HOUSING FINANCE BILL

HL Deb 19 July 1972 vol 333 cc791-859

4.16 p.m.

LORD SHEPHERD moved Amendment No. 4:

After Clause 99 insert the following new clause:

Appeals procedure from decisions of Housing Commissioner

" The Secretary of State shall within three months of the appointment of a Housing Commissioner by regulation provide an appeal procedure to which a tenant shall have a right of appeal against any decision or act of the Housing Commissioner or where a tenant believes he has been affected by maladministration by the Housing Commissioner."

The noble Lord said: I must make some amends to the noble Lord, Lord Drumalbyn. When I was replying to our last debate I was rather critical of him in the sense that accused him of not having looked at the matter. The noble Lord always appears to be operating from the Dispatch Box. If it is not this Bill it is the Scottish equivalent or the Gas Bill. No doubt he is preparing for a strenuous time on the legislation dealing with Indus try, and I suspect he will also be involved in the debates on the E.E.C. Furthermore, he is at the Dispatch Box day after day making statements. We on this side appreciate fully the very heavy burden which he carries. I feel that if he were a lawyer he would have been drafted into the proceedings on the Criminal Justice Bill. The Whips do not need to exaggerate their own weaknesses by over-employing the noble Lord, but that is for them to decide.

The purpose of this Amendment is to make it possible, by regulation, for some form of appeals procedure to be included in the Bill. We all know what the consequences of rent increases are going to be. The increases will vary quite considerably across the country. We know the various procedures which the Government have put into the Bill for implementing fair rents. We fully applaud the system of rebates and allowances which will give the less well off, the less privileged, certain new rights. Of course there are some provisos. I am thinking particularly of the part of the Bill which says that a local authority must take into account the size of a person's house in the private sector and where the house is located. They are all matters of fine judgment.

We have sought during Committee and on Report to provide for an appeal procedure. We feel it is right that when you are putting new demands upon people, and where, in order to mitigate the hardships that will arise, you are correspondingly giving some new privileges by way of rebates and allowances, where a tenant or a person involved has a feeling of injustice, he should be entitled to an appeal against what in the end is a subjective judgment. The Government have all along rested their case—in our view unsatisfactorily, but at least with some decency—on the claim that at the end of the day the tenant should have the normal democratic rights of going to see his member of his local authority and put his case forward, and that it would then be for that elected member, if he thought there was a case, to take it up with the Department concerned.

My Amendment is directed to a case which I hope will never arise, where the elected member will have no position whatsoever. The Housing Commissioner will be set up by the Secretary of State with full powers, and he will not be answerable either to the local authority or to local pressures. True, in the end he may be answerable to the Secretary of State, but how he will be answerable is still not clear to me. So far as a tenant is concerned—that little man, that little woman, who may have great problems and a sense of grievance—there will be no way in which he or she will be able to appeal against the decision of the Housing Commissioner. I hope the House will feel that this is unsatisfactory.

The noble Lord, Lord Avebury, ingeniously moved an Amendment on Report to bring this aspect within the remit of the Parliamentary Commissioner. But we had to accept the advice of the noble Lord, Lord Drumalbyn, that the Housing Commissioner was not likely to be a servant of the State and could not be subject to the scrutiny of the Ombudsman and, therefore, the noble Lord's Amendment, which had a lot of sympathy—even, I think, with the noble Lord. Lord Drumalbyn—was not practicable. So we have to consider how best we can meet what I believe to be the right of any individual in this country: that where he has no appeal to his elected member, or no real right to effective action by an elected member, be it in a local authority or in Parliament, we should institute some procedure by which he can appeal against a decision.

My Amendment goes a little further, really as a consequence of the Amendment moved by the noble Lord, Lord Avebury. We know that from time to time there are cases of maladministration; cases where the authority has not acted rightly, or has not proceeded with due expedition, and thereby created hardship to an individual. We on this side of the House take great pride in the fact that, despite some fears from noble Lords opposite, we brought into being the Parliamentary Commissioner, the Ombudsman. It was a matter of regret that, initially at least, this official had to be restricted to the field of central Government. I think that most of us who have any practical experience of the problems of ordinary people know that when they are due to maladministration they are more likely to be found in the local authority areas, connected with housing, education and health, than within the decisions and procedures of the central authority. It was a new system that had to be tried out, and from experience it was felt that we should limit the area of operation. I think there would be a good deal of support for the remit of the Ombudsman being extended to operate throughout the local authority service. But that is not for this Bill. Where a Housing Commissioner has been appointed who is not responsible to any elected member, and there are cases of maladministration, we must provide in some way that the person involved should have a right of appeal.

In moving this Amendment, I recognise that I have not set out what type of appeal procedure there should be. We have some experience in drafting Amendments, but when one drafts Amendments which in the end will be the size of a regulation, it will always be open to the criticism that it is imperfect. I do not think it is the duty of the Opposition to provide Amendments of this character. Therefore, we have sought to lay the responsibility for the establishment of an appeal procedure on the Secretary of State, and to leave it to the Secretary of State to decide what form of procedure it should be. We also state that the Secretary of State, within three months of the appointment of a Housing Commissioner, should provide an appeal procedure. In other words, we are being as reasonable as we can—and I must say that in the light of this Bill that is saying something—in seeking to meet what I believe are the rights of tenants in this matter, when they may be dealing with an official who is answerable, certainly so far as the locality is concerned, to no one but himself; and where, so far as the Secretary of State and Parliament are concerned, it is difficult to see how even a Member of Parliament could effectively provide a satisfactory means of dealing with problems that may arise. I hope that, with those very reasonable words, the noble Lord will respond in like manner and will find ways and means of accepting this Amendment.

4.30 p.m.

LORD JANNER

My Lords, I rise to support this Amendment. I think your Lordships will appreciate that we are dealing here literally with the lives of men and women. One of the main factors so far as their existence is concerned depends upon the manner in which they are housed and the conditions imposed upon them, if they wish to be (as they do of course) tenants under reasonable circumstances. I think the tendency in recent years has been to make people feel they are being fairly dealt with, and that is the important principle behind an Amendment of this nature. If you want contented people—people who are satisfied that justice has been done to them—you have to give them an opportunity of being able to present their case against a decision, whether it be in the High Court or in the lower courts. There are provisions now of a reasonable nature for people to appeal against decisions; and in order that a tenant may be satisfied that he has been fairly dealt with obviously it should be open to him to question a decision before some appropriate tribunal. My noble friend has indicated that he would have no objection to an appeal tribunal of some kind which the Government themselves might consider to be advisable or necessary for this purpose. All he is asking is that there should be an opportunity for an individual who is a tenant and against whom a decision has been made by one person, who after all is not a person, as my noble friend has said already, elected by the people as a whole, but somebody who has been appointed and given arbitrary powers (because that is the position) to arrive at a decision himself. No individual, whoever he may be and whatever talents he may possess, is capable of saying that a decision in a matter of this kind or indeed of many other kinds, made by himself, is one which cannot in any way be attacked or which is infallible.

I am sure that the Commissioners themselves would be content to allow any decision to which they came to be questioned in a reasonable and proper way before a tribunal consisting probably of two or three people. I think that a Commissioner would be content to have his decision inquired into in such circumstances, even if it were then found to be a wrong decision. It is only human to err in these matters, particularly when complex points have to be considered. I think that any Commissioner would be content to have his or her decision tested so that people are sure that the right decision has been made. I do not think that is asking too much.

Following the trend of legislation that has been passed in recent years, I think that the Government ought to consider favourably the principle which lies behind this Amendment. If the Amendment is not properly drafted, the wording can easily be adjusted. It is necessary to be just; it is necessary to be seen to be just; but above all, it is necessary that the person whose case is being investigated should feel that he has been given every possible opportunity of objecting to a decision that he feels to be wrong. Then, after appeal, he will at least have been able to satisfy himself that the opportunity had been afforded to contest the decision. In those circumstances, I hope that the Government will accept what I consider to be an extremely reasonable Amendment.

4.36 p.m.

LORD DRUMALBYN

My Lords, the noble Lord, Lord Janner, says that this is an extremely reasonable Amendment. It has indeed been very reasonably argued, but, if I might be allowed to say so, it seems to me to go a little beyond the limits of dealing with complaints against maladministration. It is a pretty tall order to ask for an appeal procedure enabling a tenant to have the right of appeal "against any decision or act of the Housing Commissioner"—because that phrase must necessarily include all the day-to-day actions which are taken in his name throughout the whole system. In so far as the Commissioner is exercising the functions of the defaulting authority, a tenant will have exactly the same right to make representations to the Commissioner as he would have had to the authority. The noble Lord will obviously appreciate that most of the acts or decisions will not be made personally by the Commissioner in the first place, and the same rights of making representations to the Commissioner will remain as the person would have to his authority. For example, if the Commissioner has to assess fair rents provisionally under Part V, the tenant will have the same right to make representations about the fair rent for his place of dwelling as he would have had if the assessment had been made by the authority. Similarly, the tenant could make representations to the Commissioner about his determination on an application for a rent rebate or an allowance, if those functions had also been transferred to the Commissioner.

If the tenant is dissatisfied with the actions of a Commissioner then, rather unlike what happens when a local authority is concerned, he can make representations to the Secretary of State, who appoints the Commissioner. These representations may be made in many ways: for instance, he could write direct. The noble Lord, Lord Shepherd, said that his elected member on the local authority will have no position whatsoever. no locus so far as housing affairs are concerned; but he will still have an elected member of his local authority who also could take the matter up with the Secretary of State, or he could take up the matter with his Member of Parliament. I do not know why the noble Lord should question the effectiveness of a Member of Parliament in approaching the Secretary of State in a matter for which the Secretary of State has responsibility—and he has responsibility in this case. He could do it by means of a Parliamentary Question; he could write to the Secretary of State; he could go to see him; he could take a deputation—all these things could be done.

LORD JANNER

My Lords, that kind of argument could he used with regard to any appeal. The man in the street does not think about going to the Secretary of State, and that kind of thing, in a matter which may be one which is not of very great importance to the general public but is of great importance to him. If I may say so, the noble Lord is taking a wrong view of this. The ordinary man does not go to the Secretary of State to say that a tribunal has failed to understand his case; he has somewhere else to go which he understands.

LORD DRUMALBYN

My Lords, the individual can, in the first place, go to the Commissioner. The Commissioner will either be housed in the premises of the local authority or elsewhere and this will undoubtedly be made known. The first action of anybody who has a complaint about housing is to go to the authority that deals with housing. After that he has a choice of actions: he can go to the Citizens' Advice Bureau, to his Member of Parliament, to a "clinic"—which I am sure the noble Lord used to hold—and these are very well-known procedures. He may even go to a solicitor. There are various means of approach and I do not think he is going to be substantially worse off than he would be with the local authority.

I do not know whether the noble Lord, Lord Shepherd, was present this afternoon when I replied to the first Amendment moved by the noble Lord, Lord Avebury. He certainly did not mention this in what he had to say when he was talking about the Parliamentary Commissioner, the Ombudsman. I said that it was the intention of Her Majesty's Government to introduce legislation next year to set up commissioners for local administrations. While no decision has been taken on this at the moment, we shall certainly consider the inclusion of the actions of a Housing Commissioner in connection with the tasks of the Commissioner for local administration. Taking all the things that I have mentioned together, this is something new on which the noble Lord will he able to rely. I am not saying that it can be done within three months of the passing of the Act; the legislation may take a little longer. One can only hope that in the meantime there will be no need to appoint any Housing Commissioners. I hope that this will substantially meet what the noble Lord has in mind.

LORD SHEPHERD

My Lords, I am sorry that I was not in the House when the noble Lord was replying to the first Amendment. I was using the telephone and I apologise for my absence. I am sorry for another reason, because quite clearly what the noble Lord opposite must have said to the noble Lord, Lord Avebury, supports the case that I have sought to put to the House this afternoon. Until the noble Lord raised this point in the conclusion of his remarks, I was going to say that if it had not been for the fact that I could see the noble Lord I would have wondered, when listening to him, whether we were in the same world. The noble Lord says, "Of course a person can go to the Housing Commissioner". We accept that he could go to the Housing Commissioner; we are only suggesting an appeals procedure for a person who feels that the Housing Commissioner has not met or satisfied him in what he considers is a genuine grievance. I agree with the noble Lord that there is nothing to stop that person going to the Housing Commissioner.

Then the noble Lord said, "Of course if he does not get satisfaction he can always write to the Secretary of State." I wonder how long it takes for a housewife, after she has written her letter to the Department concerned, to get a considered reply? She may be lucky to get a card acknowledging receipt of her letter after ten days. The letter would need to be considered by the officials who would then consult with the Housing Commissioner. This would stretch on for two or three months; but the grievance would still exist and the hardship remain. The noble Lord is saying to the House that this is satisfactory and this is sufficient. I must tell the noble Lord that it is neither sufficient nor satisfactory. The noble Lord has acknowledged that it is not satisfactory because he now envisages legislation for the creation of a local authority commissioner—I believe the noble Lord mentioned a title like that. This is very much to be welcomed.

No doubt if this procedure were set up on the coming into force of this Bill as an Act there would be no need for me to press this Amendment, but the difficulties are going to arise in the very early stages. We have made it quite clear that when we are returned to power we are going to repeal this Bill lock, stock and barrel, provided that: the rebates and allowances systems still continue. If it were still to be in being in three or five years' hence the basic problems would have been settled. There might be the odd problem but not any major unknown waters to be crossed. Therefore the noble Lord has acknowledged (has he not?) that there is

a need for some form of appeals procedure; but he says that the people must wait.

LORD DRUMALBYN

My Lords, if the noble Lord will forgive me, I tried to divide what I had to say into two parts. The first was with regard to an investigation—and the noble Lord, Lord Janner, referred to this—of matters, acts and decisions of the Housing Commissioner. The other part was with regard to maladministration. The C.L.A. would be dealing with matters of mal-administration.

