HL Deb 20 March 1967 vol 281 cc609-36

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 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 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 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 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 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, 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 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, 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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. 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 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.

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 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.