Lords Sitting of 8 June 1972

Preamble
The House met at three of the clock:
The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Guildford.

LORD HEWLETT
Sir Thomas Clyde Hewlett, Knight, C.B.E., having been created Baron Hewlett, of Swettenham in the County of Chester, for life—Was, in his robes, introduced between the Lord Chelmer and the Lord Harvey of Prestbury.

JUSTICES OF THE PEACE
3.18 p.m.
LORD BESWICK: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what consultations were held prior to the recent extension of the categories of individuals held not to be eligible for appointment as justice of the peace.
THE LORD CHANCELLOR (LORD HAILSHAM OF SAINT MARYLEBONE): My Lords, I should like to begin by saying how grateful I am to the noble Lord for having agreed to postpone, for my convenience, his two Questions which he first put down for answer on May 18.
There have been no recent alterations to the rules governing the qualification of candidates for appointment as justices of the peace. In June, 1971—a year ago—in the course of a routine examination of the criteria of appointment, I made it clear that the existing restriction against full-time paid secretaries and agents of Parliamentary constituency parties acting as justices of the peace within their constituencies should extend to such officials, whether paid or unpaid, part or whole time. It is not correct to say that they are not eligible for appointment as justices of the peace. They are so eligible except within the Commission covering the constituency concerned. Except for day-to-
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day contacts with advisory committees and the Magistrates' Association no outside bodies were consulted. I am advised that this was in conformity with the established practice of my predecessors. The changes were published shortly after the time when they were announced. I have received only one complaint that outside organisations were not consulted. This came from a high official of the Labour Party organisation. I did not think such consultation necessary at the time, and I share the view, which I understand was held by my predecessors, that it is not constitutionally desirable that consultation between Party organisations and the Lord Chancellor's Office should take place regarding the criteria for judicial appointments, though of course the Lord Chancellor remains responsible to Parliament for his policies in this regard.
LORD BESWICK: My Lords, we are grateful to the noble and learned Lord for that Answer. May I ask him whether he is aware, when he says there has been no recent alteration, that that is only under his own definition of the word "alteration"? Is it not the fact that, whereas before it was undertood that unpaid part-time secretaries of Party organisations were allowed to hold a Commission, since the noble and learned Lord's intervention they are not so allowed? Is the noble and learned Lord further aware that his action has stimulater a good deal of disquiet and allegations of Party bias in an area where there should be no such disquiet? May I ask him whether he would be good enough to have a look at this matter again?
THE LORD CHANCELLOR: My Lords, as regards the first part of the noble Lord's question, I made it clear in my Answer (if he will refer to it), that when I say there was no recent alteration there has been no recent alteration at all since June, 1971, which is a year ago. There was the alteration in June, 1971, to which I drew attention in my original Answer. It is of course true that for a very long time, certainly before the Commission of 1948, there was a discrimination between agents and secretaries who were paid and agents and secretaries who were not paid; and I made it clear that in the latter part of the 20th century I thought this distinction between "gentlemen" and "players" ought to be abolished. I still

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think so, because the same suspicion of bias to which the Royal Commission pointed in their Report must, I think, at the present date apply to both classes. The only bias that there could be would be if a Lord Chancellor appointed political constituency secretaries and agents to the Bench to act within their constituencies. That is the only bias there could be, and that is precisely what I am trying to prevent, because I do not think that justice would be seen to be done if I made such appointments. Only the other day I appointed a Labour Party agent to sit as a J.P. immediately outside his constituency; but inside his constituency, no.
LORD BESWICK: My Lords, may I ask the noble and learned Lord whether he is aware that had he had some form of consultation he would have found out that, certainly in the Labour Party and I rather suspect in the Liberal Party too, there is a predominance of part-time unpaid agents and secretaries, and that in the Conservative Party, on the other hand, the majority are paid and are full-time? Therefore, by drawing this distinction as between chairmen of political Parties and part-time secretaries he is thereby penalising the Labour Party and those within the Labour movement who would otherwise wish to serve as Justices of the Peace.
THE LORD CHANCELLOR: My Lords, I thought I made it clear that I have drawn no distinction at all but I have abolished the distinction. It seems to me that if one is to avoid discrimination one has to choose between abolishing the restriction on all agents or imposing it on all agents alike. All I said was that I would not appoint any political agents for constituencies to sit within their constituencies, and I regard the distinction of whether they are paid or not as being irrelevant for the purposes of my appointment. So far from there being any discrimination in what I have done, I have abolished discrimination.
LORD BESWICK: My Lords, may I ask the noble and learned Lord two further questions? Can he justify the appointment of a chairman of a constituency Conservative organisation, which is permitted under his present arrangements, and not at the same time
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permit the appointment of the secretary, part-time, unpaid possibly, of a Labour Party organisation? May I further ask him whether he is aware that although there would appear to be some justification for barring the spouse of a Member of Parliament from sitting within the confines of the constituency of a Member, there can be no conceivable reason why the spouse of an unpaid part-time local secretary should not be allowed to sit?
THE LORD CHANCELLOR: My Lords, with regard to the first question, I do not think the noble Lord has put it in at all a fair way. The chairmen of Parties, whether they are Conservative Party chairmen or Labour Party chairmen, are not restricted, and that was in accordance with the findings of the Royal Commission. All I have done is to say that the distinction as regards secretaries and agents, between those who are paid and those who are unpaid, is not meaningful in 1972. If I were pressed as to the position of chairmen, to restrict them too, I would of course consider the situation, and it would apply equally to the chairmen of all Parties but the only way in which the position of chairmen has ever been introduced at all into this discussion is to ask me to extend to agents the freedom which is given to chairmen, and on the whole I am not prepared to do that.
I certainly would not draw a distinction between a Conservative chairman and a Labour agent. The chairman must be considered in one category whether he is a Conservative chairman or a Labour chairman, and agents must be considered in one category whether they are Conservative agents or Labour agents. This is the only way in which we can avoid Party bias.
With regard to spouses I have made no change at all, except to this extent, that my predecessors and I have always reluctantly but firmly said that where there is a restricted category—namely, for instance, policemen or solicitors or Party candidates or Members of Parliament or paid agents—in any restricted category the spouse of the restricted person is also restricted. That again has been solely in the interests of justice being seen to be done, and is not and has not been at all inspired by any kind of other motive. As regards my own policy, I made no

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change in the rule but if we restrict a new category, even in theory, the general operation of the rule regarding spouses applies to them equally with all other restricted categories. I must add that I was Lord Chancellor for 12 months before June 1971. I must have appointed at least a thousand J.P.s during that time, and so far as I know it was never suggested to me by any of the advisory committees that a candidate who was in fact a political agent should be appointed to the Bench, nor do I imagine that any advisory committee would ever have done so, whether I made the rule or not.
BARONESS LEE OF ASHERIDGE: My Lords, may I respectfully disagree with the sentiments expressed by the noble and learned Lord—
SEVERAL NOBLE LORDS: No!
BARONESS LEE OF ASHERIDGE: My Lords, may I respectfully ask the noble and learned Lord the Lord Chancellor whether he will reconsider some of his remarks regarding wives? For 13 years I was in a different political Party from my husband. There is no reason at all to assume that a Member of Parliament or an agent should find his wife simply reflecting his point of view. May I ask whether the noble and learned Lord does not think that to assume that the wife, whether the wife of a Member of Parliament, an agent or anyone else, is merely a reflection of her husband's point of view is at this period of time shockingly out of date?
THE LORD CHANCELLOR: My Lords, as regards wives, in fact I said nothing about wives. The rule applies also to husbands. It applies generally, and that is why I used the word "spouse", and I think the noble Lord in his Question also uses the word "spouse". It is not so much that I have expressed any sentiments; all I have said is that my predecessors and I for many years have restricted the spouses of restricted persons in this way. As those who have discussed this matter with me will know, I have a great deal of sympathy with what the noble Baroness has said. But if, for instance, the wife of a chief constable or the husband of a chief of the women's police, or the husband or wife of a solicitor practising before the Bench, were to sit on the Bench, or the
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wife or husband of a Member of Parliament were to sit on the local Bench, in nine cases out of ten I do not believe that the public would think that justice was being seen to be done. I am not in the least trying to suggest that they are mere reflections of their husbands or wives, as the case may be, but for very many years this has been the rule and I very much doubt whether the public would welcome a change in the more liberal direction in which the noble Baroness has suggested.
LORD GARDINER: My Lords, may I ask the noble and learned Lord whether when he made this change he bore in mind that the Royal Commission in paragraph 140 of their Report carefully considered this question, and unanimously recommended that whole-time paid political agents should be excluded but no other political officials? And secondly, am I not right in saying that, with the exception of himself, every Lord Chancellor since 1948 has followed that recommendation of the Royal Commission.
THE LORD CHANCELLOR: My Lords, I not only bore it in mind but I made it clear in both my original and first supplementary Answer that I did so bear it in mind. I specifically referred to the finding of the Royal Commission that paid agents should he restricted in this way and of course their wives. although they did not mention it, but I considered that in 1972 this distinction between "gentlemen" and "players" really is unmeaning in the present political context. Yes, I certainly considered it. It is also for that reason, as I said in, I think, my first supplementary answer, that I did not extend it to chairmen because that again is in accordance with the Report of the Commission. But the noble and learned Lord will not forget that in the very next sentence in paragraph 140 to which he referred the Royal Commission went on to say that there would be other cases from time to time where political bias would be an excluding factor, although they did not at that date suggest that there should be an inflexible general rule.
BARONESS SUMMERSKILL: My Lords, could the noble and learned Lord tell me why he does not feel that the wife of the chairman would be suspect?
THE LORD CHANCELLOR: My Lords, the chairman is not restricted; therefore, the wife of the chairman is not restricted—or as it may be the husband of the chairman is not restricted.
LORD LEATHERLAND: My Lords, may I ask the noble and learned Lord this question: is he aware of the fact that in many districts it is the chairman who is the active Party boss and that the unpaid part-time secretary of a Party is frequently little more than a clerical officer?
THE LORD CHANCELLOR: My Lords, I am not: prepared to say that the secretary of any political constituency Party is little more than a clerical officer. On the contrary, if he were I should have thought that was exactly one of the reasons why one did not want to put a person who was under orders in a judicial position. I do not think it is fair to secretaries to call them that. So far as chairmen are concerned, I am aware that the position differs from constituency to constituency; and that is precisely why I agree on that point, on balance, with the Royal Commission.
LORD NUGENT OF GUILDFORD: My Lords, as this question has already taken half an hour, may I suggest that it might be pursued by, I was going to say a mini-debate but perhaps a maxi-debate might be better, on some other occasion?
LORD BERNSTEIN: My Lords, with your Lordships' permission may I ask of the noble and learned Lord, who said that justice must be seen to be done, that there is no doubt that some people feel—
SEVERAL NOBLE LORDS: That is a speech.
LORD BERNSTEIN: I will make it a question. Will he also consider that political bias should not be seen or considered?
THE LORD CHANCELLOR: My Lords, that is precisely what I have been trying to convey.
LORD BESWICK: May I address one last question to the noble and learned Lord? Is it not clear both from the replies which he gave in letters which extend back now over some period of time, and from his replies to-day, that he
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was really unaware of the position that existed in the local Party organisations of the Labour Party and had he taken consultation he would have properly understood this? In the light of this misunderstanding might I ask him whether he would at least undertake to have discussions with the parties concerned to see whether some arrangements or corn-promise could be reached?
THE LORD CHANCELLOR: My Lords, I do not think I can accept the latter because of what I said at the end of my original Answer. I am advised that it is not desirable for consultation to take place with political Party organisations, although of course I am very open to receive any members of any Party, the noble Lord's Party or any other, who happen to be Members of Parliament of either House. I would certainly undertake to do that. May I say this by way of conclusion to the noble Lord although it perhaps does not arise out of the question: that all the steam would be taken out of this if and when, as I hope, after the next Session, I have had an opportunity to consider the alterations which will follow on the Local Government Bill. I may then be in a position to introduce legislation to abolish the Commission system altogether which will give me a very much greater degree of flexibility than I now possess. I would really suggest that therein lies the possibility of satisfying the noble Lord without interfering with the administration of justice.
LORD BESWICK: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will establish an appropriate independent inquiry into the procedures involved in the appointment of justices of the peace.
THE LORD CHANCELLOR: No, my Lords, the procedures now followed are those recommended by the Royal Commission on the Appointment of Justices of the Peace in 1910 and approved by the Royal Commission on Justices of the Peace in 1948. While I am always prepared to consider suggestions for improvement, I do not think there is a case for a fresh inquiry of the type suggested by the noble Lord.
LORD BESWICK:My Lords, I am grateful to the noble and learned Lord for that Answer, although is he aware that the latter part of the last answer he gave to the previous series of questions really answers my Question much more satisfactorily? I was going to ask him whether he does not appreciate that there will be a difference in the situation with the passing of the Local Government Bill, with the extension of the areas of the Commission, and is there not a case now for looking at this matter again? But if he undertakes to have consultations within the reasonably near future, may I ask him whether he is aware that that would go some way to satisfying the request I am making?
THE LORD CHANCELLOR: Of course, the noble Lord's Question related to the procedures involved in the appointment of justices of the peace. His previous series of questions related to the criteria of eligibility. My own belief is that the right way forward—I am perhaps talking slightly out of turn—is to abolish the Commission system altogether and that would enable a Lord Chancellor to have complete flexibility within the administrative powers of his office to appoint justices of the peace notwithstanding that their house happens to be on one side of the road rather than the other. If, as I hope, I get to that situation, I do not believe there will be any steam in this at all. In the meantime, any further inquiry would be superfluous. As I said to the noble Lord I am always willing to receive him or anybody else as a Member of Parliament about this or any other matter relating to my Office.
BARONESS GAITSKELL: My Lords, would not the noble and learned Lord Chancellor agree that with all these argument ever since the noble and learned Lord Lord Gardiner instituted a new and fairer way of appointing justices of the peace, happily continued by the present Lord Chancellor, things are really not as bad as we might think?
THE LORD CHANCELLOR: My Lords, I am very grateful indeed to the noble Baroness and I yield to no one in my admiration of my immediate predecessor. I do not think, to be completely accurate, that he did introduce a new system. The system has been developed as I indicated for more than seventy
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years. What I think my predecessor did was this: right up to the time when he became Lord Chancellor, successive Lord Chancellors—certainly going back as far as my father—had tried to balance the parties inside the local bench but the noble and learned Lord saw that that was not quite good enough and tried to balance the occupations and the social strata from which they came. I have very conscientiously tried to follow him in this, and I am grateful to the noble Baroness for perhaps indicating that that was so.

