HL Deb 02 December 1969 vol 306 cc41-62

4.24 p.m.

THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET)

My Lords, this Bill applies to Great Britain. It has two purposes. Part I enables the Housing Ministers to continue to control rent increases made by local authorities if these increases exceed certain limits. Part II provides for the phasing of increases which may arise when the rents of private regulated tenancies are registered. There is a control of rent increases for both council and private regulated tenancies under the Prices and Incomes Act 1968, but this Act expires at the end of this month. The present Bill is to come into force on January 1, 1970, and its control provisions differ from the control provisions in the 1968 Act, which in this respect it will be replacing.

Because of the importance of rent in the family budget, restraint in local authority rent increases has been an ingredient of the Government's prices and incomes policy from the very beginning. The three White Papers on Prices and Incomes Policy issued in 1966 and 1967 stressed the need to avoid or moderate rent increases wherever that was possible. The great majority of local authorities followed the Government's advice. But during 1967 and early 1968 a few authorities made or proposed increases which appeared to be incompatible with that advice. Accordingly in December, 1967, the Government referred to the National Board for Prices and Incomes the reasons for increases in council rents and the phasing of such increases, with particular reference to 21 named authorities which represented a cross-section of rent increases made or proposed at that time.

In their Report in April, 1968, the Prices and Incomes Board recommended that the weekly increase in average standard rents should not exceed 7s. 6d. per dwelling in a 12 month period. The Board did not lay down a suggested maximum for the increase for any individual dwelling but recommended that: the principle of moderation should be observed for individual households also. In the light of these recommendations power was taken in the 1968 Prices and Incomes Act to control local authority increases. This limited the exercise by local authorities of their statutory responsibility under the Housing Act 1957 to review rents from time to time and to make any necessary changes. Since the 1968 Act an authority wishing to increase rents has had to submit proposals to the Minister and obtain his approval before the rent increase could be made.

In dealing with proposals under the 1968 Act, the Housing Ministers have allowed local authorities to increase rents only in order to meet unavoidable increases in costs or to meet the cost of introducing or improving a rent rebate scheme, subject to an upper limit, in any 12 month period, of 7s. 6d. a week for the average increase and 10s. a week for any single house. In only one case has the Minister agreed to a proposal to increase rents by an average of more than 7s. 6d. a week. There was a good reason for this and I will not detain the House with a description of it.

Nearly all proposals under the 1968 Act involved an average increase of 7s. 6d. a week or less, and 914 such proposals have so far been approved. Nearly three-quarters of these involved increases averaging 5s. or less a week, and over a quarter involved increases averaging 2s. 6d. or less a week. Of these proposals, 273 were rejected, 14 because they involved increases of more than 7s. 6d. a week. The remainder were rejected mainly because the authority had not taken all the steps reasonably open to it to avoid, moderate or postpone the proposed rent increase, for instance by using a substantial housing account balance. Where the proposed increase averaged 7s. 6d. a week or less the authority was not expected to eliminate working balances or to make a rate fund contribution greater than it had normally made in recent years.

The 1968 Act was resented by the local authorities—or some of them—because it reduced their previous statutory discretion. But it reduced only their discretion to review rents, to use the statutory word, or to increase rents, to use the commonplace word. It did not directly reduce their discretion to fix reasonable rents and to grant rent rebates. In administering the Act the Minister has not in fact been concerned with the rent levels as such of an individual authority, or with the rents fixed for individual dwellings, only with the increases.

The Government consider that the prices and incomes policy continues to require restraint in rent increases, but we want that restraint to be operated, so far as is compatible with that policy itself, by the local authorities. The Government have therefore made an agreement with the local authority associations in the light of this policy. The associations representing authorities in England and Wales have agreed to recommend to their members certain guidelines for the period January 1, 1970, to June 30, 1971. These guidelines are as follows: First, for a sitting tenant the standard rent—that is, the rent for the dwelling excluding any payment for rates, water rates, furniture and services—should be increased only to the extent necessary to meet any unavoidable increases in costs falling to be met in the period covered by the agreement, or to meet the cost of introducing or improving a rent rebate scheme. Secondly, rents should not normally be increased to reduce a rate fund contribution, but special consideration might be given where the contribution has become abnormally high in recent years.