LORD SHEPHERD

My Lords, it may well be that it is in the area of what people may think is maladministration that many of these appeals or grievances will arise. For that area we have to wait for three or five years. This is unsatisfactory. The Housing Commissioner will not be subject to any form of local check on his decisions. The elected members of a local authority will have no position whatsoever in relation to the Housing Commissioner. The noble Lord has made our case this afternoon; the only difference between us is whether we wait for two or three years for the provision to be implemented, or whether we put it into the Bill now, recognising that it is only in the area where a Housing Commissioner may be appointed—and we hope he will never be appointed. We feel that this provision should be in the Bill when the Bill becomes an Act and when it is implemented. My Lords, I should like to test the opinion of your Lordships.

4.50 p.m.

On Question, Whether the said Amendment (No. 4) shall be agreed to?

Their Lordships divided:—Contents,60; Not-Contents, 99.

CONTENTS
Airedale, L.	Crook, L.	Hughes, L.
Amulree, L.	Diamond, L.	Janner, L.
Archibald, L.	Donaldson of Kingsbridge, L.	Kennet, L.
Ardwick, L.	Douglass of Cleveland, L.	Leatherland, L.
Avebury, L.	Faringdon, L.	Llewelyn-Davies of Hastoe, Bs [Teller.]
Beaumont of Whitley, L.	Fiske, L.
Bernstein, L.	Gaitskell, Bs.	Lloyd of Hampstead, L.
Beswick, L.	Garnsworthy, L.	McLeavy, L.
Blyton, L.	Geddes of Epsom, L.	Meston, L.
Brockway, L.	Gladwyn, L.	Milford, L.
Buckinghamshire, E.	Greenwood of Rossendale, L.	Moyle, L.
Byers, L.	Hale, L.	Nunburnholme, L.
Chalfont, L.	Hall, V.	Ogmore, L.
Champion, L.	Heycock, L.	Phillips, Bs. [Teller.]
Chorley, L.	Hoy, L.	Popplewell, L.
Rusholme, L.	Shinwell, L.	Taylor of Mansfield, L.
Sainsbury, L.	Simon, V.	White, Bs.
St. Davids, V.	Slater, L.	Williamson, L.
Serota, Bs.	Stow Hill, L.	Wootton of Abinger, Bs.
Shackleton, L.	Summerskill, Bs.	Wynne-Jones, L.
Shepherd, L.
NOT-CONTENTS
Aberdare, L.	Crathorne, L.	Long, V.
Abinger, L.	Crawshaw, L.	Lovat, L.
Ailwyn, L.	Cromartie, E.	Macleod of Borve, Bs.
Albemarle, E.	Daventry, V.	Mansfield, E.
Alexander of Tunis, E.	Denham, L. [Teller.]	Merrivale, L.
Amherst of Hackney, L.	Derwent, L.	Milne, L.
Amory, V.	Drumalbyn, L.	Milverton, L.
Ashbourne, L.	Dundee, E.	Mountevans, L.
Atholl, D.	Elliot of Harwood, Bs.	Mowbray and Stourton, L. [Teller.]
Auckland, L.	Emmet of Amberley, Bs.
Balerno, L.	Essex, E.	Napier and Ettrick, L.
Balfour, E.	Ferrers, E.	Oakshott, L.
Beauchamp, E.	Ferrier, L.	Rankeillour, L.
Belhaven and Stenton, L.	Fortescue, E.	Rhyl, L.
Belstead, L.	Gage, V.	Rochdale, V.
Berkeley, Bs.	Gisborough, L.	Rockley, L.
Bessborough, E.	Goschen, V.	Ruthven of Freeland, Ly.
Brabazon of Tara, L.	Gowrie, E.	Saint Oswald, L.
Brentford, V.	Greenway, L.	Sandford, L.
Bridgeman, V.	Gridley, L.	Sandys, L.
Brooke of Ystradfellte, Bs.	Grimston of Westbury, L.	Savile, L.
Caccia, L.	Hailes, L.	Sempill, Ly.
Camoys, L.	Hailsham of Saint Marylebone, L. (L. Chancellor.)	Somers, L.
Carrington, L.		Stamp, L.
Chelmer, L.	Hankey, L.	Strang, L.
Clitheroe, L.	Hanworth, V.	Strathclyde, L.
Clwyd, L.	Hawke, L.	Suffield, L.
Coleraine, L.	Howard of Glossop, L.	Swansea, L.
Colgrain, L.	Hylton-Foster, Bs.	Tweedsmuir, L.
Colville of Culross, V.	Jellicoe, E. (L. Privy Seal.)	Tweedsmuir of Belhelvie, Bs.
Cork and Orrery, E.	Kemsley, V.	Vivian, L.
Craigavon, V.	Kilmarnock, L.	Ward of Witley, V.
Craigmyle, L.	Kinloss, Ly.	Wolverton, L.
Cranbrook, E.	Lansdowne, M.

Resolved in the negative, and Amendment disagreed to accordingly.

Clause 105 [Exclusion of housing authority property from provisions of this Act]:

4.58 p.m.

LORD DIAMOND moved Amendment No. 5: Page 115, line 4, at end insert (" and shall be published no later than four weeks after it is given in whatever manner the Secretary of State may provide.").

The noble Lord said: My Lords, this Amendment is to Clause 105 which is best described by looking at the rubric. It says: Exclusion of housing authority property from provisions of this Act. This measure is about housing authority property, so when a little clause is tucked in at the end to exclude housing authority property this is quite plainly giving powers for the whole of the provisions of the Bill to be negatived in relation to chosen property. Who does the choosing? —the Secretary of State. Subsection (1) says: Where the Secretary of State is satisfied … he can exclude property. In short, here is a Bill of some 108 clauses, 11 Schedules and a total of nearly 180 pages, and the whole of the provisions can be avoided upon the say-so of the Secretary of State in relation to property of his choosing. This is not driving a coach and horses through the Bill; it is driving through it a bus, a train and everything else you can think of. It is just saying that all the clauses with the exception of one clause constitute the Bill, and one clause constitutes the opposite to the Bill.

Fortunately we have agreement that these are wide powers. I need only quote from what the noble Lord, Lord Sandford, said at our last discussion, at col. 459 of the OFFICIAL REPORT of July 13: My Lords, I agree with the noble Lord "— that is me— that these are wide powers. And a few lines lower down in the same column: The width of the powers is certainly there, but it is required in order to meet a wide range of exceptional circumstances. So there is no dispute that the powers are extremely wide; and the Government say that they will need them.

Well, my Lords, it may be that they will need them. But it is surely reasonable to assume if Parliament. After spending quite a few hours on this Bill some 150-odd sessions in Committee in another place and quite a few short moments spent in your Lordships' House—in examining and finally approving this legislation, gives certain powers and requires certain things to be done, Parliament will wish to know if a Minister proceeds to ride in the totally opposite direction from what the Bill and Parliament are saying. So at earlier stages we have sought to help in that regard by making it a condition on a Minister who wishes to issue a direction under this clause that such direction should be subject to a Statutory Instrument, which would be subject to annulment in pursuance of a Resolution of either House of Parliament—the Negative Resolution procedure, not even the Affirmative Resolution procedure. It was a very modest proposal, but that proposal was turned down. So we are now in a situation in which the Government insist that a Secretary of State should have these very wide powers indeed, on his own "say-so", and without having to consult Parliament at all.

It may be said that Parliament can ask a Minister. But one cannot ask a Minister if one does not know what a Minister is doing. One cannot arrange to ask a Minister, every time his turn arrives for Questions, "Have you done anything under Section 105?" The Question would not be admitted after one or two occasions. So there must be some means of ensuring that the world and Parliament know whether the Secretary of State has exercised his enormous arbitrary authority under this curious clause. It is for that reason that the Amendment proposes that a direction (I am now referring to subsection (4)) under this clause shall be published no later than four weeks after it is given. That, I should have thought, is the minimum it would be reasonable to ask a Minister to do. It is not to come to Parliament, but merely to let Parliament and the world know what he is doing. As to the manner of publication, that again is left completely to the discretion of the Minister. The Amendment says merely: "in whatever manner the Secretary of State may provide". This is a very reasonable provision. I hope that the Government will accept it.

5.4 p.m.

THE PARLIAMENTARY UNDER-SECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (LORD SANDFORD)

My Lords, this was a clause which was introduced at the Committee stage and we debated it at Report stage when the Opposition was suggesting that the exercise of this discretion should be subject to the Negative Resolution procedure. After debate the noble Lord, Lord Diamond, withdrew that Amendment. I explained the particular circumstance which led the Government to introduce this new clause, but for the benefit of noble Lords who were not present then I would repeat that the one exception which in our view makes this clause necessary is the Barbican scheme in the City of London, which was built without subsidy for letting to persons whose income is sufficient to meet the high rents charged there and for which it would be inappropriate for the Common Council of the City of London to attract subsidy. At no point has the noble Lord, Lord Diamond, argued that buildings of that kind should be subsidised; although they are, without the operation of this clause, part of the Housing Revenue Account and would attract subsidy. I think the noble Lord recognises that here is one exception and that there might be others.

Because we are catering for exceptions we need to have wide powers. The noble Lord was initially questioning whether wide powers are needed. If they are to stretch over and embrace all possible contingencies of buildings that it would be appropriate to embrace within this legislation, then the powers must be wide. But the question remains as to how they should be exercised. What the noble Lord is proposing, namely, that the circumstances in which this power is exercised should be published in one way or another, is certainly reasonable. He said that in fact it is for the Secretary of State on his own initiative to exercise this discretion and to issue directions. But that is not the only circumstance. In the only case that has arisen so far the initiative came from the City of London, and subsection (2) makes provision for an application to the Secretary of State for the exercise of this direction.

Is it sensible that there should be anything like a general publication in every case? Is Cornwall really interested in what happens in the City of London, or vice versa? Yet, on the other hand, is it not conceivable that there might be a number of occurrences all of a similar kind where a general circular would be appropriate? I think the noble Lord recognises from the tenor of his Amendment that the precise way in which this should be published is something which at the end of the day can be only a matter for the discretion of the Secretary of State; and that discretion is already provided for in the Bill. In the nature of the case this is not something which the Secretary of State can do entirely on his own. It has to relate to other people's dwellings, and if he does not publish it, they are free to do so. Because this is designed to deal with buildings as exceptional as the Barbican, however much we might like to provide a narrower framework it is not possible to do so. As the noble Lord's Amendment itself provides, we can at the end of the day rely on the Secretary of State's discretion as to the precise manner in which the exercise of this power regarding publication is used. He has discretion under the Bill which he will exercise in any case. So I do not think the Amendment is necessary or adds anything to the existing position. I hope that this explanation will satisfy the noble Lord.

LORD AVEBURY

My Lords, having looked at the remarks of the noble Lord on Report stage, to which he has referred, and also having listened to him very carefully this afternoon, may I say one word on this Amendment? If the Barbican is literally the only scheme that the Secretary of State has in mind here, why make the powers as wide as they are in the Bill? Why could the provision not be rephrased so that specific reference is made to the Barbican scheme, unless the noble Lord has in mind some other projects to which he can refer which might be covered by this provision? I am not aware that in the London Borough of Bromley, or in any other authority with which I am familiar, proposals are made by the local authority to the Department to build dwellings which will not attract subsidy. I would also say, as this opportunity arises, that I cannot see the logic of the Common Council of the City of London involuntarily relinquishing subsidies that would otherwise be payable. They may not want to reduce the rents which will be payable by the residents in the Barbican scheme, but those subsidies could have been used to help other tenants of the Common Council.

Of course, this is a wholly exceptional case because there are very few dwellings owned by that local authority and some of us might question the wisdom of retaining the City of London as a separate housing authority—a matter which we do not need to go into here —but there is no parallel case elsewhere in the country where the vast bulk of rateable property which is owned by an authority is commercial, warehouse and industrial, and very little is residential. Therefore, whatever happens in the case of the Barbican scheme it will make practically no difference to the revenues of the City of London, whereas if we were considering the London Borough of Bromley the circumstances would be quite different and the additional subsidies that would have been obtained on a scheme like the Barbican could then, even in the absence of this Bill, be used to reduce the rents payable by citizens occupying other classes of accommodation. That, after all, is exactly what the Government are trying to do.

So if in the end, as I hope, we could abolish the City of London and bring it within the framework of the ordinary local authority structure of London then it would be extremely important that subsidies should be obtained on the Barbican just as on any other housing scheme so that residents in other parts of that authority could obtain the benefit of a national subsidy scheme. Having listened to the noble Lord's explanation I am even more unhappy that this exclusion should be made for the sole reason that the Barbican scheme has been the subject of a voluntary move by the City of London, but I think that if that is the sole reason it should be spelt out in the Bill.

LORD SANDFORD

My Lords, I wonder if I might answer that specific point? I said that the Barbican scheme was the only specific concrete example at the moment, but I did mention—and I will mention it again in case the noble Lord, Lord Avebury, was not present when I mentioned it before—that it also has occurred to us in framing this clause that there might be another case; for instance, where a gift of money was made to a local authority for the erection of certain houses under certain conditions, which the council put up using their powers under the Housing Acts, but it might have been, under the terms of the endowment, that they could be let only on certain terms to certain classes of tenants, the terms being such that it would be inappropriate for those dwellings to remain in the Housing Revenue Account. Without a clause of this kind there is no method of excluding them, however much the Secretary of State, the local authorities and the local authority associations might all agree that they should not remain on the Housing Revenue Account. In exactly what circumstances those funds might be made available and those buildings might be built, it is difficult to envisage, but I think it is possible to envisage that buildings might be put up in those circumstances. That is why we need this kind of clause.

LORD DIAMOND

My Lords, it is surely the case, as the noble Lord, Lord Avebury, has said, that if this exclusion were to refer entirely to the Barbican scheme one would not have needed an exclusion in these general terms. So we are on common ground that this is a very wide power and the Government have it in mind for cases which may arise but which they cannot foresee entirely at the moment. That is not an unusual situation, but we do not provide in the other 108 clauses of this Bill that the Secretary of State will do what he jolly well pleases. That would make it a one clause Bill—" Housing Finance Bill. The Secretary of State shall do as he shall determine." Finish! I do not know what we have been wasting our time on. On the contrary we provide detailed instructions on the Government powers and all the limitations with which your Lordships are familiar.