AMERICAN SPACE PROGRAMME AND BRITISH PARTICIPATION
3.40 p.m.
TIIE EARL OF KINNOULL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether a decision has yet been reached to support our European partners in participation in the American post-Apollo programme.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, we are examining the merits of participation jointly with our European Space Conference partners. A meeting of the Conference is being planned for July for the purpose of taking decisions on participation.
THE EARL OF KINNOULL: My Lords, while thanking my noble friend for that reply, would he agree that it is very important to British aerospace technology that we should play a part in this programme, and can he say how long we have in which to make up our minds so far as the Americans are concerned? Finally, if we do go in, can he say what length of programme we should be committed to?
LORD DRUMALBYN: My Lords, so far as the first part of the question is concerned, the National Aeronautics and Space Administration of the United States of America envisage placing contracts to United States prime contractors about the middle of this year. They would also like a decision in principle to participate in the tug or orbital systems development, so there is not very much

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time for us to take a decision; but of course this meeting, which is to take place in July, will take that decision.
LORD WYNNE-JONES: My Lords, can the noble Lord tell us whether Her Majesty's Government are paying close attention to the presentation on this issue which was made by M. Giscard d'Estaing to the North Atlantic Assembly, where the great importance of building up an industry, both in this country and in Europe, in order to collaborate with the Americans was emphasised?
LORD DRUMALBYN: My Lords, naturally Her Majesty's Government are aware of this presentation and are taking it into account.

DEPARTMENT OF EDUCATION AND SCIENCE
LORD BEAUMONT OF WHITLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what they intend to do about the facade of the headquarters of the Department of Education and Science in Curzon Street.
LORD MOWBRAY AND STOURTON: My Lords, the facade will be improved during a major internal refurbishing which is due to start soon.
LORD BEAUMONT OF WHITLEY: My Lords, I am most grateful for that Answer, which is very satisfactory. May I ask whether it means that the Department of the Environment is now taking a very real interest in some of the major eyesores of Government buildings in this country, including possibly their own?
LORD MOWBRAY AND STOURTON: My Lords, to the first question the answer is a completely affirmative, Yes. To the last part, we have it and we must enjoy it.
LORD LEATHERLAND: My Lords, can the noble Lord tell us whether this major internal refurbishing which is to take place in the premises of the Department of Education will also take place in regard to its policy?
LORD DERWENT: My Lords, may I ask my noble friend, if I am not out of order, whether when the facade is dealt with the appalling working conditions inside the building will also be improved?
LORD MOWBRAY AND STOURTON: Yes, my Lords; that is one of the intentions of this exercise.

DEVON COUNTY COUNCIL BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
HAMPSHIRE COUNTY COUNCIL BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

HOUSE OF LORDS OFFICES
3.44 p.m.
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, I beg to move that the Fourth Report from the Select Committee on House of Lords Offices be now considered.
Moved, That the Fourth Report from the Select Committee on House of Lords Offices be now considered.—(The Earl of Listowel.)
On Question, Motion agreed to.
The Committee's Report was as follows:
1. THE ROYAL GALLERY
The Committee have further considered the proposal that increased use should be made of the Royal Gallery. They recommend that for a trial period with the concurrence of the Lord Great Chamberlain suitable armchairs, sofas and tables should be set out in the Royal Gallery; the type of furniture and its arrangement to be considered by the Committee on Works of Art.
2. CONTROL OF MASS LOBBIES
The Committee have considered and approved a recommendation from the Administration Committee that in order to control lobbyists waiting to enter St. Stephen's Entrance, a barrier of removable railings should be installed across Old Palace Yard from St. Stephen's Entrance to the Victoria Tower. Outside these railings and marking the Western limits of the car park, a line of permanent stone bollards will be set up. The Scheme has

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the approval of the Westminster City Council and the Fine Art Commission.
3. THE MOSES ROOM
The Committee recommended that air conditioning should be installed in the Moses Room.
4. TIMING OF SPEECHES
The Committee recommend the permanent installation in the Chamber of the time indicators now displayed to enable the duration of speeches to be timed in accordance with the recommendation of the Procedure Committee.
5. LANGUAGE TRAINING FOR PEERS
The Committee were informed and took note with approval that a scheme will be forthcoming to provide language courses in Common Market languages for Members of both Houses.
6. SUB-COMMITTEE ON WORKS OF ART
The Chairman of the Sub-Committee reported to the Committee that a portrait of H.R.H. The Duke of Edinburgh by Major Davidson-Houston commissioned by the Lord Great Chamberlain will be hung in the Royal Gallery with that of Her Majesty the Queen. The Committee noted that this will involve some rearrangement of existing pictures.
7. PARLIAMENT OFFICE AND LIBRARY
The Committee were informed of the retirement on the 1st June of Miss J. P. Culverwell, M.B.E., Examiner of Private Acts, after 33 years in the Parliament Office, and asked the Clerk of the Parliaments to convey to her their appreciation of her long and valuable service to the House.
The Committee were informed of the rearrangement of duties in the office of the Examiner of Acts and authorised appropriate rates of pay.
The Committee also authorised the appointment of an additional Senior Office Assistant in the Judicial Office, an additional Office Assistant in the Library, and an adjustment of the Salaries paid to certain of the staff in the Accountant's Office.
8. OFFICIAL SHORTHAND WRITER
The Committee approved an increase in the Official Shorthand Writer's annual fee for Judgments with effect from 1st November, 1971.
9. DEPARTMENT OF THE GENTLEMAN USHER OF THE BLACK ROD
The Committee were informed of the forthcoming retirement of Lieutenant-Commander S. E. Glover, O.B.E., D.S.C, after 21 years as Staff Superintendent and asked the Chairman of Committees to convey to him their appreciation of his long and valuable service to the House.
(a) The Committee were informed of the appointment of Major Donald McNab Whyte, M.B.E., as Staff Superintendent from 1st June, 1972.
The Committee authorised the payment of the salary of the post additionally to Lt.-Cdr. S. E. Glover, O.B.E., D.S.C, until his retirement on 31st August, 1972
(b) The Committee also authorised the appointment of an additional Clerical Officer, an additional Attendant and three additional Housemaids on the staff of the Gentleman Usher of the Black Rod
10. HANSARD REPORTING STAFF

(a) The Committee authorised the employment of:

(i) up to five temporary Reporters;

(ii) teams of seven additional relief Transcribers from Palantype Organisation;

(iii) Recording Operator supplied by Tannoy Products Limited, at the discretion of the Clerk of the Parliaments for the reporting of Debates.

(b) The Committee also authorised the payment of an increase in the charges for transcribers supplied by Palantype Organisation with effect from 1st November, 1971.

(c) The Committee were informed of provisional arrangements for the temporary secondment of verbatim Reporters from the Northern Ireland Parliamentary Reporting Staff and authorised the payment of the cost of travelling, subsistence allowances and attendance fees.

11. MEAL ALLOWANCES
The Committee approved an increase in the rate of meal allowances payable to certain officials working late in the evening after a normal day's duty.
THE EARL OF LISTOWEL: My Lords, I beg to move that this Report be agreed to.
Moved, That the Report be agreed to.—(The Earl of Listowel.)
LORD SHACKLETON: My Lords, I think noble Lords will have noticed that in this Report there is a tribute from the Offices Committee to Commander Glover on his forthcoming retirement after 21 years as Staff Superintendent. Those of your Lordships who, like the noble Earl the Leader of the House and my noble friend Lord Beswick, and no doubt the noble Lord, Lord Denham, and other noble Lords, have been concerned with the housekeeping and the administration and security of this House will know that Commander Glover has given quite outstandingly devoted service. I doubt whether we could find another man, either in this House or indeed in this country, who so signally demonstrates his feeling of loyalty, a somewhat old-fashioned but rather fine loyalty, of service to the Crown and of duty to your Lordships. The fact that he has had, I do not doubt, great satisfaction in this work does not in any way detract from the quite exceptional quality of the work. He is always on the

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job. I feel that this might be an opportunity, because I am sure the noble Earl agrees with me, for some of us in this House to put on record how much we owe to Commander Glover, and to wish him a happy retirement.
THE LORD PRIVY SEAL (EARL JELLICOE): My Lords, may I say that I wholeheartedly agree with the sentiments expressed by the noble Lord the Leader of the Opposition. Commander Glover's example is an astonishing one of service, generally and to this country: 30 years in the Navy, coming (if I may say so with a certain amount of salt water in my veins) as he did from a naval family; and his father, incidentally, happened to be the greatest exponent of the hornpipe the Navy have ever seen. Thirty years' service in the Navy followed by no less than 22 years' service to your Lordships' House—52 years in all—is a very remarkable record, and the responsibilities which Commander Glover has discharged in his dual appointment as Staff Superintendent and Superintendent of Custodians have been extremely onerous, and he has made them no less onerous. I believe that a great deal of the extraordinary courtesy with which we meet as we go round this House, and also the efficiency with which its housekeeping is run, is in itself a tribute to Commander Glover's service. I should like to echo what the noble Lord has said in wishing Commander Glover a very well-earned retirement, and assuring him that he will always be a very welcome guest in this House, in which we know him so well and to which he has made so long a contribution.
LORD BYERS: My Lords, my colleagues and I would endorse in full measure what has been said by the noble Earl the Leader of the House, and practically everything said by the noble Lord the Leader of the Opposition. We are very fortunate in the servants we have in this House, but at no time could any one of them, particularly Commander Glover, be accused of an old-fashioned type of loyalty. His loyalty is 100 per cent., and we wish him well in his retirement.
LORD SHACKLETON: My Lords, I regard old-fashioned loyalty as the finest loyalty.
On Question, Motion agreed to.

PROCEDURE OF THE HOUSE
3.49 p.m.
THE EARL OF LISTOWEL: My Lords, I beg to move that the Sixth Report from the Select Committee on Procedure of the House be now considered.
Moved, That the Sixth Report from the Select Committee on Procedure of the House be now considered.—(The Earl of Listowel.)
On Question, Motion agreed to.
The Committee's Report was as follows:
1. SHORT WEDNESDAY DEBATES
The Committee have considered the experimental short Wednesday Debates held in pursuance of the Second Report of the Procedure Committee of this Session. They recommend that the experiment should be continued in the next Session on the same lines as in the present Session (see Appendix). From the beginning of next Session until the Recess at Whitsun 1973 one Wednesday a month should be set aside for the purpose of Short Wednesday debates, but the actual dates should he arranged not more than a month in advance.
2. USE OE CLOCKS FOR TIMING SPEECHES IN THE CHAMBER
The Committee have considered the way in which the clocks should be used. They recommend that they should be principally used for those debates when lists of Speakers are issued. They should also be used to measure the total time taken for Starred Questions and Ministerial Statements. They should not be used for proceedings in Committee or on Report. Interruptions to a speech should count as part of the speech for the purposes of timing. The clocks could also be used for Divisions. The Committee recommend that the clocks should be operated by the Clerk at the Table.
The Procedure Committee will review the experiment in due course.
3. PROCEDURE ON THE CONSIDERATION OF REPORTS FROM SELECT COMMITTEES
The Committee have considered the procedure whereby two separate Motions are moved, when a Report from a Select Committee is considered and agreed to by the House.
They consider that the moving of two Motions on such occasions may lead to procedural difficulties and is a waste of the time of the House. They, therefore, recommend that the House should dispense with the Motion: "That this Report be now Considered"; and that one Motion only should be moved, namely:—
"That this Report be now agreed to".

APPENDIX
SHORT WEDNESDAY DEBATES
The main features of the experiment in limited-time debates, as approved by the Procedure Committee for the purpose of continuing the experiment next Session, are:—

(1) Until the Recess at Whitsun one Wednesday a month is set aside for two debates each of 2½ hours duration.

(2) The right to propose subjects for these debates is reserved to Back and Cross Benchers.

(3) The resulting Motions are entered in Part II of No Day Named.

(4) The purpose of these debates is to provide a forum for discussion rather than questions which the House is required to decide, if necessary, on a Division. Motions should not, therefore, be couched in a form to provoke a challenge.

(5) The choice of the two subjects for debate on a selected Wednesday is by ballot. This is carried out by the Clerk of the Parliaments on a day which is announced in advance three or four weeks before the debates are due to take place.

(6) It is assumed (unless notice to the contrary is given to the Clerk of the Parliaments) that any Lord who has a Motion down in Part II of No Day Named on the day of the ballot will be in a position to move his Motion on the day selected.

(7) Once a Motion has been set down for a particular day, it may be amended in form but not in substance (i.e. a Lord who has been successful in the ballot may not substitute another subject for the one originally proposed).

(8) A Lord who has been successful in the ballot may not enter another Motion in Part II of No Day Named in the same Session.

(9) If the period of 2½ hours allowed for a debate is interrupted by other business, e.g. a Ministerial Statement, the time limit is extended by the time taken by the interruption.

(10) In such circumstances the new time limit is announced from the Government Front Bench at the end of the speech following the interruption.

(11) The speakers' list is prepared in the usual way after consultation through the usual channels and with the mover of the Motion.

(12) At about 20 minutes before the end of the debate, whoever may be speaking is expected to give way to the Minister so that the House may hear the Government reply.

(13) On the expiry of the time limit, if the debate is still continuing, the Clerk at the Table rises and the Lord on the Wool sack brings the debate to an end by inquiring whether the mover of the Motion wishes to withdraw his Motion; or by putting the Question.

