HL Deb 03 November 1970 vol 312 cc301-12

3.35 p.m.

THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (LORD SANDFORD)

My Lords, with the permission of the House I should like to repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for the Department of the Environment. The Statement sets out some of the broad decisions of principle on the basis of which we propose to change the structure of housing finance.

The Statement continues:

"There are a multitude of disadvantages with the present system. Ratepayers and taxpayers are being faced with a large and rapidly growing subsidy bill. The subsidies are not distributed so as to remedy the housing problems of the worst areas. The rents paid by tenants are related neither to the value and quality of their accommodation, nor to their capacity to pay. The help available to the poorer tenant is incomplete and haphazard. The present system of rent control in the private sector is creating new slums at the very time when local authorities are replacing existing slums with new houses.

"My right honourable friends the Secretaries of State for Scotland and Wales and I have worked out a strategy for reform, but before our plans can be perfected we will need to consult the local authorities and other interested parties.

"We intend to introduce a pattern of rents which will remove the present artificial distinctions and inequalities between the private and public rented sectors and within each of them.

"The fair rent principle has become generally recognised as an equitable basis of determining rent structures. I am glad to pay tribute to the Party opposite for introducing this principle. We now intend to take the natural step of extending it within the private sector. We intend to see that controlled tenancies will progress more rapidly into the fair rent system. We will thus prevent thousands of dwellings from sinking into decay and encourage the improvement and repair of these properties.

"At the same time we shall apply the fair rent principle to local authority dwellings in England and Wales over a period. There will be a limit to the average increase of rent in any one year.

"In Scotland my right honourable friend has concluded that, because of the different nature and the relative number of privately and publicly rented houses, the fair rent formula cannot be applied at present to council houses. However, in consulting the Scottish local authority associations he will be making proposals which for the next few years will have broadly the same financial effects as those which I have outlined for England and Wales, and will provide for the same rate of progression in rents. The aim will be to balance housing revenue accounts by the end of this period. My right honourable friend will consider the possibility of moving later to the same rent basis in Scotland as in England and Wales.

"In order to see that tenants are not prevented from occupying accommodation suited to their needs because of their inability to afford the rent we will introduce a comprehensive system of rent rebates and allowances for all of those in need. Any tenant of unfurnished accommodation who cannot afford to meet the full new rent will be able to obtain financial help which will have proper regard to his income and family commitments.

"Until now rent rebates have only been available to council tenants where the local authority have operated a rebate scheme. Under the Government proposals rent rebates will be available for the tenants of all local authorities. Under the previous system of subsidies, the system which will now be entirely recast, only one-seventh of the subsidies went into rent rebates. This Government intends to see by statute that subsidies from public funds will be directed towards those people who need them.

"In spite of the fact that the 1968 Family Expenditure Survey disclosed that a far higher proportion of households in the private unfurnished sector had incomes below £1,000 per annum than in the public sector, no form of rent rebate has been available to private tenants. It is the Government's intention to see that, in future, help is given to these tenants by means of an entirely new system of rent allowances for those tenants who need them —allowances that will be as generous as the rebates available in the local authority sector. Subject to discussions with their associations, we contemplate that the local authorities will operate the scheme and that the Exchequer will meet the greater part of the cost.

"There are two further major changes we intend to make in the subsidy system. The Government do not consider that the present subsidy system for slum clearance is adequate to meet the problem and we intend to take special steps to relieve the high cost of slum clearance.

"Secondly, in those areas where there is serious overcrowding new building is often exceptionally costly. It is therefore our intention to give special assistance to those authorities who need it to meet the high cost of tackling the related problems of overcrowding and obsolescence.

"We intend to continue a major drive for the improvement and rehabilitation of older houses.

"A reform on these lines will bring the full weight of Government assistance to bear on the worst areas of the housing problem. It will mean that those local authorities with serious housing problems will be better placed to solve them speedily. It will distribute subsidies equitably where they are needed and in doing so substantially reduce a growing burden which has become wholly indefensible. It will give the citizen more genuine responsibility in choosing the housing he needs. In short, it will create the conditions in which we can pursue a housing policy which is rational, fair and compassionate."

My Lords, that ends the Statement.