In this one case there are no such limitations; the discretion is complete. That is not disputed. The only issue before us is this: in the exercise of that discretion in issuing a direction should the Secretary of State keep it to himself or should he let anybody know. Of course he should let people know because one authority which has not applied may be very interested in the result of the application of another authority. In fact we moved an Amendment to secure something along these lines which the Government refused to consider. So there could be considerable interest on the part of one local authority as to what another local authority was succeeding in doing in relation to being excluded, or partly excluded, or in the conditions upon which it was excluded from the scope of the Bill because subsection (2) says that the Secretary of State may direct that all or any of those provisions shall not apply …". So it would be reasonable (would it not?) that Parliament should be consulted. But the Government are not prepared to agree that Parliament should be first consulted. Surely then it is reasonable that Parliament should be informed.

The noble Lord probably knows that there are many things which a Minister does, about which he does not have to ask Parliament in advance, but of which he has to notify Parliament immediately he does it, by laying a paper. That is one method of publishing to Parliament and the world what the Minister has done under the authority given to him by Parliament. It is not a matter for further powers or further authority; it is within the discretion of the Minister. But something having been done, Parliament is, quite properly, immediately notified. Surely it is not unreasonable, where you have a clause which goes completely against the whole of a Bill and gives complete and unfettered discretion to the Secretary of State, that he should at least be required to tell Parliament what he is doing. That is all that is being required here. It says that a direction shall be published no less than four weeks after it is given.

Now I turn with great care to what the noble Lord, Lord Sandford, said at the end of a speech which I did not follow entirely because it seemed to go in more than one direction, but never mind about that. I am interested in the finality of it. At the end of it he seemed to be saying that the publication in his own way by the Minister of a direction is something which the Minister would do in any event. If the noble Lord can give us an assurance that whenever a Secretary of State gives a direction under Clause 105 he will publish it in his own way—and the Amendment asks only for it to be published in whatever manner the Secretary of State may provide—I would have thought that that would be the end of the matter.

LORD SANDFORD

My Lords, certainly one can give that assurance. Perhaps I did not succeed in doing so before but I certainly intended to do so. In every case where this direction is exercised by the Secretary of State some sort of publication of what is being proposed is desirable and will be undertaken by the Secretary of State, but I think the noble Lord would agree that if this related to a single building, say, somewhere in Somerset, it need not be published in Glasgow or Manchester. If it is a whole class of buildings—buildings of which there may be some all over the country —then a circular will be desirable. That is the sort of discretion which the Secretary of State should possess.

The other assurance I should like to mention is that not only does Parliament, through any individual Member, have the right to question the Secretary of State about particular matters and cases where discretion has been exercised, and to elicit more information than the Secretary of State has published, but there is nothing at all to stop a noble Lord or Member of another place from tabling a Question to the Secretary of State—indeed, it might be a good thing from time to time if this were to happen—about the exercise of his discretion in, say, the previous six or twelve months. Either option will be open to any Member. I confirm that the Secretary of State will always publish the exercise of this power in some appropriate form on each occasion it is exercised.

LORD DIAMOND

My Lords, I am grateful to the Minister for that assurance, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 108 [Citation, etc.]:

5.22 p.m.

LORD DIAMOND moved Amendment No. 6: Page 116, line 2, leave out (" two weeks") and insert (" twelve months ").

The noble Lord said: This is the Amendment to which I referred at the outset when I hoped it would be convenient for the debate on this point to range over the principles of the Bill so as to save the time of your Lordships' House. That being the case, I hope it will be convenient if I utter some preliminary remarks before coming to the heart of the Amendment.

We have been engaged in a hard—I will not say long—fight on this Bill. It is therefore a pleasure to record that our labours have not been wholly in vain. I am indebted to the noble Lord, Lord Drumalbyn, for having supplied me with a detailed list of the Amendments which have so far been accepted. I hasten to add that it is not a final list, for it goes only to the start of the Third Reading. I find from this list, on a slight readjustment of the analysis, that a total of 160 Amendments will be going to the other place, which is no mean figure. Of those 160, about two-thirds can be appropriately classified as major Amendments, and it is not without interest that, of the total of 160, about half arose on the initiative of the Government and the other half on the initiative of the Opposition. In other words, your Lordships need not feel that the time spent on improving the Bill has been wasted.

Equally, it would not be right to say that the Bill is wholly satisfactory in its present form. It is far from satisfactory, and the object of this Amendment is to ameliorate this state of affairs. The Amendment seeks to expose one of the worst characteristics of the Bill, but also a characteristic of the Government in their other legislation; and I have in mind fiscal, industrial and social legislation. I refer to the characteristic of being divisive. I am sure that when the historians come to make their assessment of this Government they will be regarded as the most divisive Government since the First World War. I am strengthened in my view by the knowledge that this is an opinion shared by many non-Socialists.

This Bill is unsatisfactory in very many ways. It still attacks the living standards of many workers and quite unnecessarily humiliates some of the poorest members of the community. It does this for the simple purpose of lessening the tax burden on the richer elements in our society. The Bill prevents housing subsidies from rising as they would otherwise have done, and sets out the procedure by which housing subsidies are at the moment halted and from now on will fall substantially in real terms. That fall will mean relief for the taxpayer, but it arises from the increased rents which tenants, in particular local authority tenants—5 million of them—will have to pay. Thus if one makes a reasonable assumption about the levels of income of housing authority tenants all over the country, and of those who will get the major benefit from reliefs in taxation, one is driven to the conclusion that I am being no other than accurate in saying that the main purpose of the Bill is to reduce tax burdens on the richer elements at the cost of putting additional burdens on many workers. That is one element and it is divisiveness.

Another element is the new tensions the Bill will create between local authority and national Government. It will do this because it will withdraw from local authorities their treasured power of providing houses as a service to their communities, with discretion to look after individual members. It will create tension for the most obvious reason that it will withdraw cash from the localities and return it to the central Government. I refer, of course, to cash in the form of surpluses: wherever a local authority has a hard-won surplus the Government will come in and extract one-half of it. The Bill will create tension between local authority staffs and Whitehall by imposing on local authorities what we have tried to demonstrate is a totally impossible time schedule. Thus the only way of which we can think at this late stage, to not avoid the effects of the Bill but at any rate to ameliorate them, is to get accepted an Amendment which would postpone the Bill's coming into force from a period of two weeks after its passing to a period of twelve months.

What benefits would this have? I suggest that there are two categories in particular to which I should refer. The first is inflation, which is clearly question No. 1 for the Government; indeed, conversations were going on yesterday at high level, and I have no doubt that there is now a great deal of activity on this score behind the scenes. I need not remind your Lordships of the rate of inflation, of the damage it is doing to our overseas competitive position, of the fact that we have a floating pound and of the fact that this is due to the views taken by foreigners of our capacity to cope with inflation in the coming months and the way inflation is likely to go.

At the discussions which took place yesterday between the Government and the two sides of industry, one of the major elements that was considered was the increase in rents. As I have said, and as many others have said from this side of the House, there is nothing more certain to give an extra twist to the inflationary spiral than the proposed highly substantial increase—in proportionate terms—in rents in the immediate future; that is to say, on October 1, with notification going out on September 1, if this Amendment is not accepted. What I would claim for this Amendment, therefore, is that it would have some effect —although it would not wholly remove the inflationary effects of this Bill—in that the inflationary urge or thrust would be somewhat reduced by being spread over a year. The postponement would lessen the effects, both on the individual tenant who is being required to increase his rent and on the general belief, especially abroad, in the capacity of this country to contain inflation. Nobody is going to think that inflation will he contained if the Government are determined to go ahead with a policy of increasing local authority rents, workers' rents, by 50 per cent. in the month or two ahead.

So much for inflation, my Lords. I now turn to the other divisive effect to which I referred—that is to say, the effect so far as the local authorities are concerned. They still have a very long list of objections to this Bill, and these objections have been expressed by the associations of the local authorities. They object, of course, to the power to fix rents being withdrawn from them. They object to their ability to look after tenants being much reduced. They object, as I have already indicated, to money being withdrawn from them in the form of hard-won surpluses. They object to having to bear part of what in their view, and in our view, is a national responsibility; namely, the relief of poverty. This they are required to do through having to contribute to rent allowances. They object even more to being required to bear the whole cost—not just a part of the cost—of administering the Government's scheme for rent allowances which is adding insult to injury, since, in the first place they reject the view that they should be required to bear a part of the cost of the rent allowances and they object to the lack of flexibility in the Bill. They have many times asked that provision should be made in this Bill, as in similar Bills in the past, under Governments of both Parties, for special help to be given to those authorities whose rate burden as a result of the provisions of the Bill would be unbearably high.

All these form their objections, but there is one thing to which they object above all others and which they put at the head of their list. That is the speed at which the Government intend to implement this Bill. Their regular complaint is that the Government are attempting by this Bill to do too much too quickly, and this is putting an impossible burden upon local authorities. We have given chapter and verse for this time and time again, and it has never been denied. It is putting an impossible burden upon local authorities to expect them to have the Bill operating as quickly as this clause provides. Everyone knows that August is a period of holidays so far as local authority staffs are concerned. It is the period when councils rarely meet, unless there is some crisis, and accordingly it is a period in which staffs take their holidays. Yet under this Bill notices would have to go out at the beginning of September. By that time the councils would have had to meet and would have had to take advice and do an enormous amount of work. Their staffs would have been engaged not at the normal annual rate but at an excessively high rate. The councils would have had to engage additional staff. All these things are quite impossible and, as I have said before, in many cases the result would be totally chaotic.

The alternative of allowing a local authority to take a little longer where it had special difficulties was refused by the Government when we put it to them, quite unreasonably in my view. The alternative of a local authority anticipating the Bill and doing all its work now is again quite impossible because this Bill does not say what a local authority is required to do. It says what a local authority is required to do unless it makes application under Section 62(4): unless, that is to say, there are special provisions which affect that authority as decided by the Secretary of State. Many local authorities have made such application. Some of them as recently as last week were told what they have to do and I have no doubt that some more will be told this week and next week. The point I am making is that although this is a very full and detailed Bill local authorities cannot anticipate in all cases, or in anything like all cases, nor are they required to anticipate, the coming into effect of this Bill until they know what their position is under Section 62 if they are thinking of making an application.

Moreover, I have just referred to the fact that there are at a minimum 160 Amendments to go to another place. What that other place will do with those Amendments one can only conjecture but certainly a Bill that is subject to 160 Amendments is not a Bill in its final form and any local authority would be foolish to rely on it completely at this stage. Here we are in the middle of July with two weeks left before the holiday period starts and everything to be done before then. I am bound to say that I try hard to understand a Government acting in what seems to me an extraordinary way because my natural and very evident modesty makes it plain to me that from time to time one may be wrong oneself. But on this particular issue I cannot see why the Government are determined to race ahead in this way, further to irritate and alienate local authorities, their members and their staffs, for no real advantage; on the contrary, for a considerable disadvantage in terms of Britain's problem No. 1, the rate of inflation.

I speak to this Amendment, therefore, not with the conviction that it will be accepted but in the hope that the Government will still find it possible to meet the arguments and the views of the councils in some way or other. Of course I would not know about the councils' position unless that had been the view expressed to me by the associations of the local authorities themselves. The Bill itself, therefore, and its relationship with local authorities would be helped or, at all events eased, by a postponement certainly of the minimum period I have indicated. It would give time to deal with these determinations under Section 62(4) which are most important and fundamental. It would give time to hold council meetings and for the housing committee to meet because before a council deliberates the housing committee has to meet to make its decision which it then recommends to the full council. It would give time for that and for notifying tenants and for a council to see how it could best cope with the many difficulties the Government is putting upon it. It would give time for the right people to be chosen as members of the scrutiny boards.

Your Lordships will remember that the final authority in all these matters is now going to be the rent scrutiny board, a board which will work in a completely arbitrary manner, will make its own decisions, be answerable to nobody, will decide in camera and will hear no evidence or expert witnesses. That is quite astonishing, but that is the method in which these scrutiny boards are required to work under this Bill and every attempt we have made to open them to fresh air and daylight has been turned down. At all events it is clear that the way in which they will work will now depend entirely on the nature, characteristics and attitudes of the people who are appointed to them. And these will need very careful searching out. They will need to be people whom arbitrary power will not worsen; they will still hold a balanced judgment notwithstanding that they are accountable to nobody for their decisions. And so it is right, I think, that these members should be selected with the greatest possible care and that the time should be made available for it.

Of course the Bill, as the Government know, is very unpopular indeed with the local authorities. We have now reached a stage where the local authorities, having made suggestion after suggestion which have been turned down, having seen the way debates have been carried on in the two Houses of Parliament, and being refreshed in membership as a result of the elections which took place in May and at other times over most of the country, are now taking the view, not merely that they would like certain variations to the Bill but that the whole of the Bill should be withdrawn. This is a most unwelcome situation, typical of the Government's divisive legislative programme.

I would merely say this to the Minister. The local authorities, or many of them, seem to me to be very nearly on the boil, and as a good cook he will know that when the milk is about to boil over you do not turn the heat on; you turn it off. What I am inviting the Government to do is to reduce the temperature by ceasing to inflame local authorities and their staffs by putting impossible burdens on them in terms of time-scale, but to give them time to do their work thoroughly up to the professional standards they set for themselves. If this is not done, I think the situation will go from bad to worse. If it were done, if this Amendment were accepted, at all events we should avoid the worst of the chaos and the bitter hostility that will undoubtedly result from the Government's pushing frantically ahead with this authoritarian, regressive, unjust and divisive measure. I beg to move.