Of these arrangements, No. (13) alone requires an Order of the House. The remainder of the experiment can be conducted within existing Standing Orders, with the acceptance of the House.
THE EARL OF LISTOWEL: My Lords, I beg to move that this Report be agreed to.
Moved, That the Report be agreed to.—(The Earl of Listowel.)
LORD SHACKLETON: My Lords, I do not think we ought to let this Report go by without noting that, if we pass it, this will be the last time that we shall have the Motion, "That the Report be now considered" before the Motion asking that the Report be agreed to. This is a great simplification in our procedures, and noble Lords will not, as I have so often done, jump up at the wrong point.
There is one other aspect of this Report that I would mention, and that is the Appendix, concerned with the short Wednesday debates. The Committee have proposed that the experiment of holding short Wednesday debates should he continued for another year, and I think your Lordships will agree with that proposal. But it is an experiment, and of course we shall watch it. There is, however. one passage in the Appendix, paragraph (4), which says:
"The purpose of these debates is to provide a forum for discussion rather than questions which the House is required to decide, if necessary, on a Division. Motions should not, therefore, be couched in a form to provoke a challenge."
I in no way disagree with that. It was intended that these Motions should be somewhere half way between one of our main Wednesday full Motions and the type of Adjournment Motion which they have in the Commons, but I should be very concerned if this passage gradually came to be interpreted as laying down that Motions had to be entirely neutral in form. Clearly, a Motion which condemns the Government and calls on them to resign is calculated to provoke a challenge and would be inappropriate, at any rate for a mini debate. It might be too much to hope for.
None the less, although it is stated in the Companion under "Motions for Papers"—and we always use the formula

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"Motions for Papers" in these minidebates—that such a Motion
"is treated as a neutral motion and there is neither advantage nor significance in pressing it. The opinion of the House is expressed in the speeches.…",
and I entirely agree with that, I think that the House would get into great difficulty if total neutrality were sought in its Motions. We should end up by merely having Motions to take note. I do not believe it was anybody's intention consciously to achieve that. But there having been some discussion on a recent Motion, I think it is important that the House should recognise that any Member is free, within the ordinary standards of language such as is used in our House, to put down an appropriate Motion. Clearly it is undesirable that it should be worded in such an extreme form that it would promote a challenge, but that does not mean that it could not, in appropriate language, be a critical Motion. It is rather important that we preserve our freedom and do not allow ourselves gradually to get into a bowdlerised attitude to such Motions.
LORD FERRIER: My Lords, I should like to ask the noble Earl the Chairman of Committees a question. Is there any provision in regard to a twelfth man? Under paragraph (6) a Peer might say that he was net able to move the Motion on the day he won the ballot. Moreover, in the month that might elapse between the ballot and the date a Peer might fall sick.
3.54 p.m.
EARL JELLICOE: My Lords, perhaps I could say a word on what the noble Lord the Leader of the Opposition has said. I think the test is whether Motions are couched in such a form that they are likely to invite a challenge or indeed a Division. This is an echo of what was said by the Chief Whip in the Statement on February 17 last:
"It seems to me most undesirable and contrary to all the traditions of the House that
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the House should be asked to divide in a limited-time debate in which not necessarily all those who wish to speak may have had the chance of doing so."
It is important to preserve this principle. That said, I think it is a question of judgment, and usually we can rely with great confidence on the judgment of our Members to steer something of a middle course between the entirely anodine and colourless Motion—a bore to read and possibly a bore to discuss—and a Motion couched in unduly dogmatic and controversial language. There is a middle way, and I hope that it is the middle way which your Lordships would choose to follow. That said, I believe that these mini-debates, warts and all, have been at least a certain success in the first instance. I think that this is an area of our affairs which we could keep under review, but I have been gratified by the way the experiment has gone on up to now.
THE EARL OF LISTOWEL: My Lords, I am grateful to the noble Lord, Lord Ferrier, and may I remind him of the Statement made on February 17 by the noble Earl, Lord St. Aldwyn, the Government Chief Whip, on the procedure for Wednesday about debates? In the course of his Statement the noble Earl said:
"… in order to provide for the unforeseen contingency such as illness or accidents, the Clerk of the Parliaments will draw, and keep in reserve, two other Motions in addition to the two successful ones."
In other words, the two Peers who come third and fourth in the ballot will be kept in reserve in case one or other of the noble Lords who have been successful falls ill. I should like to thank the noble Lord, Lord Shackleton, for the proposal to reduce the number from two to one of Motions required for asking the approval of the House for Reports from Select Committees. It will save me time as well as the time of the House. I beg to move.
On Question, Motion agreed to.

HOUSING FINANCE BILL
3.56 p.m.
LORD DRUMALBYN: My Lords, I beg to move that the House do again resolve itself into Committee on this Bill.
Moved, That the House do again resolve itself into Committee.—(Lord Drumalbyn.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 2 [The residual subsidy]:
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 12.
Page 3, line 21, leave out paragraph (b).
The noble Lord said: Before speaking to this Amendment, I think I should draw the attention of the noble Lord, Lord Drumalbyn, to the time—it is now four minutes to four. This is a controversial Bill. There is a good deal of work to be done and a good deal of examination, and I suspect that a good deal of time will need to be provided. I can well understand that the Government will be anxious at the end of this evening to see progress, but I hope that the noble Lord will recognise that on Tuesday we lost, I think, over half an hour because of the way in which business had been arranged. To-day we have lost, I suppose, another 35 minutes which we had intended to use for consideration of this Bill. Therefore, having drawn the attention of the business managers to the loss of time of these two days, I hope we shall have no criticism of the progress which the Committee makes on the Bill.
So far as Amendment No. 12 is concerned, I regard this as a probing Amendment. I think it is true that local housing authorities in big conurbations like London, particularly where they have considerable pressure and need for housing development, have attached very con-considerable importance to the use in operation of Section 11 of the Housing Subsidy Act 1927. As I understand it, the local authorities can receive, I think, some 90 per cent. subsidy in order to acquire expensive land in advance in order that building can be undertaken
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perhaps later on. In the Bill, subsection (4)(b) on page 3, the Government appear to be taking away from such local authorities the payments that could be made under the Housing Subsidy Act 1967. If this is correct, it is running counter to what I believe has been the policy of Her Majesty's Government; that is, to encourage local authorities to purchase land as it becomes available, even in advance of its immediate need or capability of development. I may be wrong here. In fact, I should be surprised, despite all the iniquities of this Government, if they adopted this policy. But, on the face of it, it appears that that is what the Government are doing. I have moved this probing Amendment merely in order to get an explanation from the Government of what they intend to do. I beg to move.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (LORD SANDFORD): I am grateful to the noble Lord for giving me an opportunity to explain the Government's intentions in this respect, because this is a very important matter. The noble Lord is not wrong in assuming that this subsidy, together with the 60 other existing subsidies set out in full in Schedule 7, is being removed and the eligibility to an advance payment under the subsidy goes with it. But that is not to say that the need for assistance in buying expensive sites for housing is not recognised. What is being substituted under the rising costs subsidy, which we are coming to, will be more beneficial. That is because it will not be subject to the limitation of 90 per cent., which the noble Lord mentioned, nor will it be subject to the limitation which exists on the present subsidy, of being payable only for the purchase of a site exceeding £20,000 in cost per acre. The rising costs subsidy—and we shall see in a moment exactly how it works—will be applicable to all the additional reckonable expenditure incurred by a housing authority, which needs to continue with a heavy and expensive housing programme. I hope that that explanation will reassure the noble Lord.
LORD SHEPHERD: I am not quite reassured. It seems to me that the importance of the existing subsidy is that a local authority can receive a subsidy in advance, in order to make purchases

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of land which it is not yet ready to develop. Since we have not yet reached the rising costs subsidy, I am not quite certain whether a local authority will still be able to obtain a subsidy in advance. I do not know whether the noble Lord can reassure me that a local authority will be placed in no worse position in terms of immediate grant.
LORD SANDFORD: I do not think it would be convenient to get on to a discussion of the rising costs subsidy before we really come to it. But I can certainly give the noble Lord the reassurance that the dispensations available to housing authorities for dealing with this problem will he more favourable to them under the rising costs subsidy than under the present subsidy, even allowing for the possibility of an advance payment.
LORD SHEPHERD: I think I can respond and can assist the Committee by not pressing this Amendment. But we shall need to have another look at it when we come to the clause which deals with the rising costs subsidy. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.4 p.m.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 13:
Page 3, line 25, leave out from ("question") to end of line 35.
The noble Lord said: This is more than a probing Amendment. It may be that our fears are not justified and perhaps the Government can put them at rest. It has been said on a number of occasions by the noble Lord, Lord Sandford, and the noble Lord, Lord Drumalbyn, that the Government's case for this Bill is so to rearrange subsidies that greater assistance may be given in those areas with greatest need. Local authorities attach very considerable importance to the existence in their localities of hostels. There are hostels for the elderly. and I was told by my noble friend Lady Bacon that the local authority in Leeds provides a hostel in order that old people will have somewhere to go when their families, who look after them, go away on holiday. Of course there are also other hostels for youth and for people who are temporarily homeless. Most of these hostels are expensive to purchase,
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and conversions, maintenance and repairs also cost a lot of money. Therefore, if local authorities lose the subsidy which is available to them under the sections of housing Acts which are detailed in subsection (5), that will have very serious consequences for them and could mean that they would have to cease development or even to close hostels. That would be a very serious matter.
The noble Lord, Lord Sandford, and the Department must be aware that there has been considerable correspondence from various local authorities and charitable organisations which are running hostels. Therefore, the noble Lord will be well aware of the very deep concern which exists among people who run hostels. We on this side certainly do not like to use the word "poverty" in relation to old people or those who are homeless, but it is often the case that these people are suffering from poverty and we feel it would be wrong to place upon a local authority the entire responsibility for maintaining a service of this sort, which is at present undertaken by the State out of general taxation. I hope that the Government can explain why they are proposing these changes in regard to hostels. I also hope they will recognise that these hostels are of continuing and increasing importance for local authorities in dealing with people who are in difficulty through no fault of their own. I beg to move.
LORD AVEBURY: I am most grateful to the noble Lord, Lord Shepherd, for raising this point, which was touched on during the Committee stage in another place, but which was never satisfactorily dealt with, because Mr. Channon, who was replying on behalf of the Government, said, when the matter was raised under Clause 2, that that was not the right place to raise it and that it should be raised later. But when it arose later the guillotine had fallen and therefore, although a new clause, which is now Clause 90, was introduced on hostel subsidies, it was never discussed. So the people who are providing hostel accommodation did not have an opportunity of expressing their views on the provisions of the new Clause, or of saying whether it met their objections to the omissions from Clause 2 which is now before us. Therefore, unless we raise the matter now and get a satisfactory answer from the

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Government, we shall be in the same position as the other place and shall not know whether we have to put down Amendments to Clause 90 later on, or whether we are satisfied with what has already been done.
The noble Lord, Lord Shepherd, was very modest in moving this Amendment, because he mentioned only some of the categories of people who are likely to be affected by the provision of hostels. It is not only the elderly who are concerned, although in the discussion in the other place the needs of the elderly were predominant. The Abbeyfield Society wrote to some Members and their views were laid before the Committee. The Hanover Society, which as I understand it also provides accommodation for old people, wrote to honourable Members who were on that Committee, and they, too, voiced the opinions of that society, which is one of the largest in the country providing accommodation for old people; and yet Mr. Paul Channon was able to tell the Committee that no opinions had been sent to the Department of the Environment, which really surprises me. I would ask the noble Lord who is to reply this afternoon what opinions he has had since that discussion in the Commons from the societies which are responsible for providing hostel accommodation for old people, and whether these opinions have been properly noted in the provisions of Clause 90. I hope I am not out of order in doing this, but we do need the views of the Government at this stage so that we can decide whether we want to let Clause 90 go through when we finally reach it, or whether it is necessary. in the light of the opinions of responsible organisations such as the Abbey-field Society and the Hanover Society, to put forward our own Amendments.
But these are not by any means the only organisations concerned. We are not talking only of the elderly: we are talking of people such as itinerant workers, discharged prisoners and students. I do not think homeless persons are covered by this clause, because they are dealt with under the National Assistance Act 1948; but the other category for which very little provision has been made and which might just be mentioned is that of single persons, who are very much neglected, as I think, by local authorities.
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Now the enactments mentioned in this subsection which is to be left out under the Amendment before us relate to payment for hostels which are excluded from the meaning of the phrase "subsidies for the year 1971–72". As I understand, what this means is that subsidies which have been payable in respect of these hostels are now going to cease, and they may or may not be replaced by another clause in the Bill. When I came to look these up, I found a curious thing, in that Section 40 of the Housing Act 1949 was in fact repealed by Chapter 42 of 1958 Statutes. Section 59(1) and Schedule 6; Section 22 of the Housing (Financial Provisions) Act 1958 was repealed by 1967 Statutes, Chapter 29, Section 14(1), and Schedule 14, Part I: and the same applies to Section 9(3) of the Housing Act 1961. Although the names of these provisions were repeated in, I think. Schedule 2 of the Housing Subsidies Act 1967. I want to ask the noble Lord how, in the Bill which is now before us, reference can be made to provisions in Statutes which have been repealed.
This is a minor point; it is not a point of substance. But it is a point of drafting which I should like the noble Lord to consider before he comes to reply, and I should like him to say how it is that when you look up the Statutes Revised (which, I may say, is not available in our House to bring into the Chamber; it is available in another place) you see these sections struck out. How is it that reference can be made to them in legislation which is before us now? But that, as I say, is a minor point. What is important is the substance of the argument which has been made to us by people who are concerned with the provision of hostels for the elderly, the prisoners, single persons and so on. I think I am right in saying, but I am not absolutely sure because of the confusion to which we arrive as a result of the repeal of the Statutes concerned, that we are talking only about hostels that are provided by local authorities and not those which are provided by private organisations. I think the noble Lord should clarify this when he comes to reply.
It is clear to me—and I would hope it will be to your Lordships—that whatever assistance is given by the Government to