Thirdly, in any period of one year no general increase in rents should involve an average increase of more than 7s. 6d. a week for the dwellings affected, and no increase for any individual dwelling should exceed 10s. a week, save in exceptional circumstances. Fourthly, it would be against the spirit of the agreement to vary the terms of an existing rent rebate scheme so as to increase rental income. A broadly similar agreement has been made with the Scottish local authority associations.

The Government are primarily relying on this agreement with the associations to achieve the necessary restraint. The agreement covers every local authority in Great Britain except the Greater London Council, who have refused to subscribe to it. The Government intend to buttress the agreement by taking power, in Part I of the present Bill, to control rent increases if they exceed certain limits. Under the Bill an authority will need the Minister's permission to increase the rent of more than 10 per cent. of its dwellings by an average of more than 7s. 6d. a week in any period of one year. This provision closely follows the recommendation of the Prices and Incomes Board that increases in average standard rents above this limit should need the prior consent of the housing departments. Under the Bill an authority will also need the Minister's permission to increase the rent of any single house by more than 10s. a week in any period of one year. As any increase above these limits is very difficult to reconcile with the Government's prices and incomes policy, the Ministers expect that they will be justified in permitting such increases only in quite exceptional circumstances.

There are various things in the Bill to which the control powers do not apply. It is necessary for me to tell the House what they are because one does not want to get a false picture of the inclusiveness of this Bill. The control powers do not apply to rents fixed for new houses; they do not apply to rent increases where there is a change of tenancy, unless the new tenant is a member of the former tenant's family previously residing with him; they do not apply to rent increases attributable to improvements; they do not apply to increases in rates and water rates and charges; they do not apply to increases in charges for lodgers, additional earners and so on; they do not apply to rent increases payable by a tenant as a result of a reduction in his rent rebate; and they do not apply to increases in a charge for services or furniture.

Part I of the Bill is so drafted as to expire after June 30, 1971. But as prices and incomes policy develops, the Government and Parliament may wish to terminate the powers in Part I before that date. The Bill provides that this can be done by Ministerial Order subject to Affirmative Resolution by both Houses of Parliament.

I turn now to Part II of the Bill. The Prices and Incomes Act 1968, and regulations made under it, had set up a system of phasing of sharp increases in regulated rents. That system will die with the Prices and Incomes Act, and Part II of the present Bill introduces a system to replace it. If Part II of the Bill is not enacted, rent increases registered from January 1 of next year will be chargeable at once in full, however steep they are.

In the Government's view, the need for the phasing of increases up to a new registered fair rent still continues for several reasons, partly because rents are sometimes allowed by landlords to get very much out of date and out of line with fair rent levels: for instance, because rent may have been fixed by contract for many years, or a previous landlord may not have bothered about it, the rent has stayed where it was, whereas the new landlord may be interested in getting the highest fair rent he can; or possibly because a landlord has let the rent become obsolete simply because he has forgotten all about it. These are the reasons for which one could get steep increases on registration.

Over half of the rent increases registered in England and Wales—of course that does not mean over half of the rents registered but over half of those which, on registration, were increased in the first half of this year—were increased by over £1 a week, and nearly one-third of them were increased by over 30s. a week. In the Government's view, increases as sharp as, this continue to need to be phased over a period because of considerations of general social policy—such as causing hardship by a major upset in the household budget if there is a swingeing increase of that sort, and because of the prices and incomes policy. Part II of this Bill contin[...]ues the phasing of sharp rent increases for increases registered in 1970 and 1971.

The Schedule to the Bill also produces what is, in effect, a single system of phasing for rent increases, whether they follow upon improvements or registration of a fair rent because the house is in a satisfactory condition, or whether they ensue upon any other cause whatever; so that people will be able to look it up in one single code from now on. I think that on Second Reading I need not take the House in detail through the steps of the proposed phasing. We can come to them in Committee or, if there are any particular points which noble Lords would like to raise this afternoon, I will try to speak to them at the end of the debate. My Lords, I commend the Bill to the House.

Moved, That the Bill be now read 2a.— (Lord Kennet.)

4.36 p.m.