BARONESS GAITSKELL

My Lords, I should like to support my noble friend in this Amendment; I think it is extremely important to delay the Bill from coming into force before 12 months have elapsed. We know that this Government is very partial to complicated legislation. In fact it is a maxim of the Government that so long as legislation is very difficult to understand, it must be right. It seems to me that, even as the Bill is framed, this legislation needs to be digested; otherwise bits and pieces will be regurgitated when it becomes an Act, as happened with the Industrial Relations Bill. Noble Lords know that that is exactly what has happened. Why all this hurry'? The Local Government Bill is still in progress. This tremendous Bill is going to make massive changes and a terrific impact on many local authorities; and all these massive changes, many of them very controversial, will take time and there will he unheavals and many difficulties.

After all, the proposal for a Housing Commissioner appears to many of us and to many local authorities as a kind of military takeover of a local authority in a democratic State. I do not think the Government should underestimate the difficulties or the opposition they will have to this Bill. It cannot be denied that there is great anxiety in the country about it among many local authorities. Why should not the Government allow time for conciliation, for persuasion in all these matters; for, after all, are not conciliation and persuasion the keystones of democratic legislation? I really would more than urge, I would implore the Government, to accept this Amendment.

5.45 p.m.

LORD FISKE

My Lords, I, too, should like to add a voice of support to this Amendment, which, it seems to me, would get the Government off a very nasty hook. It would be interesting to go through the Bill clause by clause and see how many of the clauses would justify the postponement that has been put forward; but that would probably suggest filibustering, and it is not my intention to do that in the slightest. I want to deal with merely two points which seem to me paramount in this matter of postponement. I want to go back first of all on a rather different plane to the Housing Commissioner. I must say that when the noble Lord, Lord Drumalbyn, brought these clauses to the last stages of the Committee I had two feelings as a result of the debate that took place: first, that the Government had not thought very much about it; and, secondly, that the noble Lord was hoping that he would never have to appoint a Housing Commissioner. By now the Government have been able to give much more thought to this particular Part of the Bill, but whether the noble Lord has revised his opinion about whether he will have to appoint one or not I do not know. I am convinced that he will.

We should all wholeheartedly agree that the law should be supported, but to support this law in this case places an intolerable burden on many local authorities. Because what are they asked to do? They are in fact asked to do the Government's dirty work. Make no mistake about it. It is not the Government that will take the blame for these rent increases, because 100 years of compulsory education and courses in civics have not taught the ordinary man and woman in the street who is responsible for what in our administrative arrangements. I have no doubt in my mind that up and down the country, under the way the Government propose, it is the local authorities who will take the blame for these rent increases, and they will in due course suffer for it at the polls. That may be what the Government want; I do not know. But it is a rather cowardly way of doing the thing, and I think they might have dealt with it in a more authoritative way.

Of course, an authoritative way for a local authority would be to make the Government appoint a Housing Commissioner, and because of the relationships that may develop in many cases between Government and local authorities I should not be surprised to see this happen, although in another way it would be deplorable if it did so happen—deplorable, but understandable. As to the Housing Commissioners themselves, I hope that in replying the Minister speaking for the Government will be able to give us some information about what sort of persons the Housing Commissioners are going to be. The first question is, will there be females as well as males? I presume that in these days there will. After that, will they be of the status of the Assistant Secretaries from the Department in Whitehall; will they be the local estate agents with the best record for "gazumping", or will they be, in plain, vernacular language, "bums"? These are questions to which we want to know the answers, because these Commissioners are going to deal at the highest level with highly qualified and, though they might deny it, fairly highly paid local officials. We must see that ignominy is not added to the fires that will already burn pretty fiercely on this front. I think that the Housing Commissioners will in many cases have to be appointed, and I should very much like to know what sort of person such a Commissioner will be.

Secondly, I should like to pursue briefly, because my noble friend Lord Diamond has already touched on it, the inflationary effect. There were only three real news items on the front pages of the papers to-day, and the one that took my eye most closely was the one about the Prime Minister having met the C.B.I. and the T.U.C. and trying to work out some industrial relations policy. One of the points that they discussed, and one of the points laid down as important, was that there should be some effort made to control inflation. In to-morrow morning's newspapers one of the most important items will be that the House of Lords this evening gave a Third Reading to, and passed, the Housing Finance Bill, thus giving the lie to the Government's wish to fight inflation, because there has been no bigger move by industry, commerce, the Government, local authorities, transport undertakings, or anybody, which will lead to inflation than this one Bill.

The extraordinary thing about this Bill in inflicting its inflation is that it will inflict it only on half of the population. That makes it look a little lopsided and a little unfair, but that is perhaps not a matter to pursue this evening, although it is a matter to be borne in mind when the noble Lord, Lord Drumalbyn, wearing another hat, goes to sit at a negotiating table with a trade union to discuss pay increases. It is useless to expect that trade unions will be able to ignore this item in the budgets of their members when they come to discuss the next wage increases. Whether they will be able to differentiate, or whether the Government will be able to differentiate, between wage earners who are tenants and wage earners who are owners, it is beyond my poor wits to say. But I should like to know—because they should have looked forward to this event, not with pleasure but in the sense of just looking in front—the Government's views about how they would try and handle a situation where they will in fact have to deal with two inflation figures concerning different sets of people around the same negotiating table. I, for one, should very much like to know how this is to be dealt with.

In all this time is of the essence. We hope—and if the Government are successful it will be o—that inflation will not be the problem this time next year that it is to-day. Then would be a better time to bring in either this Bill or an amended Bill, because I freely agree that some sort of Bill is necessary. It would come much better at that time than it could possibly come, as I presume it must come, within the next six weeks, when suddenly local authorities are going to be overwhelmed with the work that they will have to do during a period of recess to cope with the demands of an impatient Government. I think that this is wrong. It is bad for relations with local government. I would therefore fervently hope that the Government could see their way to accept this Amendment.

5.55 p.m.

LORD CRAWSHAW

My Lords, I am afraid that I cannot agree with the three noble Lords who have just spoken in suggesting that we should postpone the operation of this Bill. I personally believe that it is badly needed, and that it should come into force more or less straight away. I believe that the principles behind the Bill are good, and although, in the light of experience, we may need some adjustments as we go along, I still think that this is a Bill which is badly wanted by the country as a whole. I realise also that we have had some good Amendments moved in your Lordships' House.

I feel that the Bill is taking the blame unfairly for an existing situation which is not of its making. This I hope to explain in a minute. One of the good things about the Bill is that fair rents, not necessarily economic rents, will be paid for nearly all houses instead of the present artificial rents. We have the safeguards of the rebates and allowances for the lowest incomes, and that seems to me all right as a stop-gap until, as we all hope, improved production and wages arrive. It puts the rent paying lower wage earners in a more favourable position than the mortgage payers on similar incomes—and there are such people. And I am not sure whether this is fair or unfair, but I think it may further discourage the rented sector, and we may find that only the lowest paid people will in future be in rented houses.

It seems to me that circumstances in the future will discriminate against the rented sector in the higher income groups. I do not blame the Bill for this; I blame the existing tax system. We have been trying through the Bill to create fair rents; but these rents, for income tax purposes, are unfairly balanced against the treatment of mortgage interest. The scales used in this instance would not pass any Inspector of Weights and Measures that I know of, and I, for one, cannot see any logic or consistency in allowing mortgage interest to be set against tax while not allowing rents. I suppose one could claim that even after this Bill is passed the rent payers will pay less rent than the mortgage payers will pay interest. However, one cannot escape the fact that the tax system will continue to bleed unfairly the rented sector. Certainly landlords and their properties will suffer; and not only private landlords because, after the passage of this Bill, local authority houses are to be treated like private houses. As my noble friend Lord Hylton said on the Second Reading of the Bill, institutions and responsible private landlords have for some time been selling off rented houses and flats, sometimes to speculators, sometimes to reluctant occupiers, and so on. I feel this is an unfortunate situation. Now is there a real national dislike of rented property? So far as I can ascertain, I do not think so. I am a small landlord, and have often been rather touched by the loyalty of some of the tenants in my properties. Many of them have often said that they and their forebears have been happy to live as tenants for several generations, even of my family. As I say, I have always been rather moved by this sort of approach. They have also said that they would not have it otherwise.

I believe that during this summer we are to have a Green Paper on Income Tax, in which I very much hope that there will be a proposal for some tax relief on rents. I suppose that this might reduce the Inland Revenue income, but at any rate it would allow the inflation to have its effect over the whole property market and not just on owner-occupied properties. This would reduce the demand for properties to buy, which causes a great deal of the present inflation in house prices, land prices, and, indirectly, other costs of living, et cetera. Too much money is, I believe, at present tied up in financing mortgages and is therefore dead money so far as public spending and so on is concerned. This may be in part an answer to the points raised by the noble Lord, Lord Fiske, when he talked about inflation. There are other inflationary factors which need looking at. For instance, at present non-United Kingdom people are allowed to buy and sell their so-called one house free of capital gains tax, and as often as they like. I believe this to be wrong. Again, although it is illegal to charge a premium for a lease that falls within the 1965 Rent Act, this is, in fact, fairly normal practice and is causing further inflation.

I realise that these matters are outside the scope of this Bill, but I believe it is amongst these "grey" areas that the "nigger in the woodpile" lies. I hope I have not stretched the discussion too far and I should like to test the feeling of the House on these matters, particularly on the question of tax relief on rents. I know that people outside the House are increasingly concerned about that. I believe we should give this Bill a Third Reading expeditiously, but I would ask the Government to give an assurance that these other matters are carefully considered before the Green Paper is published. I feel that with this assurance the Act would be more readily accepted by the public at large.

6.2 p.m.

LORD SLATER

My Lords, it was not my intention to interject at all in this debate until I listened to the last speaker and the observations made by my noble friends on this side of the House. The noble Lord, Lord Crawshaw, has given support to this Bill and is backing the Government, and is saying that it is a right and proper measure to introduce at this juncture. Some of us have very long memories; we came through local government before we became Members of Parliament. I reflect over the last 20 odd years of parliamentary history, when successive Tory Governments have been in power and successive Ministers of Housing and Local Government have been appointed to their respective positions. They have made an attack on housing development and housing operations. So far as their Government have been concerned they have cut back subsidies time and time again. When the Labour Party has returned to power they have had to increase the subsidies and undo the damage done by the previous Administration.

Some of us remember the attitude of the noble Lord, Lord Brooke of Cumnor, when he was Minister of Housing and Local Government, towards the New Towns. The then Opposition in the 1945 Parliament had already agreed to the policy laid down by the Labour Government in regard to the New Towns. Immediately the Tory Government came into power they rejected that policy and set up a different policy.

Local authorities are elected assemblies. We know that when the assessment boards were operating under local administration they were more effective in fixing the rate and the assessment for property than the new rating officers or the assessment officers. Local people were able to go along to the assessment boards and local authorities and present their case, and to be represented—even taking with them a solicitor or someone else to speak on their behalf, and in many cases they were successful in their application.

What worries me and seems to be worrying many of my noble friends is, what is going to happen when these individuals are appointed? Are they to possess such powers that they will be able to impose a decision which they think is right without any form of appeal? If that is the case, local authorities are bound to be up in arms because they know what has happened over the years. If we come under the operation of the type of legislation we have presented here to-day it can only bring chaos so far as local government is concerned. This legislation will work against the tenants in local authority property which has been subsidised for very many years.

When I was in local government we had what was called the "pooling" system. If there was anything to distribute among the tenants in addition to the subsidies that came from the Government we were able to bring down the rents and everyone got a share from the pool. Under this system the amount of money that is going into a household will be taken into consideration in deciding on the "fair rent", as it is now termed by noble Lords on the other side, and the Government in particular—" economic rents "as they are termed in this year, 1972. It would have been better if local authorities had been left to work out their own policies instead of the Government's eroding their democratic rights, as an elected body, to look after people's interests and, as part of their responsibility, to find them housing accommodation.

I hope that the noble Lord, Lord Drumalbyn, will recall the many Ministers to whom I have made reference, though not by name, in previous Tory Administrations over the last 20 years. Every one when he came into office followed a new policy, one which was detrimental to the local housing authorities in this country. I have listened to the speeches that have been made, and it appears that this will again be the situation, and that tenants up and down the country living in local government property will suffer tremendously because of the approach of this Government under this Bill.

6.8 p.m.

LORD LEATHERLAND

My Lords, I listened with very great respect to the noble Lord, Lord Crawshaw. He said many things which seemed to me to be reasonable and full of common sense and many of the matters he mentioned are well worthy of consideration though, as he said, not to-day. In so far as to-day is concerned, the noble Lord came down in favour of the Bill, so I find myself, unfortunately, against him.

I have no inside information, but I have a fairly strong feeling that the Government are going to reject this Amendment of ours with disdain. I have a feeling that they will sniff at it like a sanitary inspector at a " pop " festival. But this Amendment goes to the very backbone of the Bill. We say that this is a bad Bill. We have failed to kill it; we therefore say, " Postpone it for 12 months ". In 12 months' time the Government may have saved the country, when it may be safe from the national point of view to look again at municipal rents. Alternatively, they will have pulled it down into a deeper mess than it is in at present, in which case they would be afraid to put this piece of legislation into operation.

I am a white-haired old veteran of local government. I spoke from the local government point of view on one of the earlier passages on this Bill. My noble friend Lord Diamond has to-night given us an excellent technical analysis from the local government point of view of the many difficulties and injustices that are going to arise. So I shall forget myself as a county alderman for the moment and look at the grass roots of this measure. What is it? It is undoubtedly a Bill to put up the cost of living of millions of people at a stroke.

If I were Prime Minister to-day I should feel a fairly happy man. I should be able to forget all those promises that I made in the Election about halting the rise in prices: I should be able to forget that thrilling speech I made at Luton Hoo some months ago when I said: Ever since we were elected we have conentrated on reducing the rise in prices. I should be able to forget that speech I made on television a month or two ago when I said: The fight against rising prices must be one with no holds barred. If I were Prime Minister I should feel a relieved and happy man now that this Bill is on its last stages towards the Statute Book. At the same time, I should feel slightly unhappy in another respect. I know that I should be saying to the shop stewards and the trade union leaders, " Gentlemen, do not take me seriously when I ask you to moderate your wage demands ". I should be saying: " I put up your food by over 15 per cent.; I put up your rates by 25 per cent.; I have put up your fares and I am going to put them up again. I have put up the price of clothing and of shoes and am going to put up prices still further. I am going to burden you further as a result of devaluation ". Incidentally, it was the Prime Minister who said at the time of the last Election that if a Labour Government were elected there would be devaluation in two years. Well, a Tory Government was elected and we have devaluation in precisely two years.