LORD SHEPHERD

My Lords, the House will indeed be grateful to the noble Lord for repeating this Statement. I do not think any of us would disagree with the noble Lord on the complexity of this subject, and it was for that reason that my noble friend Lord Greenwood of Rossendale, when he was Minister for Housing, required in his Department a full examination of the housing problem. I believe that a review had been completed and was being studied by him and his Department shortly before the General Election.

The Statement does not really take us very much further than the Chancellor of the Exchequer's Statement last week. There are no details. We understand that there are to be consultations with the local authorities and other interested parties. I hope that Parliament, particularly the other place, will be given some idea of what are the Government proposals to the local authorities and other parties, and therefore I would ask the noble Lord whether it is the intention of the Government to issue a White Paper setting out in detail the major proposals which they have in mind. I should have thought Parliament was entitled to that amount of information.

I would not disagree with, in fact I would give full support to, the latter part of the Statement, that further sums of money are required for slum clearance and also assistance to meet the very heavy costs of rebuilding in slum areas; and of course the rehabilitation of old places. All this will certainly require, if one takes it from this Statement, new monies over and above those which have been provided for by the previous Administration. However, we are now also to have a new class of assistance: that in the private sector. I would not disagree with this, where there is clearly a case. But all this means that new monies will need to be found, and we have to consider this Statement in the light of the Chancellor of the Exchequer's Statement of last week in which it was stated that from £100 million to £200 million was to be cut from housing subsidies. Therefore, there can be only one construction here: that for the vast majority of council house tenants this Statement means massive increases in rent. Whether that is sound policy, I do not know, but I think that none of us should misunderstand the very great inflationary consequences of the step which the Government have in mind.

I do not intend to say anything further about this Statement. I think we need to have a White Paper, and then we can have a debate. But this Statement appears to be a sort of political smokescreen to hide the real significance that is behind it: that there are to be massive increases for council house tenants on a wide scale throughout the country, with dire consequences to inflation and to the general economy of this country.

LORD SANDFORD

My Lords, I am grateful to the noble Lord for his general welcome to the proposals in the Statement, and I would confirm what was, I think, made abundantly clear in the original Statement; namely, that the next step is to have extensive consultations with the local authorities. I am sure the noble Lord will understand that, in view of that, it is not sensible to go into considerable detail at this stage. What he says about a White Paper will certainly be considered, as will be necessary, at a later stage.

I think all I would say in answer to the comments made by the noble Lord towards the end of his remarks is that he will recognise, and I think the whole House will recognise, that the system we are operating at the moment will lead to a runaway burden on public funds, both for the ratepayer and for the taxpayer, and this package of proposals, which I have just expounded in the course of this Statement, sets a curb upon that. We are moving over to a fair rent system, which we have adopted from the system introduced by noble Lords opposite, and the effect of this will be that any increases that do come about will be cushioned to such an extent that not only will the tenants who are worst housed and least able to pay not be affected by them, but some of them may be better off than under the existing system.

3.50 p.m.

LORD WADE

My Lords, may I join in thanking the noble Lord for repeating that long Statement? I think all noble Lords will agree that it requires careful study, and we shall have to consider it at leisure. I do not think that anyone will doubt the proposition that the present system is in need of reform, and we shall support any reform which appears to be on the right lines. In the meantime, may I ask one or two questions?

In the first place, with regard to the private sector, the noble Lord stated that it is the intention of the Government to see that controlled tenancies progress more rapidly towards the fair rents system. Does it follow from that that the Statement refers only to those tenancies at present controlled, or is it intended that any tenancies not controlled will be brought under any form of control? Secondly, will the noble Lord agree that there is a distinction between realistic rents and security of tenure? If I may say so, the last Conservative Government failed to appreciate that. The greatest hardship arises where shortage of accommodation is accompanied by insecurity of tenure.

Will the noble Lord also agree that the crux of the problem is the serious housing shortage in certain areas, and will these proposals be put into force sufficiently speedily to deal with that very urgent problem? Lastly, so far as local authority housing is concerned, will the noble Lord agree that high interest rates have put a very heavy burden on some local authorities, and will any of these proposals help the local authorities in that respect?