LORD BROOKE OF CUMNOR

My Lords, I should like to thank the noble Lord, Lord Kennet, for his clear and gallant effort to commend this Bill to the House. It certainly requires from him a great deal of commendation, because intrinsically it is a bad Bill. If indeed it is, as the noble Lord says, essential to the Government's policy, then that proves that the Government must have a bad policy. He sought to explain that the associations of local authorities had reached an agreement with the Government and that the Bill is designed to give legislative reinforcement to that agreement. I think that he, for his part, will agree that the local authorities refused to endorse the underlying economic policy which he says renders the Bill necessary, and all that they did was to agree to a particular scheme within that policy as the least unacceptable way to them of operating the policy. The Greater London Council were unwilling even to agree that much, and no wonder, because it appears to me that if the Bill becomes law the deficit on the housing revenue account of the Greater London Council, which it will have to ask the ratepayers of London to bear, is likely to reach the enormous sum of £9 million in one year.

Though this is not called a housing subsidies Bill, that is of course what it really is. The principal effect of Part I is to ensure that up to July, 1971, the ratepayers in general will have to subsidise the rents of large numbers of tenants of council houses whose household incomes are such that they do not need subsidies. These are the very people who ought to be making their own arrangements and leaving council houses free for needier applicants on the waiting list.

The principal effect of Part II is to ensure that owners of rented houses which have had their fair rent fixed by an entirely independent authority will be made to subsidise their tenants up till 1972, even where the tenant could well afford to pay the fair rent, and may indeed be better off than the owner of the house.

Not only that, but it is directly contrary to an assurance given as recently as September to the Annual Conference of the Association of Municipal Corporations, that the Government's desire was to reduce the amount of control by Ministers and Parliament over the way in which elected local authorities think fit to organise their affairs and carry out their functions. However, as that was an assurance given not by the Minister of Housing and Local Government but by the Prime Minister, little faith had been placed in it anyhow.

As regards Part I, everybody agrees that local authorities should not charge rents to their tenants beyond the capacity of the household to pay the rent. But where the rent, even the proposed increased rent, is within the capacity to pay, I want to ask why the Government think that the tenant should not be required to pay it. May I have an answer to that question at the end of the debate?

As regards Part II, everyone, or almost everyone, agrees that the system of fair rents embodied in the 1965 Act is equitable between owner and tenant. That being so, I want to ask the noble Lord why it is proposed that for up to two years the owner of the house should be required by the Government to charge less than the fair rent; that is, to subsidise every tenant regardless of the tenant's means. May I have an answer to that question also at the end of the debate?

I have one more question, which is a subsidiary one. Have any instructions been issued to rent officers to hold back determinations and registrations of fair rents until January 1, 1970, so that the provisions of this Bill, which has not yet passed through Parliament, may apply to them? I have a photostat copy of a letter from a rent officer referring to a list of applications before him, one of which applications was submitted as far back as last March, but the letter warns that he may not be in a position to determine and register the fair rents until this Bill, which we are now discussing in Parliament, has come into operation. Is it not the duty of rent officers to clear all long-standing applications as expeditiously as they possibly can, without having regard to any future changes that may be made by Bills which have not yet become law? Of course that is what this rent officer may be doing, but I am bound to say that his letter is capable of a different interpretation.

The Opposition fought this Bill in another place. I should like to be in a position to urge your Lordships to reject it here. But the Government would doubtless counter with a claim that the Bill was an essential instrument in their economic policy, an instrument of which, therefore, your Lordships should not deprive them. Well, so be it. But if this Bill is an essential part of the policy, the policy itself must be unjust, for this Bill is both unjust and contrary to a sound housing policy. The principles of a sound housing policy are, first, to get new houses built as fast as the country can build them; second, to enable owners of older houses to put and keep them in good repair, and modernise them; and third, to encourage people who can afford to move into more expensive types off houses to do so and vacate the cheaper or the subsidised types of houses so that these can become available to the families who cannot afford more.

It is well known that under the Governments economic policy the number of new houses being built is falling rapidly; it may be that the Government would care to explain how their policy in this Bill measures up to the second and third principles which I have outlined. Of course, the answer may be that their economic policy is such as to render a sound and constructive housing policy impossible.

4.45 p.m.

LORD HENLEY

My Lords, according to the United Nations figures we in this country spend less than any other Western European country on our housing. This may partly be due to the fact that, by and large, our housing is better than anywhere else in Western Europe. I am not sure whether that is wholly true, but at any rate it may be partly due to that. But in so far as we have areas of bad housing it seems to me that we are getting the housing we deserve. In other words, we get what we pay for. If the rents charged are kept below the cost of replacement and maintenance, we shall not get new houses built, and the old houses we have we shall not get repaired; because even if it is sought to make up the balance by subsidy in one way or another, there is bound to be resistance to the paying of that subsidy—whether the subsidy is found by the private landlord or by the ratepayer—and hence our stock of houses inevitably is going to diminish and deteriorate.