So one must pay some attention to what the Prime Minister says. He is going to put up prices as a result of devaluation; he is going to put up prices as a result of value added tax, which is to be imposed on most of the commodities that the housewife buys, and he is going to put up prices as a result of the fantastic entrance fee that we are to pay to enter the Common Market. On top of this, under the Bill which is before your Lordships to-night, he is to put up rents by 50p for the whole of this year or by £1 if the rise starts in October; by another 50p next year and by another 50p in the following year and then by an unstated, unknown, unlimited figure for the second three-year period after that.

My Lords, is this wise? We are living in an atmosphere of highly feverish inflation. We want a cooler atmosphere, one where constant rises in prices are not being chased by constantly increasing wages. We are walking on an economic tightrope and if we are not careful the measure now before the House could tip us off balance. It is a vicious attack on working people. We are saving £200 million a year at their expense, and in next year's budget this £200 million a year is going to be distributed among the surtax payers and the wealthier members of the population. We have Mr. Heath as Robin Hood in reverse. This kind of policy will not produce the " one nation " that Disraeli used to inspire the Tory Party with many years ago. It will stir up more bitterness, more class hatred than the Communists in this country have ever dreamed about. It is a charter to the wild cats to grow more wild than they have ever been in the past.

My Lords, there is one mysterious factor about the Bill which interests me. What are the ultimate increases to be? We know that there will be £1.50 on the rent of millions of people in the first three years. What is going to happen in the second three years? I think there is something sinister about the secrecy with which the Government have cloaked these ultimate figures. Many housing experts have suggested that rents will be doubled. Some Ministers have denied this. But they refuse to say what the actual increases will be. How can they deny the alleged doubling of rents if they do not know what the increases are to be? It would be more in keeping with the idea of Open Government if Ministers provided us with a list of all the areas in the country, giving the average rent to-day and the average rent when the fair rent system has come into operation. Ministers may say that these figures are not ready in respect of all areas in the country. If that is so, this House is being asked to pass a Bill the financial consequences of which to millions of people cannot be estimated.

There has been a list circulating in the Ministry for many months. Many noble Lords will be aware of this list. There has been no secrecy about it. This document stated the Ministry estimate of what fair rents would be in 1976. In London, the average rent is now £3.50. In 1976, the fair rent will be £7.45. That is more than double. In. South-East England the figures will be £3.13 now and £6.49 in 1976—again, more than double. In East Anglia: £2.16 and under the fair rent system, £5.72—again, more than double. In the West Midlands: £2.43 now, £5.72 in 1976—again more than double. In the South-West: £2.43 now, £5.53 in 1976—again more than double. In the East Midlands: £2.02 and £5.14 —again, considerably more than double. In the North-West: £2.23 now, and in 1976, £4.66. In Yorkshire and Humberside: £2.02 and £4.56. In the North: £2.08 and £4.38—more than double. In Wales: £2.39 and £4.18—not quite double, which seems to show racial discrimination towards the Welsh.

I think the Minister ought to produce that document to us so that we can discuss this Bill with our eyes completely open. I refuse to believe that the Government do not know what the ultimate rises are going to be. If they really do not know—and I am prepared to give them the benefit of that doubt—it is rather disgraceful to impose a new burden of unknown and unlimited extent on millions of people. We are being asked to pass this Bill not knowing what extra number of pounds a week these people are ultimately going to have to pay.

Let us look at this for a moment from the national economic point of view. If people are to have to pay more in rent they will have less money to spend on other household and similar goods. The demands on factories will be reduced and there will be a slowing down in industry. That in turn will lead to more unemployment. If, alternatively, people say: " We shall not be content with our existing wages if we have to pay these extra rents we will demand increased wages in order to beat the increased rents ", then we are giving another twirl to the inflationary spiral. In the national interest, therefore, I feel that these increases ought not to be imposed. That is why I give my very warm support to my noble friend Lord Diamond in urging that the Bill be postponed for a year.

6.20 p.m.

THE EARL OF DUDLEY

My Lords, I am very surprised that so many noble Lords have opposed this Bill. The effect of postponing it for one year would be that hundreds of tenants living in private property would not be able to get a rent allowance on their present rent. Many council tenants would receive less rebate than would be the case under the provisions of the Bill. The rent increases that are laid down in the Bill are limited to a figure that I am quite certain will not be beyond the means of most people to pay, and for those who cannot pay the allowances are generous. I have studied the Bill carefully and have complete confidence that it will work well and its provisions will prove to be fairer than anything ever introduced in your Lordships' House. I stress, and firmly believe, that it is far better to subsidise people than houses. That is where the mistake has been made in the past and I am glad that it is being changed.

VISCOUNT MASSEREENE AND FERRARD

My Lords, may I draw attention to something that was said by the noble Lord, Lord Leatherland? He was critical of the Government for not holding down prices. May I point out to the noble Lord, who I think has not done his sums properly that the latest pay awarded to the miners, for instance, represents an extra £89 million that the country has to find, with no increase in productivity. If we take the extra pay awarded to the railway workers it is getting near an extra £30 million. Those are the things which are causing inflation,and—

LORD LEATHERLAND

My Lords, I hope that the noble Viscount will forgive me for interrupting him. He can proceed with the general tenor of his argument as long as he likes, but he is not going to accuse me of not having done my sums properly, as in my early youth I was a statistician in the employ of a big corporation undertaking. Therefore he must not professionally denigrate me. He can say that I am wrong in other things as much as he likes.

VISCOUNT MASSEREENE AND FERRARD

My Lords, the noble Lord may be a statistician, but he is certainly not an expert on the causes of inflation. I just wanted to point that out. It is no use saying that wages are chasing prices. Wages, as we all know, have increased far more than prices, and prices have, until just lately, been held down.

BARONESS GAITSKELL

My Lords, may I add to the list given by the noble Viscount? There are the judges, civil servants, lecturers and who else?—various other categories who have had increases in their salaries, and that must have added to the inflation.

BARONESS BIRK

My Lords, first may I apologise for not having been able to be present at the beginning of the discussion on this Amendment, but I think it such an important Amendment, and the crux of the whole Bill, that I want to say a word or two about it. As noble Lords on this side of the House are agreed, this is a bad Bill; but to bring it in so quickly makes the bad worse. The noble Viscount, Lord Massereene and Ferrard, referred to inflation caused by wage increases given to miners and railway men. It is extraordinary that he should pick on two categories of people working in the public sector for low pay. He referred also to productivity. I do not know how it is possible to increase the productivity of those who work on the railways. I do know that in the private sector there are many firms and industries which are making sure they do not run down or lose their trade or their employees. They have made private arrangements; they let wages rise and they make their own agreements. So it seems to me that that was an extremely bad example, because the people to whom the noble Viscount referred are hardly in the top or the middle income groups—even with the increases which they have been given.

This leads me to what I think is one of the biggest objections to this Bill. To try to bring in this sort of rent policy without a viable incomes and prices policy seems to me all wrong; it is put— ting the cart before the horse. In the Guardian this week there was a letter from the headmaster of a primary school. He wrote because he felt strongly about the question of school meals and the lack of take-up by children, and the fear that in future there would be a decrease in those taking school meals. One of the factors which he listed as causing the increase in the cost of living and the decrease in the take-up of school meals was the effect on rents that the Housing Finance Bill would have. He went so far as to say that he felt things had got to a state where the only way to deal with the situation was to have free school meals, so that at least we could be sure that all children had the minimum amount of nutrition.

My Lords, if it were not so tragic it would be almost laughable. Here we have a Government who have cut down on school milk and on school meals, by increasing the prices, and are now increasing rents so that family incomes will have to be stretched to breaking point. It is no use saying that people are entitled to have free school meals for their children or a family income supplement, because you have to be very badly off to get them. I know of a family of farm workers in which there are six children under the age of nine. It may sound impossible, but they are not entitled to a supplement or to free school meals because the family income is something like 20p over what is allowed.

The noble Lord said that a number of people will not be eligible for a rebate, but I think that there is a great deal of guess-work about this because we cannot get the facts and figures. We know from experience that people do not take these benefits. The Department of Health and Social Security spent large sums of money advertising the right of people to family income supplements. If something like 40 per cent. or more of council tenants are entitled to a rebate, and many do not take it, there will be an increase in poverty generally. It seems to me that in the present situation, with an increase in the cost of living and the level of unemployment, it is wrong to bring in something which is an inflationary measure and also socially unjust and unfair because it will be detrimental to the family income and to family health. I think the least that we can do is to delay the bringing into force of this piece of legislation.

6.30 p.m.

LORD DRUMALBYN

My Lords, when the noble Lord, Lord Diamond, introduced this Amendment, he suggested that we might have a wide-ranging debate, and we have not been disappointed in that. The noble Lord started very graciously by drawing attention to the number of Amendments which have been carried in this House—a nice sort of " summer bonus " for another place. He did not say that of those 160 or so Amendments there were something like 26 groups. Half of these were initiated by the Government and half suggested by the Opposition. There were 12 from the Government and 13 from the Opposition, and one group was initiated by my noble friend Lord Crawshaw. I agree that our discussions have not been wholly wasted. I think we have shown that where it is possible to give way to arguments we are prepared to do so. We are also prepared to consider all arguments on their merits.

On the other hand, one has to hear in mind the fact that, so far as timing is concerned, this Bill is very closely interwoven. Dates are mentioned frequently, so the Amendment would not, in itself, make a great deal of sense. I do not know quite what would happen if it were carried. Presumably rents, instead of going up by £1 on October 1, 1972, would go up by £1.50 on October 1, 1973; we should have to do the whole lot at one time. Therefore the Amendment does not quite fit in. I think it was drafted before the Report stage; perhaps that is why it does not make a tremendous lot of sense. Undoubtedly the. main point was to give expression to the Opposition's feeling that the Bill had been introduced somewhat precipitately. Of course it was introduced a very long time ago. It is not the fault of this House or of the Government that there is not more time between the passage of the Bill and the time when action will have to be taken.

The noble Lord categorised the legislation as divisive. What is the present situation? Those who have read the Francis Report will read of flats in the same building and houses in the same street where some of the occupiers are under controlled tenancies, some may have been under controlled tenancies but as a result of take-over there is now no control; some may be under regulated tenancies, and perhaps not very far away there are council houses. For the same kind of accommodation there is at present a very wide range of rents payable by people in similar economic circumstances, possibly working side by side for similar wages. Is that not divisive? It is what this Bill sets out to cure. We think that the sooner the legislation comes into operation, the better.

In saying that the Bill should not come into operation for 12 months the noble Lord indicated his main objections to it. I could sum up the main purpose of the Bill in one long sentence: It is to ensure that public money is spent to help to provide and improve housing and to clear slums; to assist those who would not be housed in accordance with their needs if they had to pay a fair rent; to stop subsidising those who can afford to pay a fair rent; and to extend by stages the fair rents system to houses that are still under the old system of rent control, while maintaining security of tenure. That is the object of the Bill and I find it surprising that the Opposition are so relentlessly opposed to it.

Throughout the debates one has had inklings that they are not now so opposed as they were originally. The noble Lord, Lord Diamond, said at one stage that he was totally opposed to the Bill, but he has had to give way a little from time to time. For example, he said that he was in favour of rent rebates being extended and rent allowances being introduced. What would happen to them if we postponed the operation of this Bill? My noble friend Lord Balfour very properly asked that question. Something like 2½million council and private tenants will qualify for rebates and allowances. That is twice as many as the number of council tenants—one million to one and a quarter million—who will pay a rent increase of £1 a week in October. That one million to one and a quarter million has to be considered as a percentage of the 17 million house occupiers in this country, and it is not a very large percentage. This has to be taken into account when we are talking about the inflationary effect.

Price increases add to inflationary pressures. In any case, the noble Lord thinks the Bill requires the increases in fair rents to be made too quickly. There have been very few years since the war during which money has not lost some purchasing power. The noble Lord, Lord Fiske, who is not now in his place, said things might be better in 12 months. We can have no guarantee about that if wage demands are maintained at their present level. Or is the noble Lord prepared to guarantee that wage demands will not be maintained at their present level and that a lapse of 12 months would be suitable before the introduction of the Bill? The payment of subsidies to people who do not need them is not only unfair to those who do not receive them whether they need them or not; it is particularly unfair to those who do need them but do not get them, and the payment is also inflationary in itself. In these days when people are anxious to maintain and improve their standard of living it is just as inflationary to raise the level of rates and taxes as it is to raise rents. The Bill will enable those who cannot afford even their present rent to pay less than they are now paying. This will, in all justice, have to be balanced against any increased wages, because rents for some are being raised to a fair level.

Those who have been privileged to enjoy subsidised or controlled rents have been lucky at the expense of others. The question of how far they should be compensated for the loss of their privilege will have to be argued out with their workmates who have not been enjoying the same privilege. Of course most people will always fight to protect their special privileges but, mercifully for the wellbeing of this country, most people have been prepared to relinquish them when Parliament judges that the time has come for them to do so. The truth is that this unfairness has gone on for far too long, mainly because successive Governments have not devised a fair system to replace it. Now that has been done. The Labour Government took the first step towards fair rents and we are following it up to its logical conclusion. In circumstances of inflationary pressure there may be a price to pay for the removal of injustice. It will he for the good sense of the people to ensure that the price is not unreasonable, but it is high time that the injustice should be removed. There should be fairness between tenant and tenant, tenant and landlord and one local authority and another.