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local authorities towards the provision of this kind of accommodation ought equally to be available to private organisations, that there should be no discrimination whatsoever. If the Abbeyfield Society are going to provide accommodation for old people, they should be on an equal footing with the local authorities who are doing precisely the same job. I am sure that the Government will agree with me that we ought to encourage both to compete in doing the best that they can for the people who need hostel accommodation; and that, as Mr. Channon said in Committee in another place, perhaps it is time we took an overall look at the assistance which the Government give for the provision of hostel accommodation and brought this on to a uniform basis. We have the opportunity now that we are looking at this Bill. If we can have a preliminary answer from the noble Lord who is to reply this afternoon, I hope that we on this side of the Committee can bring forward constructive suggestions which will enable us to do this job satisfactorily, and not to leave it to another occasion, when we might have to bring, forward separate legislation regarding hostels, which I think would be undesirable.
In this connection, may I tell the noble Lord who is to reply about some correspondence which my noble friend Lord Wade has had from the Huddersfield Young Men's Christian Association? I think this illustrates rather well the problem that: we face, because the Y.M.C.A. in Huddersfield have constructed a hostel for the use of single people. That was done under the 1958 Act. They received a payment of £5 per bedroom, which was intended to continue over the space of 60 years. But they were informed when this Bill was introduced that that payment would cease; and, of course, if one looks at Clause 90 one sees that the concession applies only to new hostels constructed after this Bill has been enacted. So as they understand it, they will be deprived of the £5 per bedroom subsidy which has been available to them in the past, and this sum will have to be added on to the amount that they charge to people living in that accommodation, who by definition are those in greatest need. I come back to the point made by the noble Lord, Lord Shepherd, that these provisions appear to us to be inconsistent
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with the declared objectives of the Government.
When the Huddersfield Y.M.C.A. requested the views of the Department of the Environment on this subject, they received a letter back from one of the officials whose name I think I had better not quote, as your Lordships will see when I come on to the substance of the letter. This official quoted the provisions of Section 15 of the 1958 Act. Of course, that applies only to hostels provided by local authorities, and not at all to those provided by the Y.M.C.A.; so the official was quite incorrect in drawing the attention of the Y.M.C.A. to an Act which did not affect them. The official went on to quote the fact that a new subsidy would be payable up to £30 a bedroom for a maximum of 10 years, but she did not say that under the provisions of Clause 90 this would not be available to hostels that were already constructed.
So that we can decide what we do when we come to Clause 90, I should like the noble Lord to tell me what help the Government are going to give to people like the Y.M.C.A., who have already constructed hostels which are available for the use of single persons, or for elderly persons in the case of the Abbeyfield Society or the Hanover Society, as I mentioned, or for discharged prisoners, or for people discharged from mental hospitals. I do not want to complete the list, because it is a fairly lengthy one. All I am saying is that local authorities and private organisations which are providing hostel accommodation are doing an extremely important job in our community, and while we have this opportunity we must not let Clause 2 pass without having a thorough explanation from the Government of what their intentions are in this regard. If they do not declare clearly that they will continue with the help given hitherto then we see their declarations—those declarations to help the weakest members of the community, the people in the most need —for what they are; that they are of no validity.
LORD DONALDSON OF KINGS-BRIDGE: Before the Minister replies, may I ask whether he can take up specifically the point which the noble Lord, Lord Avebury, raised on hostels for discharged prisoners? I have an interest in this matter. It has never been suggested

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to me before this minute that this Bill was going to be concerned in any way with them. At the moment there is a per capita grant from the Home Office which is rather more than £30. I do not want to give it away before I am sure that I am going to get something better. I should like to be certain, if this general situation is going to be disturbed, that it is going to be disturbed for an improvement. I should like to ask for a specific reply on this point.
LORD HYLTON: I am sorry that the noble Lord, Lord Grenfell, is not in the Chamber since he raised this question of hostels on a very broad front earlier this year. If we are to have a review it must take in not only the Department of the Environment but also the Home Office and the Department of Health and Social Security.
BARONESS BIRK: Following that point, I too am very concerned about the question of hostels because it goes even wider than the question of discharged prisoners. We who sit on magistrates' benches know that there is a lack of accommodation for people whom we do not want to send to prison and would like to go into a hostel. The accommodation varies according to the local authorities. At the present time, there is a scarcity of hostels for a whole variety of people who need them both temporarily and for longer residential use. One of the results of the changes in the whole structure of the social services has been an increase in the demand for hostel accomodation. It seems to me that as this Bill stands at the moment (and I have also read Clause 90) none of it will help the situation where a local authority is backward in the sense of provision of hostel accommodation. This Bill would be an incentive to local authorities to say, "No, we cannot afford to do this." The local authority which has been more progressive in outlook is going to find the cost prohibitive and is going to be left with an ever decreasing variety of alternatives with which it can deal with its tremendous list of case histories.
Those not closely concerned with some aspect of this work find it impossible to recognise the tremendous demand for what one could call "halfway accommodation" for persons such as unmarried mothers, old people, those who have been referred to hostels by the courts perhaps
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because of some mental disturbance—who for all sorts of reasons—need a period in an hostel. The whole social inclination and structure should be towards an increase in the number of hostels. I think those who are concerned with (and have signed petitions for) the radical alternatives to prison and who would like to see not a new Holloway Prison for women but more money spent in hostels, must feel anxiety over the way this matter has been dealt with.
As it comes from the Commons, this Bill seems to me to be another example of great confusion. If almost anything can be read into it—which means that anybody can do what he likes or do nothing at all—then the future for the hostel situation is going to be very gloomy.
4.25 p.m.
BARONESS YOUNG: May I begin by saying that we regard the whole question of hostels as a very important one. We are well aware of the very great and personal interest taken by many noble Lords in all parts of the Committee on this question. I will answer what I think is the first point put by the noble Lord, Lord Shepherd—what I may call the narrow accounting point—which arises in Clause 2. The reason why this particular part is included is that we are concerned in this clause with the residual subsidies, the subsidies paid to the housing revenue account. It is based on the subsidies at present paid to the credit of the Housing Revenue Account, less the withdrawal factor. The present subsidies paid towards the cost of hostels are not paid into the housing revenue account but into the general rate fund. Therefore subsidies paid in this way cannot be included in the calculations for the residual subsidies. That is the very narrow accounting point.
But the question is much larger than that. If noble Lords look at Clauses 73 to 75 they will see that the Secretary of State has power to phase out, over either a long period or a short period, the existing subsidies. The proposals are very flexible in this arrangement. Unless the total hostel grant is insignificant compared with the association's activities or resources it will be phased out at an annual rate of not more than £5 per bedroom. Where this rate may cause hardship to the association because it is

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concerned solely with the provision of hostels the rate of phasing out will be only £2·50 a bedroom. This represents an increase in weekly charge to residents of as little as 5p a week. It is certainly not our intention to jeopardise in any way existing hostel schemes by withdrawing the hostel grant too quickly.
I turn now to Clause 90 which is concerned with grants for new hostels. First, I should like to make it clear that they are available both to local authorities and to housing associations. Secondly, the Bill is not concerned with grants given by the Home Office. The present grants are being replaced under Clause 90 by a new hostels subsidy of up to £30 per bedroom, payable for up to ten years, for schemes approved after the Bill comes into force. The amount of subsidies will thus be flexible, being related to the cost incurred in providing hostels and the standard of amentities provided in respect of the associations' hostel grants.
I hope that I may allay the fears that have been expressed by saying that the Government consider that more thought needs to be given to the whole question of hostel provision. It may be appropriate to take a fresh look at the type of accommodation likely to be needed in future and at the type of person for whom it might be provided. The providers of hostel accommodation are the best people to begin such a new reappraisal and we should expect the voluntary housing movements to take a prominent part in such an appraisal. The National Federation of Housing, Societies has suggested possible ways of considering the issues. Representatives of the Government Departments which have an interest in this matter would be prepared to join such discussions at an appropriate stage. I hope that this will go some way to allay the fears that have been expressed and to see that we shall hope to hold these future consultations.
BARONESS BIRK: May I ask a question before my noble friends who know more about this subject than I do intervene? The noble Baroness said, "not withdrawing the hostel grants"; and then, after a pause, added: "too quickly". May I ask what "too quickly" means? It sounds like the
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young lady who invited out to dinner intends to say, "No" at the end of the evening but who sits through a very expensive dinner and at the end says, "No", and her male escort goes home feeling very upset about it. The pause I referred to seemed to indicate this sort of thing in withdrawing hostel grants "too quickly". If that is the message that it to be passed to the local authorities, it is going to confuse them completely and make them reluctant to continue what they are doing at the moment. In fact it will make them feel that they would be quite justified in running down even the existing accommodation, apart from the question of whether they put up new hostels. I find it extremely disturbing.
VISCOUNT GAGE: I am not going to follow the metaphor of the noble Baroness, Lady Birk, who compared the position with her friend's experiences. But I was glad to hear from the noble Baroness, Lady Young, that this whole question is to be gone into with the National Federation of Housing Associations. One of the things which also might be investigated, I think, is the exact difference between a hostel and a home, which I, in my great ignorance, find a little difficult to follow. I notice that my noble friend Lord Brooke of Cumnor has down a series of Amendments about students. I have always understood that students are considered to be appropriate tenants of hostels. But my noble friend, who knows a great deal more than I do about this matter, has put down an Amendment about homes for students. I suggest that the whole question of the definition of these two forms of institutions requires some thought.
LORD AVEBURY: Before the noble Baroness, Lady Young, replies, may I say a word or two about her speech? Of course one is glad to hear her say, on behalf of the Government, that hostels are important. But that does not mean anything unless she is prepared to back up her words with some money. She has told the Committee that these subsidies are to be phased out over a longer or shorter period, under Clauses 73 to 75. That is not at all satisfactory. If the noble Baroness has given an undertaking to the Committee that more

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thought will be given to the whole question of hostel provision, the existing subsidies should be left as they stand until that review has been made by the Government.
I think it entirely unfair to say to the Y.M.C.A. in Huddersfield, or to any of the other associations that I mentioned, "You are going to lose your money under Clauses 73 to 75 over a period which we will determine, not after consultation but at our own discretion. Later on, we may decide that the work you are doing is worth while, and restore part or whole of the grant you were previously receiving." In the meantime the Y.M.C.A. may have gone out of business and the people who have enjoyed the benefit of the accommodation which the Y.M.C.A. provided have become homeless. The noble Baroness ought to think again about what she told the Committee. Naturally, we are delighted with the expressions of sympathy which she has voiced. But before we leave Clause 2 and come on to Clauses 73 to 75, which she has mentioned, and to Clause 90, which I mentioned, we want a much more firm undertaking from the Government about their intentions.
I agree with the noble Baroness that the whole question of hostel subsidies needs to be reviewed. That is precisely what Mr. Channon said as long ago as December 7, 1971. It appears at column 241 of the Report of the proceedings in Standing Committee E. It is not good enough for the noble Baroness, despite the fact that she has no Departmental responsibilities, to come to the Committee six months later and say precisely the same as her colleague said in the Commons. I asked what representations had been received from the authorities which are concerned in the voluntary field with the provision of hostel accommodation. The noble Baroness neglected to answer that question. I know perfectly well that the Abbeyfield Society, the Hanover Society, the Young Men's Christian Association and many others have written to the Department, since they read the Report on the proceedings in Standing Committee E, and have expressed themselves in the strongest possible terms. She ought to tell the Committee what replies she has given, what guarantees have been afforded to those associations that they will not be put out
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of business by the provisions in this Bill, pending a long-term review of the whole question of hostel accommodation. Unless she can give that undertaking—I do not know what my noble friends on the Labour Front Bench will do—I shall feel strongly inclined to press this matter to a Division.
BARONESS YOUNG: I am happy to give that assurance immediately, and I am sorry that my words should have conveyed any other impression. I thought I made it quite clear, when talking about the withdrawal of these subsidies, that it was not the intention of the Government to jeopardise any existing hostel at all, and that their whole approach was a flexible one. I thought I made the point that the subsidies would he phased out at an annual rate of not more than £5 a bedroom and that it might be less; that if the phasing out at that rate was going to cause real hardship we would adopt a lower rate, or even suspend the phasing out altogether for a period. I hope that that provides the assurance asked for by the noble Lord.
LORD SHACKLETON: I fear that I have been too long in the game to be taken in by Ministers' saying that of course they have a very great interest in the subject. We all have a great interest in any subject with which we are dealing. I am bound to say to the noble Baroness, Lady Young, that I find her answer extraordinarily depressing, particularly in the light of what the noble Lord, Lord Sandford, said on Tuesday, that one of the purposes of this Bill was to concentrate resources to aid those in the greatest need. There is no doubt at all that those who, by misfortune, age, or misdemeanour, or for some other reason, are required to enter some form of institution, such as a hostel, are people in the greatest need. It is perfectly clear, is it not? that the rate of subsidy is to be cut. Is it not equally clear that residents, particularly the elderly, are to be called on to pay a higher rent? Whether the increase is 5p is immaterial; the fact is that they are to asked to pay more. This runs completely counter to what the noble Lord. Lord Sandford, said on Tuesday and what was in fact the only reason for the imposition of the provisions in this Bill.
Did not the noble Baroness say (I ask her to correct me if I am wrong) that