The Government recognise this, and in the 1965 and 1968 Acts, and again in the new Act we have just passed, the 1969 Act, have done something about it. But this latest housing Bill seems to me to go directly counter to all those three Acts; and apparently this has been done on the advice of the Prices and Incomes Board. I wish the Prices and Incomes Board well, and I should like to see it stronger and more effective in keeping prices down. But is its advice here good advice? Is it the right advice? —because what it amounts to is that we should put even less money into housing than we are already doing; and, as I have said, we are already putting less into it than any other country in Europe. Already, local authorities, whether they are Conservative or Labour controlled, are building less because they cannot finance the building, and their housing reserves are running out. What that means is that there will have to be very large increases when the provisions of this Bill run out. I hope that the Government will not deliberately leave those increases for a later Administration.

The Prices and Incomes Board tries to discourage excessive spending on consumer goods, cars, and so on—and it is a fact that we spend far more on hire-purchase, on consumer goods, and on cars, than we do on houses; though of course it should be the other way round. We should encourage the putting of money into housing. If more money went into housing less would go into inessentials; and this is what we want. Has the Prices and Incomes Board got its priorities wrong here? If not, if this is a sensible thing to do, why is it not being done under the ordinary provisions of the prices and incomes policy? Why is it being made the subject of a separate Bill altogether? Does this mean that provisions of this sort are to be permanent? It looks to me very much like a victory for those who want to prevent the escape from the subsidy mess which the Acts of 1965, 1968, and 1969 had started.

In the private sector the Government recognised, as the noble Lord, Lord Brooke of Cumnor, said, that a fair rent must be paid if the stock of houses was not to sink into slums; and the Government, recognising that, devised a good means in the 1965 Act of fixing fair rents by rent officers and gradually converting the old controlled tenancies, controlled at rents that were nominal rather than real, into tenancies regulated at a fair rent. But when the rent officers really did fix fair rents the Government took fright and set about slowing down the process by not implementing the change from controlled to regulated tenancies. They went even further than that, and they spoilt the 1969 Act, which we thought was a good one, by slowing the process down by Statute instead of merely dragging their feet, as they had been doing before. Now, to cap it all, this Bill says that even if a fair rent has been fixed, regulated and registered by the rent officer, the landlord may not implement it, just as, in the public sector, they said to the local authorities, "You are in duty bound to review your rents and fix a reasonable one", and, when that had been done, "You may not collect it!" Is it surprising, in view of that sort of thing, that we spend less on housing than any other Western European country?

My Lords, I think this Bill shows up the whole idiotic situation into which the Housing Acts and the subsidies have got. The subsidy system is wholly arbitrary; and the first thing we must do—and this, I imagine, must be agreed to by great sections of the Party opposite—is to abolish these across-the-board subsidies to all tenants whether or not they can afford to pay a fair rent. Secondly —an idea which I notice Mr. Crossman has been airing—the poorer tenants in the private sector should be subsidised. I wonder whether he will ever get anywhere there, or whether he will not be blocked by those people who feel that the private landlord is a rapacious character who must be restrained at all costs. If one restrains him too far, one will dissipate what small store of houses he supplies.

Until people are willing to spend on housing what they think nothing of spending on less urgent needs, we shall have bad housing; and this Bill does not help to move in that direction. It undoes the modest advances that the 1965, 1968 and 1969 Acts made out of the hopeless muddle of fifty years of Rent Acts. Those Acts, which may well have been designed to alleviate hardship, and which, indeed, have alleviated hardship, have also been responsible for our failure throughout the whole of those fifty years to put enough money into housing.

4.52 p.m.