LORD SANDFORD

My Lords, I thank the noble Lord for his opening remarks and I shall seek to deal with his various questions. The Statement deals with two groups of tenancies: first, those that are at present controlled, for which there will be a transition by progressive stages from controlled to fair rents; and, secondly, local authority tenancies which will also, for the most part, move towards fair rents. But neither of those things will happen until a system of rent allowances and rent rebates is also available, to cushion the effect of those increases on the poorer tenants with the larger family commitments in both sectors.

The effect of the whole package, as I hope the Statement made clear, will be that more funds will be available not only for the tenants in private tenancies and local authority tenancies who need the rebates and the rent allowances, but also for those local authorities who, for the reasons which the noble Lord gave, and for some others, such as high interest rates, have a greater burden to bear in clearing their slums and providing new housing in high cost areas.

LORD SLATER

My Lords, will the noble Lord agree that the Statement to which we have listened this afternoon is directed towards achieving a substantial reduction in subsidies, so far as council housing is concerned? Secondly, will he not agree that this is a form of direction by a Conservative Government to the elected representatives of local authorities?

LORD SANDFORD

My Lords, I cannot entirely agree with that. In some respects—namely, the statutory progression from controlled rents and local authority rents to fair rents—there will be statutory control in an area where there has not been statutory control up till now. But there will be a considerable amount of flexibility open to local authorities, and the way in which they modify, favourably if they wish to do so, the model scheme for rent rebates and rent allowances will be the subject of our consultations with them.

LORD LEATHERLAND

My Lords, may I ask the noble Lord whether he can clarify two points in his speech? The first is with regard to the limit to the average increase in rents that will be imposed in any one year. Can he give us an idea about the figure which the Government have in mind for that average increase in rents? Secondly, in connection with the transitional move from control to decontrol will tenants lose any of the protection against eviction which they now enjoy?

LORD SANDFORD

My Lords, the answer to the last part is, No. It is a movement not from control to decontrol, but from control to regulated fair rents; and the rent which a landlord will be able to charge will be fixed by procedures with which the noble Lord is no doubt already familiar. I do not know whether that answers all his points.

LORD LEATHERLAND

No, my Lords. The other question was: what is the average increase in rents that will be regarded as the maximum?

LORD SANDFORD

No, my Lords, I cannot give details of that, because that is among the subjects which we shall be discussing with the local authority associations.

BARONESS GAITSKELL

My Lords, who is going to decide what is a fair rent?

LORD SANDFORD

My Lords, broadly speaking, the rent officers. But in view of the scale of the operation, the very large number of houses that will be involved in this operation, there will be slight modifications from the procedure which is operating now in respect of a relatively small number of houses. But the principle is entirely the same, and the rent officers and the rent assessment panels are behind it.

LORD LINDGREN

My Lords, as this scheme will undoubtedly create much bigger administration, may I ask who is to bear the cost of the added administration?

LORD SANDFORD

My Lords, I am not quite sure where the noble Lord thinks the extra administration will be. There will be a considerable increase in the number of rent officers, and local authorities will have to modify, and perhaps increase, the staffs who deal with rent allowances and rent rebates. These increases will be absorbed and, of course, in the long run the housing account will move out of deficit.

LORD LINDGREN

Therefore, my Lords, the tenants, the ratepayers, will have to bear the added cost of this administration which is being imposed upon them.

LORD SANDFORD

My Lords, some tenants will have to do so. But the point I want to stress is that the tenants with large family commitments, those in the least favourable position to pay, are going to benefit considerably from these measures, which I think all noble Lords will agree is the main object of any housing subsidy system.

LORD SHEPHERD

My Lords, perhaps the noble Lord can help us on this important point. Can he tell us whether the Government have made up their mind at what level of income assistance can be given?

LORD SANDFORD

No, my Lords. The Government have not made up their mind to the extent where I can quote precise figures, because this is among the subjects about which we are to have consultations with local authorities.