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under Clause 90 the Secretary of State would be making subsidies for the next 10 years? If the noble Baroness agrees to that, I fear that the Committee must have its attention drawn to the drafting of this clause. It does not say that these subsidies will be given for 10 years; that is the limit. Subsection (6)(a) says that the hostel subsidy payable to housing authorities or housing associations in respect of a hostel scheme
"shall be payable for such number of years, not exceeding ten, as the Secretary of State may determine."
There is a great deal of difference between the statement that a subsidy is to be available for ten years and what is in the Bill, which may mean only for one year, or two, and the local authority is to proceed on this basis. I find the position thoroughly unsatisfactory. The Government are hitting at those local authorities who are working to ease the problems of those people who, by misfortune, need to live in an institution. It may be that when considering Clause 90 we can look at it with even greater care, but I hope that now we may vote to show our complete dissatisfaction, if not repugnance at what the Government contemplate in dealing with hostels.
LORD SANDFORD: The noble Lord, Lord Shepherd, must do what he feels right to do. At the moment I cannot think of any terms which I could use to increase and redouble the assurance I gave earlier on in our discussions on the Bill, and which my noble friend has just given, about the Government's attitude towards hostels. As my noble friend has said, we shall come later to the specific clauses dealing with hostels. But, as my noble friend has also said, we regard this as a most important sector. We have not the slightest intention of doing anything which will damage it: rather, we think that it ought to be reviewed so that it can play a fuller role. Furthermore, as the noble Lord, Lord Avebury, has said, this is a sector which contains a number of people whose need is the greatest. The whole purpose of the Bill is to concentrate help on that very sector. At the moment, I cannot think of any terms in which to make my assurance clearer. I may be able to do so before we get to Clause 90; but if, in spite of that, the noble Lord wishes to divide
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the Committee, then of course he will do so.
LORD SHEPHERD: The noble Lord can give an assurance which I am sure the whole Committee would wish him to give and they would, I think, applaud him if he would do so. Will he give an undertaking that during the next ten years, so far as the present Secretary of State is concerned, local authorities and those associations now in receipt of subsidy for hostels will not receive one penny less, and that no person living in a hostel today due to misfortune, through sickness, age, or whatever it may he, will be required to pay more as a consequence of this Bill? If the noble Lord will give me that assurance, then I certainly will not press the Amendment to a Division. But if the noble Lord cannot give such an assurance, then I think the Committee is entitled to divide.
LORD SANDFORD: I say again that the noble Lord must do as he thinks fit. But I cannot possibly give that assurance, because it is not consonant with the assurance that I gave before. The assurance that I gave before was that we are seeking to concentrate help on where the need is greatest. Most of the people in hostels are in great need, but there are some who are not, and some who ought to pay something nearer the fair rent.
LORD GARNSWORTHY: Would the noble Lord tell us just who he means when he says that there are people living in hostels who are not in need? I think we need to know this percentage wise and numerically, because it will be a very small number indeed.
BARONESS BIRK: The people who are living in hostels who refuse the opportunity of other accommodation because for some reason they prefer to live in a hostel—who are they; where are they and why are they?
LORD SANDFORD: I agree with the noble Lord, Lord Garnsworthy, that it is certainly a very small group. There are young workers who are moving into areas where there is not a great deal of what is called lodging accommodation, and hostels are provided for them. There is no reason to suppose that they are not earning a quite good standard of wages.
LORD GARNSWORTHY: Is there any reason to suppose they are not paying

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already a reasonable sum for living in the hostels?
LORD SANDFORD: Many of them may be. But it would be quite impossible to say that we are following the principle of concentrating help where it is needed if the effect of that was to leave out of consideration those who are in hostels and who are paying less than the fair rent for their accommodation
LORD SHEPHERD: Can the noble Lord say how many hostels fall into this class?
LORD SANDFORD: No. But I offered, in giving my assurance, that between now and when we come on to the main clause on hostels—and we are not on the main clause on hostels at the moment—my noble friend and I will see whether there arc any ways in which we can increase the strength and firmness of our assurance; and if giving statistics of that sort will help, I am sure we can do it. if I find that we can do it before we reach that stage, then I will write to noble Lords who have shown concern.
LORD AVEBURY: May I suggest that the answers the noble Lord has given this afternoon are totally unsatisfactory? But if he does manage to write to us before we reach Clauses 73 and 75, and particularly Clause 90, and can give us the sort of assurance that we have sought, he will do himself a service, because he might be able to shorten the discussion on those clauses.
LORD SANDFORD: I am grateful to the noble Lord for that suggestion. It is an offer that I have already made, and I confirm it.
LORD SHEPHERD: The purpose of this Amendment is to see that local authorities and associations who run hostels shall not be placed in a worse position than they now are, and that those who live in those establishments shall not
be required to pay more as a consequence of this Bill—except of course if there is justification, in the terms of young workers. I accept what the noble Lord says. It may be that between now and Clause 90 the noble Lord can give us satisfaction. But I will say this to the Committee. There are occasions when Ministers on that Front Bench need to be strengthened in dealing with their Departments, and I would therefore invite the Committee to vote on this Amendment for this purpose alone; that is to say, to show to the Secretary of State, through the noble Lord, Lord Sandford, that this Committee believes that local authorities and associations and other independent organisations who work for the unfortunate should not be placed in a worse position than they are to-day, and should not be required to pay more, as a consequence of this Bill. If we pass this Amendment, and if the noble Lord, Lord Sandford, can give us satisfaction between now and Clause 90, then I will undertake to move an Amendment to put this paragraph back into the Bill. I ask the Committee to express its view on this very important subject.
LORD SANDFORD: I think the Committee have come to a pretty poor pass when two Ministers have given the fullest possible assurances, and have offered to follow them up during the passage of the Bill—
SEVERAL NOBLE LORDS: No!
LORD SANDFORD: However, if the noble Lord wishes to press the Amendment to a Division, it is up to him.
LORD SHEPHERD: I am still helping the noble Lord.
4.48 p.m.
On Question: Whether the said Amendment (No. 13) shall be agreed to?
Their Lordships divided: Contents, 50; Not-Contents, 92.

CONTENTS

Arwyn, L.

Citrine, L.

Garnsworthy, L. [Teller.]

Avebury, L.

Davies of Leek, L.

Granville-West, L.

Beaumont of Whitley, L.

Diamond, L.

Hale, L.

Beswick, L.

Donaldson of Kingsbridge, L.

Hall, V.

Birk, Bs.

Douglas of Barloch, L.

Han worth, V.

Blackett, L.

Evans of Hungershall, L.

Henderson, L.

Braye, L.

Faringdon, L.

Hughes, L.

Brockway, L.

Foot, L.

Leatherland L.

Champion, L.

Gaitskell, Bs.

Llewelyn-Davies of Hastoe, Bs

Chorley, L.

Gardiner, L.

Lloyd of Hampstead, L.

Loudoun, C.

Phillips, Bs. [Teller.]

Strabolgi, L.

McLeavy, L.

Platt, L.

Summerskill, Bs

Mais, L.

Samuel, V.

Wells-Pestell, L.

Masham of Ilton, Bs.

Segal, L.

White, Bs.

Meston, L.

Shackleton, L.

Willis, L.

Noel-Buxton, L.

Shepherd, L.

Wynne-Jones, L

Nunburnholme, L.

Shinwell, L.

NOT-CONTENTS

Aberdare, L.

Emmet of Amberley, Bs.

Merrivale, L.

Abinger, L.

Ferrers, E.

Milverton, L.

Alexander of Tunis, E.

Ferrier, L.

Molson, L.

Allerton, L.

Fortescue, E.

Monck, V.

Amherst of Hackney, L.

Gage, V.

Montagu of Beaulieu. L.

Balerno, L.

Goschen. V.

Morrison, L.

Balfour, E.

Gowrie, E.

Mowbray and Stourton, L. [Teller.]

Barnby, L.

Greenway, L.

Beauchamp, E.

Grenfell, L.

Napier and Ettrick, L.

Belstead, L

Grimston of Westbury, L.

Nugent of Guildford, L.

Berkeley, Bs.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Rankeillour, L.

Bessborough, E.

Reay. L.

Boyle of Handsworth, L.

Harvey of Tasburgh, L.

Reigate, L.

Camoys, L.

Hertford, M.

Sandford. L.

Carrington, L.

Hood, V.

Sandys, L.

Colville of Culross. V.

Howard of Glossop, L.

Savile. L.

Cork and Orrery, E.

Hylton, L.

Sempill, Ly.

Cottesloe, L.

Hylton-Foster, Bs.

Sinclair of Cleeve. L.

Craigavon, V.

Ilford. L.

Somers, L.

Crathorne, L.

Ironside, L.

Strange of Knokin, Bs.

Daventry, V.

Jellicoe, E. (L. Privy Seal.)

Strathclyde, L.

de Clifford, L.

Kemsley, V.

Strathcona and Mount Royal, L.

Denham, L. [Teller.]

Kilmarnock, L,

Derwent, L.

Latymer, L.

Teviot, L.

Digby. L.

Lauderdale, E.

Thorneycroft, L.

Drumalbyn, L.

Limerick, E.

Tweedsmuir, L.

Dundee, E.

Long, V.

Tweedsmuir of Belhelvie, Bs.

Dundonald, E.

Lothian, M.

Vivian, L.

Eccles, V.

Lyell, L.

Wakefield of Kendal, L.

Elgin and Kincardine, E.

Mancroft, L.

Wolverton, L.

Elles, B.

Massereene and Ferrard, V.

Young, Bs.

Elliot of Harwood, Bs.

May, L.

Resolved in the negative, and Amendment disagreed to accordingly.

4.55 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 14:
Page 3, line 41, leave out ("the Secretary of State") and insert ("arbitration")
The noble Lord said: I beg to move this Amendment. If any of your Lordships should be in doubt as to the reason for my moving this particular Amendment I would say it is in response to a prayer I thought I heard while going through the Division Lobby—a prayer on behalf of one of the Tories after the onslaught of my noble friend on the last occasion, saying "Come back, Jack; all is forgiven! "This Amendment refers to part of the same section where the discretion to decide any issue which affects residual subsidy is given to the Secretary of State. Subsection (6) states:
"For the purposes of this section,"—
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that is the whole of Clause 2—
"… any question whether all or any part of any payment under any of the enactments described in Part I or Part II of Schedule 7"—
that is virtually all the present subsidies—
"to this Act is to be regarded as made for the year 1971–72, or as made in respect of property within the authority's Housing Revenue Account, shall be determined by the Secretary of State."
There is not a word there, incidentally, about consultation; but I think it goes beyond consultation.
The Secretary of State should not have the power to determine on his own any issue which affects how much the Secretary of State shall pay to a local authority. He is one party to the dispute. Of course there may be honestly-held differences of opinion, and of course questions may arise on apportionment. Naturally there will be differences of that kind, and where there are such differences the Secretary of State will of course be

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concerned to put forward the Government's point of view and the local authority will be concerned to put forward the local authority's point of view: the difference will be merely a matter of money. One will be wanting to pay less and the other wanting to receive more. In those circumstances there cannot be any feeling that the local authority's case is being fairly considered if the complete discretion is left in the hands of the Secretary of State to decide how much he will or will not pay with regard to any disputed amount.
I am bound to say that this is one example—there are many in the Bill and we shall come to them time and time again—of an excessive authoritarian approach in the Bill. This is quite excessive. There are occasions when full consultation is provided for in the Bill. There is one coming up very shortly in Clause 4(12), which reads:
"…and the Secretary of State in exercising his powers under subsection (11) above shall follow such methods and principles, and take account of such matters, as he may from time to time decide after consultation with such associations of housing authorities as appear to him to be concerned, and with any housing authority with whom consultation appears to him to be desirable."
That is consultation; but I repeat there is not one word about consultation in this particular subsection, which refers to the whole of the residual subsidy where there is any question involved. So I am suggesting that a far better method of resolving a dispute of that kind would be by means of some form of arbitration—either in a statutory form or in such other form as is convenient to the Government. I do not think we can leave it to the Secretary of State himself to decide whether or not he wants to pay out a certain sum.
5 p.m.
LORD SANDFORD: The noble Lord, Lord Diamond, sounds very persuasive, but in deciding issues of the sort set out in the subsection to which the Amendment refers the Secretary of State is only continuing to do what he has been doing in respect of all the housing subsidies for many years past. It was what he was doing in 1966 when the Party opposite introduced their last Housing Subsidies Act of 1967, and I am sure it never occurred to them to alter the procedure in any way; certainly,
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if it occurred to them it was a thought which they soon rejected, because they have made no such provision at all. In many cases, if one looks through the legislation, one finds, for instance, that Clause 3(5) of the Housing Subsidies Act 1967 says:
"The Minister may determine the approved cost of any dwelling may be reduced by…"
and so on. All legislation up to now in respect of problems such as this has been shot through and through with discretion vested in the Secretary of State for deciding issues of this sort.
Furthermore, if we were to adopt the proposal that the noble Lord is now advocating to the Committee the effect would be to slow up and delay the settlement of issues such as this. Because the attraction of the new subsidies depends on deciding the issues, the only effect would be to delay the payment of the subsidies to the housing authorities concerned. All we are doing in this clause is to continue a discretion which hitherto nobody has quarrelled with; a discretion which the Party opposite certainly never thought of changing when they last introduced a Housing Subsidies Act. For those reasons I cannot commend the Amendment to the Committee in any way.
LORD LEATHERLAND: I wonder whether the Minister when, saving that in the 1957 Act—
LORD SANDFORD: 1967.
LORD LEATHERLAND: —there was no provision for arbitration, inadvertently overlooked the fact that on this occasion slashing attacks are being made on the local authorities and on their subsidies. Therefore the position to-day under the present Bill is entirely different from what it was when previous subsidies were arranged by previous Governments. In this case, the clause refers to the Secretary of State having almighty power over all the matters mentioned in Part I of the Bill. Part I of the Bill deals with all the eight subsidies that are to be paid under this new legislation. It also says that the Secretary of State shall have almighty power over everything in Part II of the Bill, and Part II of the Bill deals with the whole question of rent rebates and subsidies to local authorities, whereas Schedule 7 to

