that in a large number of cases the closest examination has been given. I have myself exercised the waiver where I have reckoned that it was proper to do so. The

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Services already have a number of people who originated from behind the Iron Curtain. As your Lordships know, in the Royal Navy there is a Rear-Admiral of Polish birth; but one Rear-Admiral in itself proves nothing very much beyond the fact that he was himself an exceptional man. There is nothing in the rules—and I must emphasise this—that in any way detracts in the slightest from our admiration and gratitude for the gallant service to the Armed Forces of this country during the war by so many people of alien birth, and particularly by those of Polish origin.
I may not have been able to answer all the points; indeed, I am sure that I have not given full satisfaction to the noble Lord. I will only say in conclusion that whereas I can make no promise, as the situation has evolved over the last few years I would say that if anything there is a slightly more relaxed position in regard to these matters. But in the face of a threat which still continues we cannot afford to take risks with national security. I hope that noble Lords interested in this subject will accept that confronted with this dilemma we must have regard to the national security.
9.16 p.m.
LORD RUSSELL OF LIVERPOOL: My Lords, I should like to thank the noble Lord very much for his full reply and to mention just two points. I tried to make it clear in my opening speech that
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I did not dispute for one moment that those who are going to have access to classified information need careful vetting. I tried to make the point—and I still believe it—that there is no evidence whatsoever that persons who have alien parents are more susceptible to security risks than those who have not.
LORD SHACKLETON: My Lords, may I interrupt the noble Lord? It is just conceivable that the application of this rule may have minimised the risk. To that extent it is very difficult for the noble Lord to conclude that it has not been of significance in regard to the exposure to espionage hazard of a kind to which he has referred. But I leave him with this thought only as a point of fair argument.
LORD RUSSELL OF LIVERPOOL: I was merely saying that I did not think there was any evidence of that.
I do not think that the raising of this matter has done any harm. If the debate to-night leads to some serious thinking about this matter, and perhaps even to more careful application of the rules. I shall be extremely satisfied. With your Lordships' permission, I now beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.
House adjourned at eighteen minutes past nine o'clock.