The Opposition have expressed support for the extension of rent rebates and the introduction of rent allowances, though they would have liked the Exchequer to bear the full cost. They have not objected to the progressive emergence of houses from the twilight of control to the daylight of regulation. They have welcomed the slum clearance subsidy and the treatment of housing associations. What they cannot bring themselves to do is to accept that what is fair for private tenants is fair for council tenants. Nor are they prepared to share any of the responsibility for the increases towards fair rents of council tenants, still less to the tempo of those increases, even although only those who can afford to pay the fair rent will do so. But that is a long way short of the total rejection of the Bill that the noble Lord, Lord Diamond, proclaimed.

We are convinced that the provisions of this Bill are not only right, but long overdue. I must say to the noble Lord that it simply is not the case that local authorities have been taking no action whatsoever towards the implementation of the Bill when it comes along. Let us consider for a moment what they have to do—and I mentioned this on the Report stage. The fact is that the main things they will have to do on October 1 are, first of all, to put up the rent by £1 if the local authority has not already put up its rents; and, secondly, to set up a rent rebate system if it has not already got one, or adapt its rent rebate system if it has not got one in line with the model rent rebate system. Surely this is not an impossible task for local authorities, given that they have already been studying the Bill very closely, and no doubt have already made careful preparations.

The noble Lord asked about preparations for the rent scrutiny boards. They will not have to start operations for eight months—six months for the local authorities to prepare their assessments, and two months thereafter for them to receive comments upon them before they pass them on to the boards. So that is not a problem. We have eight months to deal with the scrutiny boards, and no doubt time to set up the Advisory Committees and so on. In any case, how would postponement help? The noble Baroness, Lady Gaitskell, talked about time for conciliation and persuasion. Will the noble Baroness join in during the next 12 months to help persuade the local authorities that this is a good view? I should welcome it very much indeed if she did.

The noble Lord, Lord Leatherland, asked how far rents would go up: 50p a year for how many years? The answer is quite simple: up to fair rents. He asked: What are fair rents? It is not for the Government to say what fair rents are. These are decided at the present time, as the noble Lord knows, by the rent officers on appeal to the rent tribunals. It is true that a year and a half ago the Government made some working estimates for discussion, to which the noble Lord referred, but this is no kind of determination of what the fair rents are.

One of the things that interested me most was that the noble Lord then proceeded to argue that the rent increases were going to be deflationary, and were going to result in people being laid off; in less money being around and so forth. It is not for me to settle the Opposition's differences between themselves on whether this is inflationary or not.

LORD LEATHERLAND

My Lords, the noble Lord misrepresents what I said. There were two prongs to my argument. The first was that if rents went up and wages did not, people would have to buy a smaller number of commodities and that would lead to unemployment. The second prong of my argument was that if rents went up and wages went up to keep pace with them, then that would give an extra turn to the inflationary spiral

LORD DRUMALBYN

My Lords, the prongs seem to be going in opposite directions, which is unlike prongs in the usual way. I hope I have shown that there is really no substance to the objection that the Bill cannot be implemented by the authorities in the time. What I cannot persuade the Opposition, obviously, is that it would not be a good thing for the implementation of the Bill to be postponed. In another place when they want to oppose a Bill they propose: That the Bill be read this day six months. The noble Lord is now proposing: That this Bill be put into operation this day 12 months. The effect is very much the same. We believe that this is a good Bill; we believe that it should go on to the Statute Book as soon as possible, and I hope that noble Lords with me will make certain that this Amendment is defeated.

6.45 p.m.

LORD GARNSWORTHY

My Lords, I feel that perhaps the noble Lord, Lord Drumalbyn, has enjoyed himself this evening more than he did while the Bill was in Committee. He certainly gave the impression, with the smile on his face, that his labours were coming to an end, at any rate, and that perhaps for him is a source of some pleasure. The noble Lord asked one question that I should like to answer right away. He asked: How would this Amendment, if it were carried, help? How would postponing help? My noble friend Lady Gaitskell, and I think one or two other of my noble friends, have already answered that question. It would get the Government out of a very unpleasant hole. He also had a question about wage claims. The quick answer to that is that this Bill will spark off wage claims. If that has not registered, then nothing has registered.

I thought that my noble friend Lord Diamond summed up the case against this Bill quite admirably when he opened the debate. I certainly join with him in what he had to say about the manner in which the Government spokesmen have responded to the pressures that we have endeavoured to exert from this side. For my part, I should like to say that, having regard to doubts that were expressed by some people when they realised the number of Amendments that we were tabling, the constructive Opposition that has been put forward consistently from this side has been fully justified in the number of Amendments that have been made to the Bill. Then, the time-table that we have secured has enabled the Government to have a period in which they could do some thinking on their own initiative. I should think that the Government must be grateful to us for enabling them to have this time at their disposal. I hope we shall remember that the part played from this side of the House, while it has done nothing to change the divisive nature of this Bill, has at least been worthwhile.

There is one fact, I think, that stands out like a sore thumb, and I will put it as simply as I can. The price of houses in this country since this Bill was introduced has risen at a quite unprecedented rate. Nobody in the House can deny that fact. In other words, the inflationary effect of this Bill has been felt before it has become an Act. In the private sector it might be called the " landlord's benefit " and the " gazumper's chance ". Yesterday I had a visit here at the House from a young man recently married. Last September he signed a contract for a two-bedroomed maisonette at Chelmsford and he paid £4,900. Last week, being under compulsion to move to Southampton, he sold his maisonette. He was told by the estate agent to ask £9,250 for it. He has a firm purchaser at the figure of £8,800. That is what is happening in the field of houses for sale—a rise in price from £4,900 last September to £8,800 in July this year.

In the public sector the Bill introduces for the first time, despite all that the noble Lord said about fair rents, the profit-making motive. It is quite clear that the threat of further inflationary pressures as a consequence has not yet been understood by the Government. We on this side believe that something of a quite striking nature needs to be done to deal with the housing situation and to regulate house prices. It is pretty clear, in the light of what is happening in regard to land prices and the situation generally, that the best answer would be a massive increase in the provision by local authorities of rented accommodation—a sufficient number of houses to match the need.

We on this side, as distinct from the Party opposite, view housing as one of the major social services. The noble Lord, Lord Drumalbyn, attempted to claim some credit for the fact that the Government were seeking to bring the situation in the public sector into line with that in the private sector. If the private sector had been able to cope with housing as a social service we should not have needed public enterprise. Public enterprise was started in this field and has been extended because of the failure of private enterprise. There has been nothing to stop people building houses to let if they wanted to, but they would be building them only if they could see an opportunity to make money. Let us face it frankly, my Lords: the introduction of the profit-making motive into the public sector will do nothing to discommode the private sector, and the Government know that. One suspects that they are over-concerned with the private sector, and that concern plays a very considerable part in endeavouring to ensure that the public sector is based on the same profit-making motive.

It has been argued that rebates and allowances take care of the inability of the wage-earner to pay a reasonable rent for the house that his family need. I think the noble Earl, Lord Balfour, made something of that point. Let me say frankly—because there is no wish on our side to run away from it—that the standard of rebates laid down in this Bill is higher than many authorities have granted. Rent allowances are, it is true, being introduced for the first time into the private sector; but a great many people are going to need rebates and allowances because under this Bill their rents will be increased. The fact is that rebates and allowances will be made to many people who would have no need for them if the increases called for under this Bill were not made. My noble friend Lord Leather-land referred to the fact that rents are going to be doubled, and more than doubled. If he is inaccurate, and if we also are inaccurate in that statement, then all I can say is that the " guestimates "—and these are all we have had from the Government—as to the consequences of this Bill have been, and are, utterly illusory.

May I just touch on the claim that subsidies will now be related to need; that is to say, where family incomes are inadequate to maintain a reasonable standard of living, wages being too low? It is claimed that as a result subsidies will be available under this Bill, supported, as has been said, by profits from the better-paid workers who live in the public sector. I think the T.U.C. can be relied upon to speak much more authoritatively on this matter than many noble Lords on the other side of the House who have had something to say about this aspect. The T.U.C.'s strong social and economic objections to extending means-tested rebates to approximately half of all the tenants were detailed in the 1972 Economic Review, and these criticisms have not been answered by the Government.

Then, my Lords, nobody knows what the take-up is likely to be. I quoted at Committee stage the experience of one local authority with 3,000 houses: as between April and June only 800 tenants had applied for rebates. We have the failure of the family income supplement scheme as a fairly clear indication that many people do not automatically seek to take advantage of benefits that are claimable as a result of means-testing. The introduction of means-testing as envisaged in this Bill adds nothing to the dignity of the tenant. The continual reassessment to entitlement to rebate is an undignified process. It is of no use for anybody to say, " People don't mind being means-tested for income tax purposes." This is a quite different situation and it is not a worthy alternative to decent wages—or, if I may say so, to reasonable rents. Reasonable rents, as charged by enlightened authorities, have been fixed with regard to wages levels in the different districts and regions of the country. My noble friend Lord Diamond drew attention to the fact that on the subject of this Bill the Government have no friends at all in the local authority housing associations. A delay of 12 months would enable the Government to have some time to discuss with the Association of Municipal Corporations and the associations of the urban district councils and rural district councils the position that is covered by this Bill.

My noble friend Lord Fiske (he apologises for having had to leave the House; he has gone to receive treatment) dealt with the situation that may well arise with the appointment of Housing Commissioners. The threat of their appointment is resented—and bitterly resented—by many authorities who have not taken any steps to implement this Bill. They resented being called upon to impose a 50p increase before the Bill became an Act. This Government could have been, as they ought to have been, out of office by this time and the imposition of the 50p would certainly have been an anticipation of a situation that did not arise. The noble Lord, Lord Drumalbyn, is looking a little worried. What I meant to say was that if this Government had lost office, as many people think they ought to have done—and would be glad to see happen now—the authorities which imposed a 50p increase in April would have been seen to have been very ill-advised in acting in anticipation of the Bill's becoming an Act.

My noble friend Lord Fiske raised the issue of the strain on the loyalties of staffs if Housing Commissioners are appointed. I commend to the attention of the Government the latest publication of Public Service, which is the journal of the National and Local Government Officers' Association. The Government will see there a report of a debate and they will be able to gauge the very strong feeling that exists with regard to many people in local government if their authority comes into conflict with the Government on this issue. The Government would do well to take a little time to consider whether it is desirable that this situation should develop. We on this side have made it clear that local authorities cannot be recommended to leave their tenants and ratepayers to the Housing Commissioners who may be appointed. If the Housing Commissioners are appointed they can be relied upon to carry out the will of this Government whose capacity to consider the interests of tenants is bound to be questionable, to put it mildly.

If I do not—and I do not—agree with local authorities who will not touch this Bill, I understand their attitude. They say, " If we administer this measure we shall become mere agents of Tory national policy "—as my noble friend Lord Fiske said, " doing their dirty work for them ". They will be seen by those who are going to be hurt by the Bill as being, if not entirely responsible, at least responsible as partners in an attack on living standards. It is right that I should point out that in Committee we moved an Amendment to try to ensure that when the notices for rent increases were sent out they should bear a statement saying that it was the result of the Government's decision, a result of the Government's policy; that the local authority were in no way responsible and that their hands had been tied. The Government were not prepared to accept that. Apparently they are quite prepared to allow the local authorities to be seen to be carrying a responsibility for which they have every reason to say, " We have no responsibility; it is not our decision. This is a decision which has been taken contrary to all the advice we had to offer."

It would be possible to answer all the points that have been made, but I do not propose to do that. At times, listening to the debates, I have felt that the Government were taking up a position—.I will not say like an ostrich with its head in the sand, but I have been reminded of some words of Matthew Arnold in a piece entitled To a Republican Friend. I say this with no intention of being impolite, but I think what he had to say is very apposite. He was referring to moles—the creatures that burrow in the ground. He had this to say: … if to despise The barren optimistic sophistries Of comfortable moles, whom what they do Teaches the limit of the just and true And for such doing have no need of eyes … That is the position in which the Government have placed themselves. In this matter they are burrowing under the ground. What they see in the darkness is the limit of what they see as being just and true.

The local authority associations are united against this Bill. The Government have few, if any, friends despite all that has been said throughout the country. The Bill is divisive, as my noble friend Lord Diamond said. It is a measure that is going to result—I hope I am wrong—in a conflict between local government and national Government such as nobody who believes in democracy can possibly desire.

I hold in my hand an explanatory leaflet as to how the rent rebate scheme will operate. The tenant who sent it to me wrote this on it: If you understand all this you should not need a rebate, you are underpaid. There is too much truth in that for anybody's good. Noble Lords who imagine that the rebates and allowances laid down in the scheme are going to meet the situation will find that that is not so. The Government are also going to find that a large and, I fear, growing number of local authorities are determined that they will not co-operate. I fear that they will find that if they appoint their Housing Commissioners there will be reactions from members of the staff. I was not at all sure that the noble Lord, Lord Drumalbyn, fully appreciated the situation in which officers of local authorities might be placed. As I read the clauses, the Housing Commissioner can call upon officers to supply documents and information, and if they do not do so they are liable to pay a penalty of up to £400. Supplying information can mean the preparation of reports and can involve a great deal of work. I was not at all sure that the noble Lord, Lord Drumalbyn, had appreciated that there might possibly be a penalty in that regard. Certainly I should like an assurance that if there be refusal by local government officers to prepare long, detailed reports they will not be liable to the penalty mentioned in Clause 97.

We object to this Bill because it means profit-making in the public sector and an end of the concept on which local authority housing has been based. Local authorities do not deserve the treatment that is being meted out to them. We object to the Bill because it means a reduction in the freedom of local authorities and an unnecessary threat to the cooperation between local and national Government. The measure is inflationary in regard to rent increases based on profit-making. It is calculated to drive more people into the housing market where scarcity prices are alarming, as instanced by the case I mentioned earlier.