LORD MOLSON

My Lords, does the Parliamentary Secretary realise that there will be a very widespread feeling throughout the country that this is a reform on exactly the right lines; that it is giving relief where relief is most needed, and that it will bring to an end a state of affairs in which large subsidies from the taxpayer and the ratepayer are paid to tenants who are in no need at all of assistance? Does the Parliamentary Secretary also realise that this is entirely in line with what was put forward by the Conservative Party at the last Election, and that it is following logically on the lines of the "fair rents" Act passed by the last Socialist Government, which has worked so extraordinarily satisfactorily and brought about a most desirable increase in nearly all the rents that have come before the rent officers?

LORD SANDFORD

My Lords, I am grateful to the noble Lord for those remarks. I am sure that everybody realises that this is a considerable nettle to grasp, but I am also sure that the great majority of people realise that it is high time it was grasped.

LORD SHINWELL

My Lords, is it not intended by the Government to bring into effect a general reduction in the Government subsidy? Is not that the purpose of these proposals? If so, unless there is a reduction in the costs of building, and of repairs and maintenance and the like, does it not follow that, on the whole, rents will be increased? Why do the Government not admit that?

LORD SANDFORD

My Lords, I do not admit the noble Lord's first proposition. The object of this exercise is to ensure that housing subsidies are applied where they are most needed.

LORD HOY

My Lords, may I ask the noble Lord a question about how these proposals will affect Scotland? I think he said that he did not think it was quite practicable at the present moment, but that the Secretary of State for Scotland had given an assurance that, without these proposals, he could do what the Government propose to do with them in England and Wales. How in fact is the Scottish Office going to operate a system of that kind? May I also ask the noble Lord what is meant by his words, with regard to the Scottish proposals, "the same rate of progression of rents"? What do these words mean? Do they in fact mean increases in rents; and, if so, why do not the Government say so? Indeed, if there is also going to be fair rent substitution, may I ask the noble Lord whether he can give us an assurance that when they move from control to fair rents all the control satisfaction which is given to tenants at present will be maintained; that no controls will go at all, and that while there may be changes in rent the controlled tenant will still have the safeguards that he has at the present time?

May I also ask the noble Lord a question on the concluding sentences of his Statement? He said that the Government expected to save many millions of pounds by these proposals. Does that not mean what my noble friend Lord Shinwell has said: that there will be a very substantial increase indeed for the majority of householders—that is, the rent-payers—in this country?

LORD SANDFORD

My Lords, may I deal first with the last point? The position is that were nothing done about this, were this nettle not to be grasped, we should be faced in four years or five years' time with a housing subsidy that would impose a really tremendous burden on public funds, on both the ratepayer and the taxpayer, in giving subsidies to large numbers of people who had no need of them. The object of this package of proposals is to ensure that housing subsidy is given, and more generously than now, to those people who need it, both in the private and in the public sector, but not to those who do not need it.

Perhaps I might deal now with what the noble Lord was asking me about Scotland. I have been giving a broad statement of the principles that will form the basis for discussions with associations in England, Scotland and Wales. The number of regulated tenancies in houses comparable with local authority housing is so small in Scotland that the Government cannot establish a reliable basis for taking a fair rent level as an immediate objective in Scotland, and that is why the whole process will operate in a slightly different way in Scotland as compared with that in England and Wales.

LORD HOY

My Lords, will the noble Lord now say what is meant by "the same rate of progression of rents"?

EARL JELLICOE

My Lords, now that my noble friend Lord Sandford has dealt, I think at some length, with the statutory Scottish question, I think your Lordships may feel that it is about time we moved on to other business; and this, I think, would be in accordance with our normal procedure. Also, it is within my recollection that the noble Lord, Lord Shepherd, expressed the view that the details of this important Statement should properly and fully be debated at a later date in your Lordships' House, and I feel that this might be the best way for us to proceed.

LORD SHEPHERD

My Lords, I would not disagree with the noble Earl. I make only one point. Perhaps the noble Lord could answer this very short question: what is meant by "the progression of rents"?

LORD SANDFORD

My Lords, the progression of rents is the progression from where they are now to a fair rent system. That is the principle that will apply, and the principle that is our first, immediate objective in England and Wales. The system is already familiar to noble Lords in respect of regulated private tenancies. It is being introduced in England and Wales in relation to local authority tenancies, but this is not precisely the way in which this same progression is going to take place in Scotland.