LORD MOLSON

My Lords, I believe that both Parts of this Bill are, at the same time, socially unjust and economically unwise. The Government have paid lip-service to the idea of giving to local authorities the freest possible discretion in fixing, adjusting and changing rents. In another place the Minister of State said: The Minister does not concern himself in detail with that responsibility which the authority, with its local knowledge, is much better placed to discharge than he is ".— [OFFICIAL REPORT, Commons, 18/11/69, col. 1124.] Despite that general principle, which has frequently been stated by this Government, the effect of Part I of this Bill is, in fact, to impose a very severe ceiling on any adjustment of rents which are being charged by local authorities. This afternoon the Parliamentary Secretary repeated what was said by his colleague in another place. It amounted, really, to this: that it is the intention of the Housing Ministers to allow local authorities to increase rents only where a rent increase has to be made in order to meet unavoidable increases in cost or to meet the cost of introducing or of improving a rent rebate scheme.

That is, in fact, a virtual ban on what I thought most people, including the present Government, in theory, desired; that is, to get as near as possible to a system under which those people who can afford to do so pay an economic rent for their houses. The effect of this ban, if I understand it aright, is that except in the single case of adjustment of a rent rebate scheme it will be impossible for a local authority which has for a long time been subsidising rents out of rates to reduce that subsidisation. That is made even more clear when the Government go on to say that even where an increase in rents is unavoidable as a result of increased costs, they expect the local authority first to draw upon the housing equalisation fund if there is any substantial balance in that fund. The avowed purpose of this Bill, therefore, is that, instead of altering the rents to take account of present conditions, local authorities will be obliged to draw upon their reserves; in other words, they will be required to subsidise rents out of an accumulated balance, despite the fact that in these cases the increase in the cost of providing the housing will be an annual one. This is, in fact, a case of drawing upon reserves to pay an annual recurring increase in expenditure.

My Lords, the Parliamentary Secretary spoke of this as having been agreed to by the local authorities. My noble friend Lord Brooke of Cumnor has already drawn the attention of the House to the circumstances in which most of the local authorities agreed to this scheme. They never agreed to the principle. but, confronted with the alternative of this scheme or a more stringent control by the Government, they agreed to this as being the lesser of two evils. To the abiding credit of the Greater London Council, they have refused to be a party to it at all. It is, of course, one more instance of pandering to the tenants by keeping their rents down at the cost of the ratepapers. I have no doubt that the purpose is to win a certain number of votes for the Government on the next occasion. It may also be intended to help their friends who are proposing to stand at the next local elections. I cannot believe that in the long run that is going to be advantageous. There are more ratepayers than rentpayers, and there is throughout the country an ever-increasing indignation at the fact that the ratepapers, many of whom are living in worse housing conditions than the tenants of the local authorities, are being compelled, through the rates, to subsidise the rents of people living in better conditions who in many cases are better off.

There was a remarkable case cited at the conference of housing managers at Eastbourne in the summer, when one of the housing managers referred to a family that had a combined weekly income of over £120 and owned four cars, and which not only lived in a council house but sought—in vain, I am glad to think—a rent rebate.

LORD GARNSWORTHY

My Lords, I wonder whether the noble Lord could tell the House the rent which that family is in fact paying, and to what extent it is a subsidised rent.

LORD MOLSON

No, my Lords; and I cannot see that that is in any way relevant. An application was made under a rent rebate scheme, but the family were not successful in obtaining that rebate. However, the very fact that there are people with such large incomes living in council houses who claim a rebate in circumstances of that kind shows how unsatisfactory is the state of affairs when rents are so widely subsidised out of rates without, except in the case of these rent rebate schemes, any consideration being given to the income of the tenant.

The Government claim to justify this policy of restriction upon rents by their prices and incomes policy. That is a very one-sided policy. It has been used so far as possible, and is likely to be used successfully in this case; to keep down prices; but precious little has been done to keep down incomes and wages. Last year, for instance, a great increase was granted by the building trade employers to the workers in that industry, and during the last fortnight we have heard of a new agreement under which their wages are to be increased over the next eighteen months by no less than 25 per cent. That, of course, drives a coach-and-four through the Government's whole policy of prices and incomes control; and the productivity pro- visions which are included in that agreement are obviously and plainly bogus. So, my Lords, the effect of the Government's policy is to hold rents down at a time when costs are going up. It is therefore, as my noble friend has said, no wonder that the number of houses being built has declined, and is still declining. It also explains the exhorbitant subsidies which are being paid and which have gone up from £24 to £144 a house.