It may well be that the Government are determined to carry the Bill and to implement it as urgently as they can. It may well be that they mean to be rough and tough. But if so, they must not be surprised at the reaction which will follow. They ought to take seriously what has been said from this side. As surely as they call on local authorities to impose increases of 100p in rents in October, so surely are they making it impossible for responsible trade union leaders to persuade their membership to withhold claims for further wage increases. That is the answer to the noble Viscount, Lord Massereene and Ferrard. It is no use pleading with the trade union movement to be responsible in their wage claims when the Government are seen to be acting so irresponsibly in provoking trade union members to ask for wage increases to meet growing demands on them.

7.21 p.m.

LORD DIAMOND moved Amendment No. 7. Page 126, line 2, leave out paragraph 21.

The noble Lord said: My Lords, I beg to move Amendment No. 7. This is an issue which has been discussed before and therefore I will deal with it only shortly. It was last discussed on Report stage, when the noble Lord, Lord Sandford, was good enough to say that he would give the matter further thought.

7.13 p.m.

On Question, Whether the said Amendment (No. 6) shall be agreed to?

Their Lordships divided: Contents, 35; Not-Contents, 83.

CONTENTS
Beaumont of Whitley, L.	George-Brown, L.	Popplewell, L.
Bernstein, L.	Greenwood of Rossendale, L.	Rusholme, L.
Beswick, L.	Hale, L.	Shackleton, L.
Birk, Bs.	Heycock, L.	Slater, L.
Blyton, L.	Hoy, L.	Snow, L.
Bowden, L.	Hughes, L.	Strabolgi, L. [Teller.]
Champion, L.	Janner, L.	Taylor of Mansfield, L.
Davies of Leek, L.	Kennet, L.	Walston, L.
Diamond, L.	Leatherland, L.	Watkins, L.
Donaldson of Kingsbridge, L.	Llewelyn-Davies of Hastoe, Bs.	White, Bs.
Gaitskell, Bs.	Milner of Leeds, L.	Wynne-Jones, L.
Garnsworthy, L.	Phillips, Bs. [Teller.]

NOT-CONTENTS
Aberdare, L.	Daventry, V.	Mowbray and Stourton, L [Teller.]
Abinger, L.	Denham, L. [Teller.]
Ailwyn, L.	Drumalbyn, L.	Napier and Ettrick, L.
Albemarle, E.	Dundee, E.	Northchurch, Bs.
Amherst of Hackney, L.	Ebbisham, L.	Nugent of Guildford, L.
Atholl, D.	Elles, Bs.	Oakshott, L.
Auckland, L.	Elliot of Harwood, Bs.	Rankeillour, L.
Balerno, L.	Emmet of Amberley, Bs.	Reigate, L.
Balfour, E.	Essex, E.	Rhyl, L.
Beauchamp, E.	Ferrers, E.	Rochdale, V.
Belstead, L.	Ferrier, L.	Rockley, L.
Berkeley, Bs.	Fortescue, E.	Ruthven of Freeland, Ly.
Bessborough, E.	Gisborough, L.	Saint Oswald, L.
Bledisloe, V.	Glendevon, L.	Sandford, L.
Brabazon of Tara, L.	Goschen, V.	Sandys, L.
Brecon, L.	Gowrie, E.	Savile, L.
Brooke of Cumnor, L.	Hailes, L.	Selsdon, L.
Brooke of Ystradfellte, Bs.	Hailsham of Saint Marylebone, L. (L. Chancellor.)	Sempill, Ly.
Brougham and Vaux, L.		Somers, L.
Carrington, L.	Hawke, L.	Strathclyde, L.
Chelmer, L.	Howard of Glossop, L.	Terrington, L.
Colville of Culross, V.	Hylton-Foster, Bs.	Teviot, L.
Colwyn, L.	Kinloss, Ly.	Tweedsmuir, L.
Cork and Orrery, E.	Lauderdale, E.	Tweedsmuir of Belhelvie, Bs.
Craigavon, V.	Masham of Ilton, Bs.	Vivian, L.
Crathorne, L.	Massereene and Ferrard, V.	Ward of Witley, V.
Crawshaw, L.	Milne, L.	Wolverton, L.
Cromartie, E.	Milverton, L.	Young, Bs.
Cullen of Ashbourne, L.

Resolved in the negative, and Amendment disagreed to accordingly.

This Amendment seeks to exclude paragraph 1 of Schedule 1 which is headed "District audit" and begins with the words: " Section 219 of the Local Government Act 1933 … ". This gives the key. Since 1933—in fact, since a Provisional Order made in 1932, that is to say, forty years ago—professional accountants have been enabled to audit Housing Revenue Accounts if the municipality so opted, as opposed to having district auditors. This happened forty years ago, and for forty years a large number of municipalities have so opted. The figures are that out of some 330 county and non-county boroughs over 205 have opted in favour of professional audit; out of 81 county boroughs 77 have so opted. We have huge cities such as Birmingham, Manchester, Liverpool and Leeds in this category, and the total population covered is some 15 million. That is the present situation.

The situation as from the end of March, 1974, is an even more satisfactory situation inasmuch as the possibility of local authorities employing professional auditors is to be increased under the Local Government Bill. So what we are dealing with is merely the interregnum between now and that point of time. For a little over one year the Government propose in this Bill to remove from the local authorities concerned the option to continue to employ professional auditors. The wording of this paragraph, as your Lordships will see, is: … and the housing accounts of such a council shall accordingly in every case be subject to audit by a district auditor … At present, if the local authorities concerned sc decide, the accounts can be audited not by a district auditor but by a professional auditor. What I am seeking to remove from the Bill is a most extraordinary proposal by the Government that they should withdraw from these local authorities the option to continue to employ, for a period of a year and a bit, the professional accountants whom they have been permitted to employ for forty years. The proposal is something which I do not understand; it is something which the profession resents bitterly; it is an imputation upon the capacity of the profession to serve local authorities; it is a denial of the liberty of local authorities to make the choice as to whom they want to advise them on these matters—a right they have had for forty years and a right which they will have in even greater measure in a little over a year's time.

It is totally unintelligible to me why the Government should seek to proceed in this way. I hope, therefore, that they will accede to the request which I have made many times, and which is made on behalf of all the accountancy bodies concerned, that this withdrawal of the right of the option of the councils in question should be removed—that is to say, the paragraph should be removed—and local authorities should not be put, as they will be unless this Amendment is accepted, in the impossible position of being required to sack their professional auditors for a period of just over a year and then to reinstate them later on in relation to auditing of Housing Revenue Accounts. I beg to move.

7.28 p.m.

LORD STRATHCLYDE

My Lords, it is becoming ever more customary in your Lordships' House for those taking part in a debate to declare any possible interest, financial or otherwise, no matter how slight, which might affect the course of the discussion. I propose to follow that precedent. I am a chartered accountant. I have been a member of the Institute of Chartered Accountants in Scotland for close on fifty years. I retired from my firm some two years ago and have ceased since then to have any financial interest in the profession. May I put this matter as I see it? In doing so, I shall have to go over some of the ground which has already been covered by the noble Lord, Lord Diamond.

For many years the accountancy profession has been struggling to gain for its members the right to be considered as auditors of the accounts of local authorities. Against the persistent opposition of the Department, they have been able to gain only a very partial entry—an entry which they obtained, as the noble Lord has said, some forty years ago. The situation now is that some 338 authorities can opt for either district or professional audit, and of that number 205 have opted for professional audit. Recently agreement has been reached, I understand, between the Government and the accountancy profession in England and Wales that, with the passing of the local government reform legislation, from April, 1974, local authorities will be able to opt over the entire field in relation to the audit of all their accounts for either district or professional audit, but that their choice will be subject to the approval of the Secretary of State, who in fact will make the appointments. So the accountants, it would seem, have made their point.

May I come to this Bill? Here it is laid down that when it becomes an Act the Housing Revenue Accounts will become subject to district audit until such time as the Local Government Reform Bill becomes law, a period which would appear to be somewhere between one and two years. The arguments put forward by my noble friends are that the Housing Revenue Account will be of vital importance in relation to the various subsidies available under the Bill, and that in consequence a rigorous code of practice has to be laid down. No one could possibly take exception to that, and no doubt, as at present in Scotland, it will be the duty of the auditor to see and certify that the code of practice—which I take it means the various rules laid down as to the entries to be included in the account—and the manner in which the account is to be presented are meticulously adhered to.

To this point I am in complete agreement with the arguments put forward by the Ministers. But where I part company is their assumption that those professional accountants who at present audit the Housing Revenue Accounts of some 205 authorities, including such authorities as Birmingham, Manchester, Liverpool, Leeds and others, are either incapable or cannot be trusted to see that the code of practice has been adhered to. I know, and I have listened to them saying so, that both noble Lords deny any intention of casting a slur on anyone, but, with deference to both my noble friends, that is exactly what the provision in the Bill does. It relieves professional auditors of their office and puts in their place the District Auditor. One questions why. Surely the only possible answer is that they can trust the District Auditor to see that the provisions of the new code are carried out, and that, per contra, they are unable to trust the professional auditor. Does that not cast a slur on the existing professional auditors, and through them on the entire profession?

Let me go a little further. If the professional auditors are, for one reason or another, unsuitable to undertake this work under the new conditions, how will they become capable and suitable in the course of a year or so? To my mind, this provision is stupid. I can only think that it is intended as a sop to Departmental pride, no doubt upset by the agreement that in future authorities will have the option of professional auditors. It is not only stupid; it is, if I may use the Scottish word, completely " daft ". I simply cannot help feeling that the gibe made by the noble Lord, Lord Diamond, of a Conservative Government withdrawing the right of private enterprise accountants to perform their audit functions is completely and absolutely justified.

I am sorry to say that I find it more than that; I look on it as a breach of faith. As Conservatives, we have always held ourselves out as being the defenders of private enterprise. It is one of the principal planks in our appeal to the people, and through it we obtain much support. But here we are, far from defending it, taking sides against it, and in doing that we are forfeiting the sympathy and the support of a great profession, and that at a time when this Government have already plenty of difficulties to overcome. I think that my two noble friends probably feel that the attitude of the dockers in blacking the lorries in the container dispute is highly reprehensible. But I wonder, are they not following a similar course? Are they not blacking the professional accountants? I think they are.

In this House and in another place I have consistently supported Conservative Governments over a period of 32 years. I have looked at this matter from every point of view. I have endeavoured to convince myself that I should support the Government to-day. In honour to myself, I simply cannot do it. This provision is so unjust, so stupid, so absolutely ridiculous, that I am quite unable to accept the argument put forward in its favour. It is an entirely unsupported and unworthy slight on a great profession. It breaks a principle for which I believe the Conservative Party has always stood. No doubt I shall be told that this is only a very little thing. Perhaps it is. But, little thing or not, in my opinion it has no place in Conservative legislation or in Conservative philosophy. I am bitter, my Lords; I am bitter at being forced to break the allegiance of a lifetime and to vote, as I must, against the Government on this occasion.

LORD MILNE

My Lords, as a professional accountant I rise to support my noble friends. I thought, after these many years of struggling, that Whitehall had accepted the case for the option as between district and professional audit and that this Government had become wedded to the idea. It did not occur to me until the noble Lord, Lord Strathclyde, spoke, that competence was involved, but if such is the case it is an utter nonsense. If we can be trusted with the professional audit of multimillion pound property groups surely we are competent to audit the Housing Revenue Account of local authorities.

In the Local Government Bill now passing through another place the Government are actually extending the principle of this option, and this comes on in 1974. Why then, in this Bill, restrict the Housing Revenue Account on the right to have this option specifically stated? As the noble Lord, Lord Diamond, has said, many authorities have already opted for a professional audit. For a period of one year they have to go to the inconvenience of changing their auditor, and possibly changing back in a year's time. The Government may have been advised that there are technical or administrative reasons why a professional audit cannot be accepted for this Bill. Why then cannot the principle of joint audit be accepted, since competence is not in question? No wonder the professional bodies are amazed and dismayed. This is a slap in their faces. I hope the noble Lord will press this Amendment.

LORD FERRIER

My Lords, I, too, hope that the Government will think again about this Amendment, and if the noble Lord, Lord Diamond, wishes to press it, I shall support him. More than fifty years ago when I left the Army I started my commercial career as an apprentice in a chartered accountant's office in Edinburgh. One thing I learned, apart from the rudiments of accountancy, was the tremendously high standard of integrity and the importance which I have seen throughout a long commercial career of the absolute independence of auditors. It is therefore on principle that I feel this Amendment should be accepted, or if it is pressed I will support it.

7.40 p.m.

LORD SANDFORD

My Lords, as the noble Lord, Lord Diamond, has said, this is a topic which has been with us throughout the Bill. I suspected right from the beginning, and I am now quite certain, that a very great deal of the heat that has been generated and the disagreement that appears between us can be traced back to a series of quite serious misunderstandings, both between the two Front Benches and between the Government and the profession. But now that I am certain of that I think we can go a long way to resolve it. One of the misunderstandings, which I think has been resolved, was that the noble Lord, Lord Diamond, up to the time of the Report stage was under the impression that local authorities as a whole, and local housing authorities in particular, had an option, all of them, to select and appoint private auditors. This is not the case. That applied only in respect of county boroughs and boroughs, which comprise one-quarter of all local authorities.

The second and more important misunderstanding which clouded this issue from the Committee stage onwards was that the Institute of Chartered Accountants, on reading the OFFICIAL REPORT of our debate at that stage, were under the impression—this comes through clearly in correspondence that I have been having with the President of the Institute and on which he has authorised me to draw for the purpose of this debate—that the Government in making these provisions for the Housing Revenue Account were going back on an agreement which had been arrived at and an arrangement which had been made with the accountancy profession. This would have ended the long battle in which that profession has been engaged for the last 40 years and which would have secured for it an opportunity of undertaking the audit of all the accounts, 35 or so, of all authorities, about 1,400 of them, throughout England and Wales. That is an agreement which the members of the profession thought they had secured and thought we were breaking.