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the Bill, which is also mentioned, deals with 18 or 19 Acts of Parliament under which the Minister is due to make payments to local authorities. Therefore this is a very important matter, and as the whole flavour of this Bill is to penalise local authorities by reducing the amount of Government money that is to be available for rents and housing, I do not think that it is quite correct to try to compare it with previous legislation.
With regard to the ethical aspect of the matter, we in this country are sometimes cursed with industrial disputes. We are invariably told on such occasions that the trade unions should go to arbitration because arbitration is fair; it will ensure a fair deal between one party and the other. I should like to ask the Minister whether he considers that arbitration is something virtuous or something vicious. If it is virtuous when applied and recommended for trade unions, why should it not similarly be virtuous to settle disputes between local authorities and the Minister? For those reasons I support my noble friend in urging the adoption of this Amendment.
5.6 p.m.
LORD DIAMOND: I am grateful to my noble friend for the persuasive and helpful remarks that he has made. They were very much to the point. I do not have with me the relevant sections to which the noble Lord, Lord Sandford, very briefly referred. One is not supplied with all the Acts one would like to have. Certainly Schedule 7 has 60-odd Acts mentioned in it so I found it a little difficult to equip myself as adequately as one might and at the same time accommodate myself in one place on one Bench. However, my recollection is that the Act of 1967 was an Act substantially to increase subsidies so far as local authorities were concerned. It was an Act to provide that any interest rate over 4 per cent. should fall on the central Government. That would be the measure of the subsidy. If interest was at 8 per cent. it meant that one-half of the capital cost spread over the period was being provided by way of subsidy from central Government to local authorities. That was the context of that Act.
In that context of giving, I can imagine that there were different circumstances in which the giver would have some right
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of deciding how much he was going to give in any disputed area, it being in any case more than what otherwise would have been given. What we are deciding here is the rate at which the existing subsidies shall be withdrawn. That is what the context of this provision is and it is totally different from the context of the other provisions. I repeat that I have not in front of me the exact sections so I do not know what the exact wording is: I am only going on conjecture, but I think I am fairly accurate in describing the totally different context in which these two powers are given. I am not satisfied that a discretion left with the Secretary of State in those circumstances is comparable with the discretion handed to the Secretary of State in these circumstances. I repeat that it is a very wide discretion indeed.
Nor am I at all impressed with the argument that this Amendment will delay payment. It is a very regular proceeding that when an item is partly in dispute—and that is what we are talking about—the undisputed element is paid and the disputed element goes to arbitration. The disputed element, if it went to arbitration, would be delayed until the arbitrator had settled it. But under the Bill the disputed element would not go to arbitration and would never be paid. There is no difference whatsoever in terms of delay, whether this Amendment is accepted or not. If the Amendment is accepted there is hope that the arbitrator would see the point of view of the local authority. There is certainty that there would be an unbiased approach, the approach of an arbitrator, a judicial approach. That is the difference between getting a judicial approach and getting an approach from the person who has to dip his hand further into his pocket to satisfy the point of view of the person who is appealing to him—here the local authority.
I do not think that we can be at all satisfied with the reply made by the noble Lord. But I want to help the noble Lord: I spend most of my time trying to help the Government in improving the Bill in one way or another. I am such a modest chap that I do not mind reminding the Committee that the only Amendment which has been accepted so far is the most important drafting Amendment that has been suggested from this side of the Committee. The noble Lord,

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unfortunately, said nothing about the point that I touched on—consultation. It would cost the noble Lord and the Government nothing. I understand the difference between money and courtesy: money is very difficult to provide; courtesy is very easy to provide. The noble Lord could easily say, "Of course we will consult fully with all the parties concerned before reaching a decision". That would not be wholly satisfactory as a result of this Bill which reduces the revenue of the local authorities, and the result of another Bill which extinguishes their powers, which is, so I am told, very haltingly on its way from another place to this House. They may find that it slips and breaks its leg before it gets here, for aught I know.
As a result of the combination of these two Bills, local authorities are feeling about as warm towards the Government as are most trade unionists. They love them to the same extent! It would hurt the Government nothing, therefore, to get up and say: "We recognise that power ought not to be exercised arbitrarily. This is a method by which previous Governments have, in perhaps different circumstances, resolved disputes. But we will undertake fully to consult any party concerned before the Secretary of State exercises his discretion under subsection (6)." If the Government say that, then we would be able to reconsider our point of view.
LORD SANDFORD: I am most grateful to the noble Lord for his assistance. Of course I can say that this is not a unilateral decision. The local authority makes a claim for subsidies. The Secretary of State makes the determination and the local authority is certainly free to make a representation on that determination if it wishes to; and that representation is most carefully considered. Furthermore, if in the course of this exchange, or these exchanges with a number of authorities, matters of general application and importance arise, then further consultations go on not only with the local authorities concerned but with their associations, in order that these matters can be resolved. I must apologise to the Committee for not having made that point in the first instance, and I am grateful to the noble Lord for giving me an opportunity to add it now.
LORD DIAMOND: In view of what the noble Lord has said and out desire to get on as fast as we can with this Bill—I thought I detected a murmur but it was obviously something entirely in my own head—I would say simply this. The noble Lord has made clear not only that during the normal process of making representations will the local authorities' point of view be heard and considered by the Secretary of State, but that associations representing local authorities will also have an opportunity of making representations which will be carefully considered. Although that is not as satisfactory as giving an appearance of justice to what at the moment is not given an adequate appearance of justice, I do not think, subject to what my noble friend who obviously shares my view about all this feels, we would want to press the matter to a Division, and in accordance with the custom of your Lordships' House I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.14 p.m.
LORD AVEBURY LORD AVEBURY moved Amendment No. 15:
Page 3, line 43, at end insert:
(" (8) The Secretary of State shall circulate to local authorities, within one month of the passing of this Act, an algorithm for the calculation of the residual subsidy.").
The noble Lord said: The noble Lord, Lord Diamond, said that only one Amendment has been accepted so far and that had been presented from the Opposition Front Bench. I feel sure that we are about to break that precedent when the noble Lord, Lord Sandford, has had an opportunity of listening to what I have to say on this minor Amendment, which would be of great assistance to the treasurers and the members of local authorities who have to consider the calculation of the subsidies provided for under Clause 2 and so on.
It surprised me, when I put this Amendment down, to find that very few people knew what an algorithm was, and in fact when it first appeared on the Marshalled List of Amendments it was spelt in a most peculiar way, no doubt as a result of my poor handwriting, and I had to alter it. But I am sure that the noble Lord, Lord Sandford, knows what an algorithm is, and I am equally sure that the noble Lord, Lord Diamond,

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with his experience at the Treasury, is well aware of the meaning of the word. But in case there may be one or two who are not familiar with the term, I should perhaps explain it, particularly as when one looks at the Oxford English Dictionary one finds an out-of-date interpretation of the word based on the surname of an eminent Arab mathematician who I am told flourished early in the 19th century.
LORD LEATHERLAND: The ninth century.
LORD AVEBURY: I am sorry: the ninth century. He gave his name to the system of numerals that we now employ in this country. But the modern meaning of the word "algorithm" is something quite different.
The noble Lord, Lord Sandford, will be well aware of the word from his knowledge of the work that has been done by the Treasury O. and M. Department on algorithms for use in the Civil Service. I would refer particularly to the C.A.F. Occasional Papers, No. 2, published as long ago as 1967, entitled, Flow Charts, Logical Trees and Algorithms for Rules and Regulations. This paper was mainly concerned with a number of practical examples of the use of algorithms in the calculation of capital gains tax; of the use of S.T.D. telephones and so on. But there is quite a useful explanation of how algorithms are supposed to operate in the introduction to this paper which is entitled "Some basic terminology". If I may generalise and be simplistic about the subject, an algorithm is a flow chart, a logical tree or a directed graph which enables one to make a logical sequence of decisions for arriving at a solution to a particular problem.
When one looks at the particular clause to which I attach this Amendment one sees that the wording is very complicated indeed. I am sure that local authority treasurers are highly intelligent people and can follow their way through the mass of verbiage here; they can decide how to calculate the residual subsidy as a function of the subsidies for 1971–72 and the withdrawal factor multiplied by some constant depending on the year concerned. But I believe that most people when they try to interpret this clause will find the greatest difficulty in doing the arithmetic;
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and I may say that the same applies to the following clauses, Clause 3 and so on. I put this Amendment down only for the purpose of illustration.
The reason why I feel so sure that the noble Lord will accept my Amendment at once is that the O. and M. Department of the Treasury has employed algorithms, as I have said, in the case of capital gains tax and other matters in the past. This is a means of instructing people who have to carry out this legislation as to what they should do. It greatly alleviates the burden on them in understanding the legislation, and enables them to carry it through with the minimum of bother and the minimum of additional staff. I should have thought this was an ideal case where the noble Lord's Department could publish an algorithm which would be of use to the local authorities, and indeed to the people in his Department who have to check the work which has been carried out by the local authorities when they finally submit their calculations under Clause 2 and so forth. I think that that is probably enough explanation, and that the noble Lord will immediately rise and accept my Amendment.
LORD SANDFORD: I am most grateful to the noble Lord. the noble Lord's Amendment certainly contains a good idea. I am not only aware of what an algorithm is but I have an algorithm with me. This particular problem is really too easy for an algorithm. All that is required of a local authority here is to know what its current subsidies under the old system amount to (and treasurers have successfully managed to overcome the difficulties involved in that); to know the number of houses in its housing revenue account (and most local authorities know that), and to multiply the last figure by 20 and take it away from the first number. That is not too difficult. I am not in any doubt at all that algorithms come into this Housing Finance Bill. The one I have here with me now—and I will pass it across the Table first for the noble Lord, Lord Diamond, to look at and then for the noble Lord, Lord Avebury, to keep—is for rent officers who will have the very onerous task of operating, for instance, Part IV of this Bill. If the noble Lord, the Lord Chairman, will be kind enough to pass it over I think that both the noble Lord, Lord Diamond, and the

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noble Lord, Lord Avebury, will see that there indeed we have a task which fully justifies the use of an algorithm, and here is an algorithm in the process of composition for that purpose. So I am grateful to the noble Lord for having introduced this splendid idea and I am glad to reassure him that it has not been lost upon us.
BARONESS GAITSKELL: All this sounds very plausible, and I have listened carefully to the explanation given by the noble Lord, Lord Avebury; but I am afraid that it does not mean anything to people like myself. It seems to me that an algorithm is a secret among a few noble Lords on both sides of the Committee, and it needs more than one algorithm really to explain this unnecessarily complicated Bill.
LORD SANDFORD: I am sure that that is not really the case. If the noble Lord, Lord Avebury, and the noble Baroness, Lady Gaitskell, would have tea together and share the algorithm between them they would be much enlightened.
LORD AVEBURY: I am extremely grateful to the noble Lord for his kind remarks about the value of my Amendment. He will realise that I did not put it down on this particular clause because I thought the calculations in Clause 2 were particularly complicated but because I saw that the whole way through this Bill there are matters that require careful consideration by housing managers, rent officers and so on. The noble Lord has done us a great service, for which we are grateful to him, in allowing us to see this enormous algorithm, which I take it is the calculation of registered rents. Perhaps I may say, for the purposes of the Record, that this algorithm is about three feet long and at least two feet wide. It contains a mass of detailed wording which the rent officers have to interpret, and while I am sure that they will be grateful to have an algorithm so that they may understand this Bill when it becomes an Act, it illustrates the point that we have been making all along; that we are faced here with complicated legislation which has to be understood not only by the persons who are applying it—that is to say, in this case, the rent officers—but also by the tenants. I defy the noble Lord to give this to any local authority tenant, in whatever area he happens to live, and
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say, "Please find your way through this maze".
LORD SANDFORD: The algorithm is designed for the rent officer, not for the tenant.
LORD AVEBURY: I agree; but if the tenant reads the legislation he finds that difficult to interpret, and so do his representatives—those who are looking after the interests of local authority tenants. The algorithm is designed to make the job simpler, and this document has been produced by the noble Lord—quite rightly—for the purposes of the rent officer who is making his calculations. Equally, one might ask how the tenant is to find his way through the mass of verbiage in this legislation. He can do this only through the associations which represent him, and I 'hope that I may have the noble Lord's permission to make this algorithm available to organisations like the Association of London Housing Estates. Perhaps he will make a brief reply on that point. But certainly this algorithm illustrates what I was trying to put over to the Committee in moving this Amendment in the first place, not particularly in relation to Clause 2: that we are faced in this Bill with a mass of complicated legislation which will be difficult for the ordinary tenant to understand.
LORD LEATHERLAND: I do not want to discuss the rights and wrongs of algorithms, but I want to take up a point which was mentioned by the noble Lord the Minister in his original reply to the noble Lord, Lord Avebury. He said that a copy of this three-foot long document was being given to rent officers to help them to come to decisions where they have to determine rents. I was under the impression, perhaps mistakenly, that these rent officers operated in a quasi judicial capacity and that they heard the evidence from both sides and made their decisions. If they are to be primed in advance with a document from the Minister in which the Minister tell9 them how he thinks they must operate, it is a rather startling revelation and no doubt the noble Lord can give us some satisfaction on this point.
5.26 p.m.
LORD DIAMOND: The Committee are indebted to the noble Lord, Lord Avebury, for having raised this issue of

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complexity in the Bill and the need for everybody concerned—local authorities, rent officers and, in particular, tenants, to find their way through it, and he has suggested one particular method by which the path may be more easily followed. I want to say straight away that I am grateful to the noble Lord, Lord Sandford, for having handed over that algorithm. Although of course I have been familiar with algorithms ever since the age of two, I was hesitant because I did not know for certain whether it would bite or not. Now I know for certain that it does not, I am happy to receive it.
We now come to a really serious point, and my sense of humour must not mislead the Committee into thinking that I do not regard this aspect of the matter most seriously. I have said to the noble Lord. Lord Drumalbyn, several times that the Committee would be greatly helped if we could have figures or a graph, or examples, or some method of finding our way through the whole of Part I—the subsidy part—with which we are now dealing. I agree with the noble Lord, Lord Avebury, that Clause 2 is by no means the most difficult clause in the Bill to follow. If one looks shortly at Clause 3 one finds that the draftsman has been compelled to put in an explanation in the Bill—not of any legislative effect but just an explanation—for in subsection (2) we find:
"accordingly, transition subsidy, and the associated rate fund contribution, for any year (later than 1972–73) may comprise elements by reference to shortfalls for two or more different base years."
That is purely an explanatory comment to help the reader to understand what the legislation is about.
Having tried very hard, I still cannot get a picture in my own mind—and may I assume that I have the average capacity and the average interest and the average subjectivity to read a Bill of this kind—of how the total subsidy position would work in relation to different sets of circumstances. Presumably the Government knew what they wanted, and presumably this Bill came to light in the way in which Bills always have come to light; namely, by a Government's deciding what they want and saying to the draftsman, "Please draft that". So the Government cannot say that they cannot
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follow what effect the Bill will have; they would not dare to say that. We may suspect it, but they would not dare to say it, so they must be in a position of saying, and indeed of knowing, what it is that the Bill is trying to provide.
I repeat to the noble Lord, Lord Drumalbyn, that we on this side of the Committee cannot see what the impact is. My understanding is that there are many local authority treasurers in exactly that same position. Therefore I am using this opportunity which the noble Lord, Lord Avebury, has given to the Committee—very valuably—to underline once more how I think we should all be helped in our understanding and, of course, in our quicker appreciation of the points of the Bill if we could be supplied with something to help us find our way through Part I of the Bill.
The document which the noble Lord, Lord Sandford, was good enough to let us have is indeed an interesting comment on this Bill. It shows that if you ("you" being a rent officer) want to find your way through this Bill, through just one small Part of this Bill, then you need a guide which is three feet long and chock-a-block with instructions, showing how to get from point A to point B, and so on—a real maze. That, I am sure, is the greatest simplication which it is open to the Government to give to a rent officer of how to get through this part of the Bill. In those circumstances I do not wholly apologise for my inability to understand how the whole of the subsidy arrangements, the whole of Part I, would have effect in the various circumstances which one can imagine. I repeat my request that the Government should sympathetically consider giving the House on paper some method by which one can find one's way through—be it an algorithm or be it some other method.
VISCOUNT GAGE: May I add this point? I personally have found a very great contrast between the different Amendments moved from the other side, some of importance, some of less importance, and some of very much less importance. But I do agree that the question of understanding—
LORD DIAMOND: Would the noble Lord forgive me for interrupting him? He has got it quite wrong: some of our Amendments are important; some are