I turn now to Part II of the Bill. I welcomed the Act of 1965 when it was introduced by Mr. Crossman. I felt in consistency that I could not do otherwise since it was so much on the lines of what I had myself recommended to Mr. Harold Macmillan in 1952, when he became Minister of Housing. I had then recommended to him that there should be a review of rents and that they should be fixed in accordance with the quality, quantity and location of accommodation. I welcomed the Act of 1965 which was introduced by this Government; I said that it was courageous and wise. And it has, on the whole, worked extremely well. It is therefore all the more regrettable that this Bill should be introduced now for the purpose of preventing the 1965 Act from continuing to operate as it was doing before the first of the restrictions was introduced.

As the Parliamentary Secretary knows (because he has kindly provided me with figures on this subject on more than one occasion), the majority of the determinations by rent officers has resulted in an increase in the rent. In a very large number of cases, when there has been an appeal from the rent officer to the assessment committee, there has again been an increase in the rent awarded by the assessment committee over that which had first been determined by the rent officer. All this makes perfectly plain what many of us had believed to be the case all along: that a very great number of rents in this country are less than fair rents. The purpose of Part II of this Bill is to phase the increases that are authorised. Since the purpose of those increases is to establish a fair rent, the effect of this Bill must obviously be for the time being to impose upon the landlord an unfair rent.

It was frankly recognised by Mr. Crossman, when he was Minister of Housing, that the chance of a substantial improvement in the quality of privately provided housing in this country is dependent upon there being a fair and economic return upon those houses when they are let. It must therefore be a very serious setback to that policy to impose upon the working of that Act this arbitrary limit in phasing out the increases. How great the increases have to be in order to arrive at a fair rent was shown by the figures given by the Minister of State in another place. In 52 per cent. of cases the increase that was awarded was over £1, and in 17 per cent. the increase was over £2. He gave that as a justification for the Bill. It shows quite plainly that to phase out these increases means that a fair rent, or anything like a fair rent, will not be arrived at until this Bill, if it becomes an Act, comes to an end.

The first Part of the Bill is intended to subsidise the tenants of council houses at the expense of the ratepayers; the purpose of the second Part of this Bill is to subsidise the tenants of privately provided accommodation at the expense of the landlords—and as such it is arbitrary and unjust. With the great increase in wages that has taken place, a great number of these tenants can perfectly well afford to pay what the Rent Acts of 1955 and 1968 have laid down as being a fair rent.

It is particularly surprising that this Bill should be introduced at the present moment. I read with great interest the report of Mr. Crossman's "Herbert Morrison Lecture" to the Fabian Society. He there expressed the view that we ought to bring to an end this arbitrary, inefficient (I am not quoting his words; I am saying this myself) and indiscriminate way of subsidising houses whatever may be the means of the people who occupy them. What Mr. Crossman recommended—and I am sure it is the right principle—is that we should subsidise the tenants who are unable to afford an economic rent for the accommodation they occupy. When those great academic brains, formed on the Classics, Mr. Enoch Powell and Mr. Crossman, are in agreement on a policy of this kind, surely there must be much to commend it. Therefore I am very glad indeed that the Government have set up the Francis Commtitee to go into the whole question of rent regulation. I should be glad of an assurance from the Parliamentary Secretary that to go into the proposals that have been made by Mr. Crossman will be within the terms of reference of that Committee.

My Lords, I regard this as an entirely deplorable Bill. I regard it as unjust; and I am quite sure that it will have a serious effect in preventing the improvement of the standard of our housing. I can regard it only as being a hand-to-mouth expedient adopted by the Government that, when half their prices and incomes policy has failed, this is all they are able to put through.

5.7 p.m.

LORD KENNET

My Lords, I will take up as many as I can of the points that have been made in the debate this afternoon. The noble Lord, Lord Brooke of Cumnor, setting the matter forth with his customary sense of drama, complained that if this Bill becomes law the Greater London Council will run into a deficit of £9 million. That does not follow at all. I must not at this moment be drawn into a discussion of G.L.C. finances. This is the wrong place to do so; and in any case they have not yet decided what to do with their rent policy for next year. But this is not a Bill to forbid increases above 7s. 6d. and 10s.; it is a Bill to require housing authorities to submit such proposed increases to the Minister for his approval. He may approve them, or he may not; he may approve half of them, or he may send them back for second thoughts. All this is being done under the 1968 Prices and Incomes Act; so that there is a closely analogous system at present in operation.