If that was the case, and I am sure that it was, it is not surprising that there was this bitterness and resentment, and inasmuch as that misunderstanding continued to persist and may still persist, I am not the least bit surprised that the whole profession is up in arms. Fortunately in the course of correspondence, in which a number of letters crossed and perhaps added to the misunderstanding, we have now resolved this matter. It is not necessary for me to give reassurances and more because only yesterday the other place moved in the Local Government Bill the precise clause which secures for the accountancy profession the very thing it has been battling to achieve for the last 40 years. Thus, when local government reform comes into force on April 1, 1974, private auditors will have access to all the accounts, 30 or so, of all the local authorities. This is the great thing the profession has been battling for and I am glad to be a member of a Government who have given it to them and to be speaking the very day after the battle was won.

However, it is particularly ironic that the very day afterwards there should be complaints—if this misunderstanding occurred, and am sure it did, it does not surprise me—that we have gone back on agreements. Right from the beginning the Parliamentary Secretary in the Department of the Environment, who has been undertaking these negotiations, made it clear that the auditing of the Housing Revenue Account would be treated in the way in which we are now treating it.

LORD DIAMOND

That is not true.

NOBLE LORDS

Order!

LORD DIAMOND

My Lords, I should not have said that from a seated position. Nevertheless, according to my information what the Minister said is not true.

LORD SANDFORD

Clearly the misunderstanding still persists.

LORD DIAMOND

Certainly.

LORD SANDFORD

My Lords, as I say, the fact is that we now have this outcome of the battle which the accountancy profession has been waging with not one but with all Governments for the last 40 years. What the profession has been seeking it has secured. The important points I wish to stress are the terms of the arrangements, including a number of conditions and safeguards that will apply when local government reform has been enacted, which do not apply at the moment and which have not applied up to now. These are the code of practice which will govern the way in which the profession undertakes local authority auditing. This has not been in existence and does not come into force or have any statutory force until April 1, 1974. Moreover, all the appointments that local authorities intend to make after that date will be subject to the approval of the Secretary of State, with the statutory authority given to him by the Local Government Bill when it is an Act.

Those conditions and safeguards, which were themselves agreed between the Department and the profession, are not yet in force and have no statutory force. It is in these circumstances that we do not feel it right that the auditing of this new account should be done in the way the noble Lord, Lord Diamond, and others request. This is a particularly complex account; the precise way in which it is set out controls and governs subsidies. I am not for a moment saying that accountants will not be capable of understanding this subject and operating such accounts correctly when the code of practice is available to them and is in force. Nevertheless, this is not the case at present and these are the conditions and safeguards which the profession itself agreed would be necessary before he arrangements for which it has been working were fully operative. My noble friend Lord Strathclyde knows that in Scotland the appointment of auditors is by the Secretary of State, so that there we have a slightly different situation.

I am entirely ready to admit that at this point, in considering what to do in the interim period, there may be a perfectly legitimate disagreement between the profession and the Government. I hope, however, that in speaking so far I have removed the misunderstanding which has caused all this heat, resentment and bitterness and which may still be causing it, and have indicated the terms under which this new arrangement, which we as a Government welcome as much as the profession, comes into force, but which is not yet applicable or available to us. It is in these circumstances that we do not feel it right that the auditing of the Housing Revenue Account should be open to private auditors in the way in which it and all the other accounts of all authorities will be open after April 1, 1974.

LORD STRATHCLYDE

My Lords, may I ask my noble friend to explain how it comes about that district auditors are so up to date in this matter when it seems that nobody else is capable of understanding what the Government are doing? May I further suggest that my noble friend is himself misunderstanding the situation? I regret that the noble Lord, Lord Diamond, in his most recent intervention used a certain phrase, though he was right to say that my noble friend does not understand the position. I gather that the profession is not one little bit satisfied with what has been done and deeply resents the position, and that goes for the President of the Institute of Chartered Accountants too.

LORD SANDFORD

My Lords, it might be helpful if I were to avail myself of the permission of the President of the Institute to quote from the correspondence which we have been having, and particularly from the letter which he sent me to-day. I understand that copies of this letter have been sent to noble Lords. This might help us to record what he is satisfied about and what he is dissatisfied about. Indeed, it might be helpful, for the benefit of noble Lords who have not seen it, if I quoted the whole letter. It is from Mr. Douglas Morpeth, President of the Institute of Chartered Accountants in England and Wales. It begins: You will know that the Secretary of State wrote to me on July 14 "— that was the last exchange of a series of three or four exchanges— reaffirming the Government's intention that all local authorities will be free to adopt either district or professional audit of all their accounts (including the housing revenue account) from April 1974 "— that was dealing with the resentment which he had expressed at an earlier stage, on June 23, when he thought that we were going back on our original agreement— subject to certain safeguards "— those which I have been spelling out— and I understand that the appropriate provisions of the Local Government Bill to implement this were passed in the House of Commons earlier this week. In fact they were passed yesterday. The letter continues: from the standpoint of the accountancy bodies I welcome this and confirm that those arrangements are satisfactory. That removes the greatest measure of the misunderstanding that there was between us.

He goes on: However I remain disturbed by the implications for the accountancy profession of the proposal to displace professional firms from the audits of the housing revenue accounts of many county and non-county boroughs in the short period remaining before April 1974. I appreciate that there are procedural problems in the introduction of the new measure which may expose defects, which we have pointed out to your Department in the past, in the audit provisions of the Local Government Act 1933 "— that is the one quoted by the noble Lord, Lord Diamond— as they relate to professional auditors. If this is a problem, I believe it would be acceptable to the profession if the Government would accept the retention of professional auditors as joint auditors of housing revenue accounts with the district auditor during this interim period. I am sending a copy of this letter to Lord Diamond and other accountant Peers. And it is that final suggestion in his fourth paragraph that I should now like to pursue.

The plain suggestion that there could be joint audit by private and district auditors in the sense that they could take joint responsibility for the account would conflict with the present statutory requirements relating to the two forms of audit in the Local Government Act of 1933, which will not be superseded until April 1, 1974. The Statutes place more extensive duties on district auditors than on private auditors. The form of certificate to be provided by the district auditor is prescribed specifically at the time. The district auditor has more specific duties in relation to his report on the accounts to the authority. But the local authorities at present employing private auditors for housing accounts would not be precluded from continuing to employ them to carry out those audit functions which normally fall on an internal audit section, and we can undertake to draw the attention of the Association of Municipal Corporations to this possibility. Indeed, this is not without precedent in local authorities who adopted district audit under the 1933 Act provisions. We should also be prepared to consider, in consultation with the profession, the possibility of arranging for the existing private auditors to assist at the audit of the Housing Revenue Accounts if they felt that this would give useful experience to some of their staff.

My Lords, I hope that with this explanation of how I believe the misunderstanding has caused trouble at the beginning, with the assurance that the suggestion made by the President of the Institute can be pursued for the period between now and April 1, 1974, and with the positive confirmation we now have before us by the action of the other place last night, that for the first time in history all the authorities will be free to choose private auditors for all their accounts from April 1, 1974, the noble Lord will feel that we have resolved this problem as far as is possible to resolve it at present and will not feel it necessary to press his Amendment.

LORD MILNE

My Lords, may I ask the noble Lord a question? Does he seriously suggest that the district auditor has regulations and a format, a code of regulations that he makes which are not available to other people though they must be laid down publicly?

LORD SANDFORD

My Lords, that is unfortunately the case at the moment. May I make it clear that it was agreed that part of the arrangements under which, thank goodness! it will from April 1, 1974, be possible for private auditors to be appointed to audit all the accounts of all the authorities includes the provision of a code of practice that will be given statutory force.

7.55 p.m.

LORD DIAMOND

My Lords, the noble Lord has sought to meet the difficulties, but totally inadequately. He has first of all tried to ride off the issue by introducing an enormous amount of matter which is wholly irrelevant to what we are considering. It is perfectly true that arrangements have been made—the noble Lord keeps on using the word " agreement " but it is the wrong word—which were proposed by the Government and which are acceptable to the accountancy bodies. There is no question of an agreement, bargain or anything of that kind. Those arrangements will enable some of the suggestions made by the provision over the years for improving the audits of local authorities to be carried out, but all this is totally irrelevant to what is happening on anything other than Housing Revenue Accounts.

There is no misunderstanding. The noble Lord is only justifying his own unwillingness to listen to an argument and to have regard to the facts and the feel ings of one of the most reputable professions in this country. He is only hiding behind this theory of a misunderstanding. There is no misunderstanding on the part of noble Lords, on my part or on the part of the President of the Institute. The only person who is unable to understand the effect of this is the noble Lord, Lord Sandford, to whom we have been trying—and this is the third occasion—to explain that chartered accountants, two of whom as I reminded your Lordships on an earlier occasion, have been introduced into the Front Bench of the Government opposite because of their great wisdom, skill and ability to share in the Conservative Government, bitterly resent the suggestion that they are incapable of auditing one of the simplest pieces of audit work, a Housing Revenue Account. They have been doing this for forty years and they see no reason why they should be removed from office. It is unpalatable—that is a very mild word to use, but I do not want to offend anybody —in the highest degree. They refuse to believe that they should be removed from their audit office just because it fits in with some kind of convenience—which I am totally incapable of understanding—of the Government to have this hiatus for a year and a bit. Presumably they will be restored to office in a little over a year's time under the provisions of another Bill.

There was a misunderstanding which was due to the words which the noble Lord, Lord Sandford, used in this place. We are all liable to use words at the Box which, if we thought about them a little more carefully, we would not have used. That is what caused a misunderstanding on an irrelevant issue, but the noble Lord has made clear to the President of the Institute that he did not mean what he said. But that has nothing to do with the simple issue here: Housing Revenue Accounts have been audited by professional auditors for forty years. The local authorities concerned have had the option to engage them. Nobody forces a professional accountant on to a client; the client employs him because he thinks it is in the best interests of those for whom he acts. The largest local authorities have done so because they believe it is in their interests, and so far as I am concerned the idea that if I were—and I have explained previously that I am no longer a practising accountant and have no financial interests of any kind whatsoever, or ever will have, in the results of this Amendment—still a practising accountant, after 30-odd years as a practising accountant in the City of London, to be asked to attend upon district auditors so that I could learn from them the art of auditing a Housing Revenue Account, I would say to the noble Lord —I am sure he meant it in the best of interests—that he is adding insult to injury. It is as simple as that. I am not prepared to be put in that position and I hope that no member of my profession is prepared to be put in a position where we are going to be taught by somebody how to add up some figures in this way.

Therefore I totally reject the proposal of the noble Lord, Lord Sandford. What ask the noble Lord and the Government to do is to withdraw from the Bill the provision which requires local authorities who for 40 years have opted to use professional accountants, to sack them.

LORD SANDFORD

My Lords, I interrupt only to make it clear that it was the President of the Institute of Chattered Accountants who made the sug-

gestion for joint audit and not myself. I was just following it up.

LORD DIAMOND

My Lords, I do not know what the noble Lord means. If he is saying "joint audit", then he must withdraw the provision in the Bill and say "joint audit". I do not understand the noble Lord, and clearly he does not understand what he is saying. What the noble Lord suggested in his earlier speech at the Box was the opposite to joint audit. What he said was that there could be audit by district auditors alone; that the provision about sacking professional auditors had to remain in the Bill. What chartered accountants could do, as a sop to them, was to stand at the end of the room and watch the district auditor doing his job so that they could learn thereby. I repeat, that is adding insult to injury, and I propose to divide the House.

8.0 p.m.

On Question, Whether the said Amendment (No. 7) shall be agreed to?

Their Lordships divided: Contents, 39: Not-Contents, 50.

CONTENTS
Amherst of Hackney, L.	Ferrier, L.	Popplewell, L.
Atholl, D.	Gaitskell, Bs.	Rusholme, L.
Auckland, L.	Garnsworthy, L.	Ruthven of Freeland, Ly.
Beaumont of Whitley, L.	George-Brown, L.	Shackleton, L.
Beswick, L.	Hale, L.	Slater, L.
Birk, Bs.	Heycock, L.	Somers, L.
Blyton, L.	Hoy, L.	Strabolgi, L. [Teller.]
Bowden, L.	Hughes, L.	Strathclyde, L.
Chalfont, L.	Leatherland, L.	Taylor of Mansfield, L.
Champion, L.	Llewelyn-Davies of Hastoe, Bs.	Walston, L.
Davies of Leek, L.	Milne, L.	Watkins, L.
Delacourt-Smith, L.	Milner of Leeds, L.	Wolverton, L.
Diamond, L.	Phillips, Bs. [Teller.]	Wynne-Jones, L.

NOT-CONTENTS
Aberdare, L.	Craigavon, V.	Inglewood, L.
Ailwyn, L.	Crawshaw, L.	Masham of Ilton, Bs.
Albemarle, E.	Cromartie, E.	Mowbray and Stourton, L. [Teller.]
Balerno, L.	Cullen of Ashbourne, L.
Balfour, E.	Daventry, V.	Northchurch, Bs.
Beauchamp, E.	Denham, L. [Teller.]	Nugent of Guildford, L.
Belstead, L.	Drumalbyn, L.	Oakshott, L.
Berkeley, Bs.	Dundee, E.	Rankeillour, L.
Bessborough, E.	Elles, Bs.	Sandford, L.
Brabazon of Tara, L.	Elliot of Harwood, Bs.	Sandys, L.
Brecon, L.	Emmet of Amberley, Bs.	Sempill, Ly.
Brooke of Cumnor, L.	Ferrers, E.	Teviot, L.
Brooke of Ystradfellte, Bs.	Gisborough, L.	Tweedsmuir, L.
Brougham and Vaux, L.	Goschen, V.	Tweedsmuir of Belhelvie, Bs.
Carrington, L.	Gowrie, E.	Vivian, L.
Colville of Culross, V.	Hailes, L.	Ward of Witley, V.
Cork and Orrery, E.	Hylton-Foster, Bs.	Young, Bs.
Resolved in the negative, and Amendment disagreed to accordingly.

LORD DRUMALBYN

My Lords, I beg to move That the Bill do now pass.

Moved, That the Bill do now pass.—(Lord Drunialbvu.)

On Question, Bill passed, and returned to the Commons.