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more important and some are most important.
VISCOUNT GAGE: I accept that, and I also note what the noble Lord said about adding to simplicity. The Amendment that he has on the Paper to Clause 20 does not look as though it adds to the simplicity of the Bill, but it may do. Unlike the noble Lords opposite, I believe that this Bill is on the right track, but I am afraid that there will be difficult cases arising from the fact that the rent officers, the housing managers and the treasurers now in local government will be in somewhat of a state of uncertainty about their own future. I hope this will not happen, but I am very glad that my noble friend Lord Sandford, is determined to do what he can to simplify their task.
LORD HYLTON: I wonder whether, before my noble friend replies, he could give us an assurance that all algorithms brought out by his Department which bear on the rights of tenants will be published. That would be very helpful, and it would also he very helpful if, when they have been published, they could be explained to tenants by such bodies as housing aid centres who I am quite sure will be flooded with inquiries on points of this sort.
LORD DRUMALBYN: If I might reply at once to the noble Lord, Lord Diamond, I would say that we are most anxious to help the noble Lord and other Members of the House in any way we can. I see some force in what he has said, because I myself had some difficulty in following the Bill in the early stages. He asked for something comparable the other day. He asked for two things: the first was relatively easy to supply, but the second, as I think he will recognise, is a little more difficult to get out. But I am hoping it will be available to him before long.
LORD SANDFORD: May I first of all reply briefly to my noble friend Lord Hylton? Of course this Bill is complex. Its main complexity lies in the transition arrangements from one system to another, and of course it will call for a wide range of circulars, explanatory pamphlets and heaven knows what! But the algorithm is not a suitable thing for a tenant. Tenants want much simpler pamphlets
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concentrating on those aspects of the matter which affect them. The rent officers asked for and have produced the particular algorithm which I have used for illustration because they have a most complex part to play in the Bill, and the algorithm is a suitable device for assisting them with their particular proceedings. It is not suitable for a whole lot of other practices, though circulars and other forms of explanation will undoubtedly be needed.
LORD AVEBURY: May I make one brief comment on those final words of the noble Lord. Certain types of algorithms might be more suitable for the tenant than the rent officer, but l do not say without giving it proper study whether this algorithm would be the most convenient form in which to display the information for the tenant. Perhaps a list structure, or what is sometimes called the branching programme would be of greater help to the tenants in explaining what sort of calculations they should make to check the validity of what is being done by the rent officer. I do not want the noble Lord to think that I am not extremely grateful for the explanation he has given and his—well, it goes further than a "duty "—allowing me to see this copy of an algorithm which has been prepared for the use of rent officers.
I hope that nothing that has been said in the course of this debate will inhibit the noble Lord from being just as forthcoming on other Amendments in later stages of the Bill. This is precisely what we are after, to try to get to the bottom I of what is meant by some of the clauses so that we can make constructive criticism. This is precisely the object achieved. Although in fact I tied the Amendment to Clause 2, that was not the purpose of the exercise; it was to display the whole complexity of the Bill. The noble Lord, Lord Drumalbyn, has already said that he finds some parts of the Bill difficult to understand. The only thought that I should like to leave with the Committee in conclusion before I withdraw this Amendment is this. Perhaps the ordinary Explanatory and Financial Memoranda attached to the beginning of Bills are unsuitable when it comes to legislation of such complexity as we have in the Housing Finance Bill. Perhaps the noble Lord might go back to his Department, or perhaps to the Management Service

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Department of the Civil Service Department—that is the thought that I throw out, off the cuff—and ask them whether, in the case of very complex legislation, and particularly with such matters as subsidies which are dealt with from Clause 2 onwards, they might help in the drafting process by supplying, instead of the normal Explanatory and Financial Memorandum, some algorithms which could go into that section which precedes the body of the Bill itself. With those words, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question. Whether Clause 2 shall stand part of the Bill?
5.39 p.m.
LORD DIAMOND: I rise to address your Lordships on the various reasons why Clause 2 should not stand part of the Bill. Clause 2 is a bad clause in a bad bill. It is the first effective clause and the one that determines the shape of the Bill. Therefore I am going to put before your Lordships shortly, but I hope persuasively, the reasons why we should not pass Clause 2.
The first reason is one that was touched on earlier but to which no satisfactory reply—in fact I do not think any reply at all—was given; that is, the inflationary effect of this clause. This clause is based on an increase in rents which will mean that for all those local authority tenants whose authorities have taken the view that until there is an Act there is not an Act, and therefore rent increases can only start after this Bill becomes an Act, there will be an increase in rent in the second half of the current financial year of £1 per week. Their rents on average over the country amount to £2 per week, and therefore they are faced with an increase of 50 per cent.
I have made the point before and I do not want to labour it, but I want your Lordships to appreciate the importance of the rent book to the council tenant and the importance of the rent to his, and more particularly his wife's, budget. This is a most permanent and important element in their living and in their calculating. Nothing more important than the rent book and nothing more important than the rent which, as I have said before, is mostly found on the mantelpiece, put
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on one side week after week for payment of the rent. To those of your Lordships who are unaware of payment of rent—because it goes through by banker's order if you are tenants, or if you are a freeholder you do not pay it at all—it is very difficult to realise the ever-present importance of rent books and rent payments. I can think of nothing which would be more calculated to give a twist in the wage spiral than an increase of 50 per cent. in the rent of a council tenant. And this clause presumes and is drawn up with that figure in mind; that is what subsection (3) is about. So that is the first reason. And I am astonished that the Government in the current circumstances or the circumstances as they are likely to be in the autumn of this year, should be contemplating taking this course. The economic damage that the Government are doing by this over-hasty withdrawal is, in my view, totally unnecessary, and I hold them to be totally irresponsible in continuing with that level of rent increases.
I recognise that we are on Committee stage, and that the other House has passed this Bill and that it has received its Second Reading in your Lordships' House. There is no reason whatever why the rest of the Bill, the main purposes of the Bill, should not be carried out—carried out more slowly—if the Government want to do it. I do not want them to do it, but they want to do it and they have the authority to do it. They could achieve the purposes of their Bill without inflicting economic damage and stirring up wage negotiation difficulties. They could do it by slightly slowing down the process of removal of the residual subsidy, which is under Clause 2, and thereby making it possible to slow down the increase in the amount of the rents. Therefore I say to the Government that that is the first reason why we cannot contemplate giving approval to Clause 2. I must not be forced into saying anything about the Government's being, in relation to these matters, some of the biggest twisters I could ever contemplate; it is an economic twist, and I must not be quoted out of context, because that would be very discourteous indeed. That is the first reason.
The second is that this clause is the first one which shows the pattern, which

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is repeated throughout the Bill, of ignoring the local authority's self-respect and need to feel important and to be able to continue to make a contribution. This Bill, as so many local authority officers have said, is withdrawing one of their main freedoms, the freedom to fix rents, which is a major responsibility of any housing authority. It is withdrawing the whole of that freedom and taking the power from the local authority into the hands of Whitehall. And throughout this Bill there is inadequate reference to consultation or no reference to consultation, and the whole Bill is redolent of that authoritarian approach. This is the first clause which demonstrates that. I have already referred to it in subsection (6). That is the second reason.
The third reason is that the Government have said that their justification for damaging the self-esteem and sense of importance of local authorities and for doing harm to the economy is that they want, while maintaining the level of subsidies, to concentrate them where help is most needed. We have clearly established—we have not got the exact figure yet—that the Government's statement that it is maintaining the level of subsidies cannot be sustained. It is not maintaining the level of subsidies; the level of subsidies is falling by an amount which any one of us could calculate, but the estimate might vary. If the Government would agree to give us a calculation we should be grateful If the Government say to us, with regard to the financial effects of the Bill, that
"… as a result of the provisions of the Bill, annual total net charges on the Consolidated Fund… in connection with housing in England and Wales…including payments towards rent…made by the Supplementary Benefits Commission, are estimated…"
to fall until 1975–76 to the figure of X at constant prices—constant prices instead of current prices—we should know what the Government's estimate was and the amount by which the level of subsidies was being reduced. It is not merely that the level of subsidies which would otherwise increase is being kept stationary; it is that the present level of subsidies is being further reduced. It is being reduced by at least the amount of inflation arising annually over the next years. If we are considering a 10-year period—and 1981–82 is a year frequently
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referred to—it is over those 10 years. I am saying to the Government, first of all, that their claim that they are maintaining the level of subsidies is a sham. We had better have it clear. It is not supportable at all, as my noble friend says.
As to the second part of the justification, that they are going to maintain the level of subsidies and to concentrate them where need is greatest, every single Amendment we have had illustrating need and asking for special concentration on that need has gone unheeded. In particular, the noble Lord, Lord Avebury, referred to the particular hostels he was concerned with on the Amendment which my noble friend Lord Shepherd moved with such force, and we got no satisfactory answer there. I referred the day before yesterday to the case of Crawley, which I chose because it is an example of a large category of cases, all those local authorities which have a small stock of housing but have a large requirement in building, who will find it impossible to cope with the rate increase resulting from this Bill. It is a local authority which needs to house its citizens; their needs are very great and they come precisely within the definition that the Government gave of concentrating subsidy where need is greatest. I chose Crawley because Crawley has been in lengthy correspondence with the Government, and the Crawley figures show that for them to cope through the rates with the disadvantages this Bill will impose on them will mean increasing the rate by one shilling in old coinage—5p. That is an enormous increase in the rates purely to make up for the damage that they are going to suffer through the effects of this Bill.
It is all on record in correspondence with the Government. The Government have not disputed it. The Government have simply said, "Oh well, this is a transitional difficulty", which is an extraordinary argument to me, because time and time again in legislation where one is moving from one situation to a new one and transitional difficulties are encountered the Government have found it their duty to make special arrangements to cover those transitional difficulties. It is, incidentally, not a transitional difficulty: it is a permanent difficulty so far as Crawley is concerned, as they have made clear. I am only saying that the

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Government's reply was wholly irrelevant. I repeat, we are in this situation that whereas the Government have said that they want to maintain the level, they do not; they want to reduce it, and that is what they are doing. Whereas they have said that they want to concentrate the subsidies on those in greatest need, they do not; and this Bill—I repeat the major point that I put to the noble Lord, Lord Drumalbyn on Tuesday—is framed on a conception which the Government themselves have destroyed, a conception of increases in rent which, so far as Birmingham and all similar authorities are concerned, has now been withdrawn.
So what do the Government propose to do with this Bill, and particularly this Part of the Bill? It is a totally new situation created by the Government and the fact of the local elections—for which we are grateful. Justice comes in in odd ways: even if it is at the time of local elections it does come. Therefore I am saying to the Government that this clause cannot pass for these three reasons, and I should be grateful if the Government would say whether they are thinking now of withdrawing the Bill because it is no longer relevant to the purpose that they had in mind. They have altered that purpose. Their original purpose was to put up rents, by given figures to reach a certain maximum—the fair rent, as they called it. The position now is that the structure of the Bill is no longer relevant for the purpose so far as Birmingham, and all the other "Birming-hams" are concerned, and many local authorities will equate themselves with Birmingham and are no doubt hard at work getting out figures to justify that equation. This is a convenient opportunity for the Government to say whether they are now proposing to withdraw the Bill. In any event we are going to vote against Clause 2.
5.52 p.m.
LORD SANDFORD: In that case I will not delay the Committee long, except to confirm that we have no intention of withdrawing the Bill. My noble friend and I have not said very much about rents or the progression to fair rents in the course of the debate on this clause because the clause is not about that subject. If the noble Lord will help us to get on to Parts V and VI we shall be
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ready for a full discussion of that important matter. Clause 2, which we are now discussing, is about the residual subsidy, and that is not based on rents. It is based upon the existing subsidies set out in Schedule 7, and upon their phased withdrawal. That phased withdrawal is part of the beginning of the changeover from what we believe to be an outworn, indiscriminate system to a fairer system which is fair to all concerned and at the same time concentrates help where help is most needed. Because it is a fairer system we want to get on with it.
LORD SHEPHERD: I really wondered why the noble Lord did not choke. He again repeated what he said on Tuesday regarding the purpose of this Bill so far as he is concerned; that is, to see that resources are made available to those who are in greatest need. I think the Committee was generally and genuinely dissatisfied with the way in which the Government responded to our debate and our fears in regard to hostels, so I really wonder—in fact I nearly choke at the thought of the noble Lord spinning these words out time and time again when they appear to be unable to convince anybody, certainly on this side of the House, that their intentions are going to be achieved in this Bill. There is no doubt that the subsidies are going to be cut.
I wonder whether the noble Lord, Lord Sandford, could give us any indication as to the rise in the cost of building land in London and the South-East. The rise in the last six to nine months has been absolutely astronomical. I know of one building plot, in which—I will not say I had some interest, but I hoped that one of our building companies might have succeeded in the auction. I will tell the noble Lord, Lord Sandford, what happened. It was a 5½acre site in Kent and there was planning permission for 12 houses—no more. Do you know how much that land went for at public auction? It went for £150,000. The price of land in the conurbations and the suburbs of London has gone up at a rate even greater than that. This is what local authorities have to raise in the next few years if they are going to fulfil their building programme. But in the meantime the subsidy that is going to be available under Clause 2 is going to be cut. Clearly, there can be only one consequence. Either the local authority