I think that it would have been possible to sit through this debate this afternoon —or at least through the last three speeches—and believe that the Government were proposing to introduce for the first time a system whereby the Ministers can, within certain limitations, control council rent increases. This is far from being the case. They have been doing so for the last year and a half. What it is proposed to do is to continue that control in a less onerous form than that in which it has previously existed. That, I think, answers the point put by the noble Lord, Lord Brooke, about what the Prime Minister said to the A.M.C. In certain respects this is a reduction of central Government control.

My Lords, on these occasions there is the danger of running into Party histrionics because the greatest local authority in the country is under the control of the Opposition Party in Parliament. It is sometimes a pity when that happens. I think that we have not gone too far this afternoon in that direction and I do not propose to go very much further. As to the £9 million deficit and the intolerable burden facing Ministerial control over 7s. 6d. a week, I should like to remind the House of where the G.L.C. matter now stands. It stands at no conclusive point, but last week the Greater London Council's Housing Committee announced that they had resolved to increase rents in March, 1970, by an average of 7s. 6d. and a maximum of 10s. per house. This resolution still has to be approved by the Finance Committee and the full Council, but is it not interesting that this local authority which, "to its undying credit" according to the noble Lord, Lord Molson, has alone resisted the unjust encroachment of central Government, should, when it comes to the point, be doing exactly what central Government says it may do, without asking central Government's permission. So much for the histrionics.

LORD BROOKE or CUMNOR

My Lords, the noble Lord says "histrionics". Is it not conceivably possible that the Housing Committee of the Greater London Council believed that the Government would manage to carry this Bill into law and therefore that it should take action at once in order to keen its deficit for 1970–71 as low as the Bill would permit?

LORD KENNET

My Lords, the Bill would permit the Greater London Council to come forward and suggest a rent increase of 32s. a week, as the Chairman of the Housing Committee once said that they would, I believe, in a letter to the Guardian. We have heard no more of that one. The Bill does not prevent them from suggesting any rent increase that they want.

LORD MOLSON

My Lords, are we to understand that the Parliamentary Secretary is suggesting that the Greater London Council should deliberately go out of its way to have a head-on collision with the Government?

LORD KENNET

Well, my Lords, the Greater London Council has already done that in standing out alone among all the 1,400 housing authorities in the country and refusing the voluntary scheme. I was struck by the noble Lord's words, "to its undying credit". I note that he puts it down, I must presume, as an eternal discredit to all the other housing authorities in the country that they accepted it.

The noble Lord, Lord Brooke of Cum-nor, said that they did not like it. It is perfectly true, they did not like it; they accepted it, as it were, under protest and because—rightly in my view—they had to admit that a prices and incomes policy was something for central Government; and if central Government wanted to pursue a prices and incomes policy of this nature then this was the way they would prefer the rent matter to be handled. This was not to say that they welcomed it being handled in that way; not to say that they welcomed the Bill—and I never said that they did—but only that they were prepared to go into this voluntary agreement with the one single great exception.

The noble Lord, Lord Brooke of Cumnor, said that private landlords would be subsidising tenants, when they got the registered increase, until 1972. Once again my Lords, you can put it that way. It is a very highly coloured way of putting it but, of course, a great many landlords are subsidising tenants and have been for decades under the old control legislation. If this is tenant subsidising landlord, then all I can say is that there is a very great deal of it going on, and we are not instituting any new principle by these phasings.

LORD BROOKE OF CUMNOR

My Lords, the noble Lord made a slip of the tongue. I think he meant landlord subsidising tenant, not tenant subsidising landlord.

LORD KENNET

My Lords, I am sorry; I was quoting what the noble Lord said. He pointed to the landlord subsidising the tenant. My point was that if he is he has been doing it for a long time. The fact that a new phrase has been coined in the general debate on this matter should not disguise from us the fact that no new phenomenon is occurring; indeed a very familiar one is continuing. The noble Lord, Lord Brooke of Cumnor, asked whether any instructions had been sent to rent officers to hold back their determinations until January 1. The answer is that no such instruction or notice has been sent.

The noble Lord, Lord Henley, said that according to United Nations figures we spent less than other countries on housing, and he immediately, in my view, supplied the answer to this. Despite the growth of our housing problem and the terrible backlog, we do not need to spend as much as they do. I was struck by a figure I happened to come across the other day, a French figure, in a comparison between France, on the one hand, and England and Wales on the other. They have about the same total housing stock of 15 million or 16 million houses. In our country nearly 3 million lack an indoor lavatory. In France 11½ million lack an indoor lavatory. So you see, my Lords, they have good reason to be spending more. I take this only as one illustration; no doubt one could find others.

Salt tears have been wept during this debate for the ratepayer who is called on to subsidise the council tenant. What we should not forget is that the ratepayer himself is now a beneficiary of the rebate scheme, and a very substantial one. Domestic rate relief was introduced by this Government. The value of this relief in this year was £82 million for Great Britain. Next year, when the reductions which apply to those who can claim them under the criteria will be increased, the total value will rise to £112 million. This is, as it were, straight from the Exchequer back to the ratepayer in the form of unpaid rates. The rate-rebate scheme is at the moment benefiting about 900,000 people and so, my Lords, it is not all on one side.

If I were to try to get the matter back into proportion, after the spirited attack from the Opposition, I think the fact on which I would lean most heavily is that most councils do not need rent increases of more than an average of 7s. 6d. a week in a year in order to carry forward big housing programmes; to avoid denuding their other sources of money, or to avoid tapping other sources of money. If they do need this for any particular reason, they can come to the Minister and ask for it. If their case is well argued— "reasonable" is the word—they will get it. If not, the Minister may be able to help them to find some way of avoiding a rent increase which they may not have thought of themselves. This is often the case, and it is natural. What is being done is simply to take powers, which we hope will not be used because we hope the voluntary system will suffice, but which may be necessary in one or two cases. As we all know, one great authority has given overt notice that it is likely to be necessary to use the powers in its case; except that at the moment it does not seem to be acting in such a way as would cause the powers to be used. We must wait to see how that develops, and I want to say no more about it.

Of course, as the noble Lord, Lord Brooke, said, the answer is to build faster; to have a sound rehabilitation policy and to encourage the mobility of people out of council houses if they can buy their own, if they want to. I must remind the House of what I am sure noble Lords already know, or ought to know; that is, that this month the 2 millionth house to be built under the present Government will be finished. That has been done in a period considerably shorter than it took to achieve the building of 2 million houses under the Conservative Governments of the 1950s or early 1960s—I forget the exact period. The 2 million houses built so far in our six years is about equal to the size of London. It is a fairly striking fact. If you say to yourself, "How long would it take to build a London?", I think that six years is a fairly startlingly short period in which to do it.

The increase which, so far, has been an unbroken series of all-time records every year that we have been in power, is now stopping. It will not be a record this year for the first time. We all know the reason for that. It is partly a world phenomenon—we cannot entirely protect the construction industry against high interest rates which are international— and it is partly the fruit of the intense campaign of Government for economy in expenditure, which had the backing of the Opposition, I think, as a general fact, although it is always tempting to knock one bit of it. The present situation will not last long. We hope that the figures will be up again, so as to achieve new records as soon as that is possible.

As to rehabilitation, it is only a few months since I had the pleasure of taking a major Bill through this House, largely with the support of the noble Lord, Lord Brooke; the Housing Act 1969. The noble Lord has not mentioned it to-day, but there it is. There is now getting under way the greatest campaign of improvement and area improvement that the country has ever seen. These are the things on which we must rest, and on which we do rest. This Bill is part of social policy.

I do not claim that the housing subsidy system is perfect; indeed, I freely admit that it is very imperfect and has been for a long time. That is why the Housing Ministers have instituted a major review of the whole of housing finances, public and private sectors alike. Mr. Crossman's suggestion about paying subsidy to people rather than on bricks and mortar has been mentioned by more than one speaker this afternoon. This is very much in the forefront of the study I have mentioned. The study is really a fundamental one. This is an enormously difficult subject. We are, within the Government, going at it "hell for leather" at this moment and we hope shortly to come out with proposals for the largest overhaul of housing finance since the present system was instituted.

LORD MOLSON

My Lords, may I, for elucidation, ask the noble Lord whether the Francis Committee is looking at only some particular aspects of housing finance, or are the Government going to wait until the Francis Committee have reported on what I think is called the regulation of rents?

LORD KENNET

My Lords, the Government study is much wider than the Francis Committee's and covers all housing finance whatever. The Francis Committee is looking into the operation of the rent registration system which, of course, only operates in the private sector, but the Government are also studying the public sector, subsidies and so on, right across the board.

On Question, Bill read 2a, and committed to a Committee of the Whole House.