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has got to increase its rates on that particular locality—seek ways and means of raising rates where it can—or cut its building programme. The noble Lord shakes his head. If there is less subsidy available to a local authority and the cost of land rises as it has done, plus the cost of the building itself, what alternative does a local authority have?
LORD SANDFORD: Clause 4, the rising costs subsidy, deals precisely with the situation which the noble Lord has been talking about. If he can be patient until we reach that clause I shall explain how it works.
LORD SHEPHERD: I certainly look forward to that, but it seems to me, taking Clause 2—and that is the only thing that is before the House and we have not yet had an opportunity of having the noble Lord's assurances so far as Clause 4 is concerned—that this is the only judgment we can make at this moment. I think local authorities are going to be in a very serious position, and considerable hardship is going to be placed on people who at this time can ill afford the major increases to which my noble friend has drawn attention.
This is not the moment to discuss the consequences of joining the E.E.C., but costs are going to rise as a consequence of that. On top of this, I tremble at the thought of the sort of wage demands which we are going to see in the next 12 to 18 months, especially when I see that the C.B.I. are making strenuous efforts with the T.U.C. to find ways of restricting unnecessary wage increases. I think the Government are stirring the fires of a very grave inflationary period.
VISCOUNT MASSEREENE AND FERRARD: May I point out that one of the reasons for the very high price of building land is its scarcity, and when the noble Lord's Party was in office, through their legislation for planning permission they made the release of land for building so difficult that of course the prices went up sky high. You have got to release more land.
LORD SHEPHERD: I know that the noble Viscount takes an interest in matters concerning the working classes in this country, but I am sure he will agree that land prices have soared in this last nine months on a scale that has no
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relevance and no comparison with the rises in the past century. The noble Viscount knows that as well as I do.
VISCOUNT MASSEREENE AND FERRARD: That is because not enough land is released.
LORD DIAMOND: I hesitate to interrupt the noble Lord, but we must make progress. Grateful as I am to the noble Lord, Lord Sandford, for the brevity of his reply, I do not think he has advanced the argument a great deal. In fact, I heard him say something which I did not understand at all. He said, as I understood him, that there is no relationship between this clause dealing with the withdrawal of the residual subsidy, and the rent increases. I thought that was what he said, because he was inviting us not to consider the rent increases until we get to Parts V and VI of the Bill dealing with rent increases. But the whole tenor of my argument is that the residual subsidy is related to the proposed rent increases. I hope the noble Lord will make clear what he said, because if one wants to contemplate smaller rent increases then one must deal with the residual subsidy. The residual subsidy phases out at £20 a year, but the increase in rents will be £26 a year, and after rates increases and so on the figures will very nearly balance. That is what is contemplated.
If the noble Lord says that that is not so, then may I say that the Bill has deceived me. And I am in the best of company; it has deceived all the local authorities, too, because the local authorities are pressing as hard as they can for a slowing down. May I read a letter dated June 2 this year addressed to me from the Association of Municipal Corporations? It states in paragraph 3:
"As you will know, throughout the consultations with the Government the Association pressed the view that the progression to fair rents should be more flexible. The importance therefore of the suggested amendment to Clause 2"—
that is, to reduce the £20 to £10—
"is that the rate of withdrawing existing subsidies is related to the increase in rent income."
I thought that was a fundamental part of the structure of the Bill. Perhaps the noble Lord said something which I misheard, or said something which he did not intend to say, or—perish the thought—he does not have the foggiest idea of

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what the Bill is about. He is trying his hardest to persuade us to the last conclusion. But I have to repeat that that is the situation as it is understood by all of us, including all of the local authorities. Therefore, it is no good the noble Lord saying, "We will not talk about inflation because that has nothing to do with rent increases. Rent increases do not arise until Clause 6 and we are still on Clause 2." We shall be grateful if the Government will tell us why they are insisting on this over-hasty withdrawal of subsidies, coupled with an over-hasty increase in rents, which will do such damage to the economy of the country, resulting in an increased twist of enormous magnitude to the wage spiral.
LORD SANDFORD: The noble Lord thanked me for being brief. I shall now try to be a little briefer, because there really is not much more to say. As I said the day before yesterday, of course there is a connection between the progression to fair rents, which we shall deal with in Parts V and VI, and the withdrawal of the existing subsidies which we are now discussing. I am looking forward to a discussion on progression to fair rents; but the object of a Committee stage is to look at one Part of a Bill at a time, and at the moment we are looking at residual subsidies and their withdrawal. There is not the direct connection which the noble
Lord, Lord Diamond, believes there to be, because, as I explained, there is the transition subsidy which comes in between. The speed of withdrawal of the residual subsidy represents the speed with which we get on with the changeover, from what we believe to be an outworn and indiscriminate system to a fair and better one. It is for that reason that we are sticking to the terms of Clause 2.
LORD LEATHERLAND: I do not want to prolong this discussion, but the only way I can be in order in making my request is to make it now before the clause is passed. May I please have from the noble Lord a copy of the algorithm? He has provided the noble Lord, Lord Avebury, with the only copy, and I should like to be able to study it in the leisurely atmosphere of my home during the weekend.
LORD SANDFORD: I am not sure that I can respond as quickly as that to the noble Lord, but I will do my best.
LORD LEATHERLAND: It seems to be duplicated, so it must be possible to run off another copy.
6.5 p.m.
On Question, Whether Clause 2 shall stand part of the Bill?
Their Lordships divided: Contents, 88; Not-Contents, 40.

CONTENTS

Aberdare. L.

Drumalbyn, L.

Latymer, L.

Abinger, L.

Dundonald, E.

Lauderdale, E.

Ailwyn, L.

Eccles, V.

Long, V.

Allerton, L.

Elgin and Kincardine, E.

Lothian, M.

Alport, L.

Elles, Bs.

Loudoun, C.

Amherst of Hackney, L.

Emmet of Amberley, Bs.

Margadale, L.

Balfour, E.

Ferrers, E.

Massereene and Ferrard, V.

Barnby, L.

Ferrier, L.

May, L.

Beaumont, L.

Fortescue, E.

Merrivale, L.

Belstead, L.

Gage, V.

Milverton, L.

Berkeley, Bs.

Gainford. L.

Molson, L.

Bessborough, E.

Garner, L.

Monck, V.

Bledisloe, V.

Goschen, V.

Monsell, V.

Brougham and Vaux, L.

Greenway, L.

Mowbray and Stourton, L. [Teller.]

Carrington, L.

Grenfell, L.

Colville of Culross, V.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Napier and Ettrick, L.

Cork and Orrery, E.

Nugent of Guildford, L.

Cottesloe, L.

Harvey of Tasburgh, L.

O'Neill of the Maine, L.

Cowley, E.

Hertford, M.

Orr-Ewing. L.

Craigavon, V.

Hood. V.

Rankeillour, L.

Crawshaw, L.

Howard of Glossop, L.

Reay, L.

Cullen of Ashbourne, L.

Hylton, L.

Reigate, L.

Daventry, V.

Hylton-Foster, Bs.

Ruthven of Freeland, Ly.

de Clifford, L.

Inglewood, L.

Sandford. L.

Denham, L. [Teller.]

Jellicoe, E. (L. Privy Seal.)

Sandys, L.

Derwent, L.

Kemsley, V.

Savile. L.

Digby, L.

Killearn, L.

Sempill, Ly.

Sinclair of Cleeve, L.

Tweedsmuir, L.

Wakefield of Kendal, L

Stamp, L.

Tweedsmuir of Belhelvie, Bs.

Wolverton, L.

Strange of Knokin, Bs.

Vivian, L.

Young, Bs.

NOT-CONTENTS

Barrington, V.

Gardiner, L.

McLeavy, L.

Beaumont of Whitley, L.

Garnsworthy, L.

Mais, L.

Beswick, L.

Gifford, L.

Nunburnholme, L.

Blackett, L.

Granville-West, L.

Phillips, Bs. [Teller.]

Brockway, L.

Greenwood of Rossendale, L.

Seear, Bs.

Burntwood, L.

Hale, L.

Shackleton, L.

Chalfont, L.

Hall, V.

Shepherd, L.

Champion, L.

Henderson, L.

Stow Hill, L.

Davies of Leek, L.

Hughes, L.

Strabolgi, L.

Diamond, L.

Jacques, L. [Teller.]

Summerskill, Bs.

Donaldson of Kingsbridge, L.

Leatherland, L.

Wells-Pestell, L.

Evans of Hungershall, L.

Llewelyn-Davies of Hastoe, Bs.

Willis, L.

Faringdon, L.

Lloyd of Hampstead, L.

Wynne-Jones, L.

Gaitskell, Bs.

Resolved in the affirmative, and Clause 2 agreed to.
Clause 3 [The transition subsidy, and associated rate fund contribution]:
6.14 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 16:
Page 4, line 13, leave out ("the percentage of").
The noble Lord said: I beg to move Amendment No. 16, and perhaps it would be convenient if we could take with it the following Amendment, No. 17, as the two are linked. The purpose of these two Amendments is to give effect to many of the statements of the noble Lord, Lord Sandford. When we were dealing with an earlier clause and were talking about subsidies, the noble Lord, Lord Sandford, frequently told us, "You see, the transition subsidy comes into it, and that makes up the balance", or words to that effect. Now we are on Clause 3, and we have got the transition subsidy; and this Amendment is a simple and, I am sure, an acceptable one. It achieves the purpose which at present the clause fails to achieve of making the subsidy a full subsidy instead of a part of a subsidy. I have no need to bother your Lordships with what part, because the part is described later on, in the Table; and the part that is not made good by the subsidy has to be made good by the local authority by a charge on its rate fund.
What we are doing here is to delete the words which refer to a percentage and, instead, we propose that the subsection should read:
"transition subsidy shall be payable to the local authority of an amount equal to the amount of the shortfall"—
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simply that. The shortfall is something which, again, is described in more detail in the later part of this clause, but, broadly, it is the difficulty which the noble Lord, Lord Sandford, has referred to many times as being overcome by the transition subsidy. The only difference the noble Lord, Lord Sandford, and I have had hitherto is that I distinguish between 100 per cent. and something less than 100 per cent.—it is just part of my nature; I just feel like that—whereas the noble Lord seems to think there is no difference between 100 per cent. and 90. 85, 80 or 75 per cent., or such other percentage as may be substituted for 75 per cent. Therefore, I am giving the noble Lord an opportunity to achieve his purpose. I beg to move.
BARONESS YOUNG: We have, I think, already discussed this principle on a preceding clause. The principle is as to whether or not the local authority should make a contribution to each of the subsidies—in this particular case to the transition subsidy. The position is as set out in the Table, and it is, of course, that, in 1972, 90 per cent. of the subsidy is paid by the Government and 10 per cent. by the local authority, which rises in 1975–76 to 25 per cent. by the local authority. It does not go beyond that until after the years 1982 or 1983, and even that is a matter which has to be determined then. I think the point is that those of us who value local authority freedom feel that if the Government paid the full 100 per cent. subsidy then inevitably the Government would want to see how the money was spent, and it would lead to further restrictions and further inquiry into the whole matter. Indeed, the 100 per cent. deficit

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subsidy would be unlikely to benefit the issue of local authority freedom, and for that reason we feel that it would assist towards a much better relationship between central and local government to leave the proportions as they are.
LORD DIAMOND: Your Lordships will have noticed that whenever the Government have an impossible task to perform they put up the noble Baroness to try to perform it for them, and no Government could be wiser than using their best batsman when they are on a sticky wicket—an extremely sticky wicket. So I am saying to the noble Baroness that we are delighted to hear from her again, but—I hope she will not misunderstand me—she whets my appetite. I had better hasten to add that I want to hear some more from her. What I want to hear from her is a little more explanation about the new situation which has arisen—and, of course, she has far more experience of local authority work than I have—under which chairmen and treasurers of municipal bodies, chairmen of local authorities, mayors and particularly chairmen of finance and general purposes committees are so concerned with their liberty that when the Government come along and say, "We would rather not give you 80 per cent.; we would rather give you 90 per cent.", they immediately put their hands up in horror and say, "No, please do not do that—that would sully our liberty".
What I am saying to the noble Baroness is that she can tell that story to the Marines! I am sorry, but it just does not make any impact so far as I am concerned. A local authority has a very hard time; it is being battered by public opinion to keen its rates demands down, pressed by public opinion to increase its services and the whole time is finding it very difficult trying to make ends meet, as everybody who is concerned with local authority work knows. It comes to the Government for help. The Government have such control of its affairs in most ways that the local authority is not going to feel that its freedom is denied if instead of getting 80 per cent. it gets 90 per cent.
I am bound to say to the noble Baroness that I am sorry that she picked on that argument. It did not do her justice. If the liberty is to be maintained
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by giving 90 per cent. instead of 100 per cent., what is it that happens in Year Two when it is reduced to 85 per cent., or in Year Three, to 80 per cent., or in Year Four, to 75 per cent.? Why should I, as a local authority representative, feel my liberty is secure in one year only if I receive 90 per cent. and that my liberty can only be maintained in security in the following year when it is reduced to 85 per cent., 80 per cent., or 75 per cent. "or such other figure as the Secretary of State may by order direct"? I am sorry, but that will not wash.
The serious point here is that this is a transitional subsidy; it is not a permanent subsidy. It is not likely therefore to affect the permanent relationship between the local authority and central Government; and, as we know, the local authorities attach importance to it. There is no reason why the local authorities should not (as was indicated to us by the noble Lord, Lord Sandford) rely on this subsidy to make up the deficit in other subsidies. That was the whole purport of his argument: that whatever other difficulties there were, they would be put right here. I hope that we are not going to get into a situation where, when on Clause 2, we were told that we cannot consider rent increases, for example, because this comes in a later clause; and that when we come to the later clause (as now on Clause 3) we are told that this was really decided in principle on the earlier clause and therefore we cannot discuss it now. I am sorry, we want to progress as rapidly as possible, but at the same time we want to press the point that there is no justification whatever for having falling percentages or any percentages at all. We invite the noble Baroness to have another go.
BARONESS YOUNG: I am bound to say that in the course of my public life, logical as I am, I have not always convinced Members of the opposite Party of the rightness of my case. I was very pleased with what Lord Diamond said and I shall have to try to tell him—even if he is not a Marine! I think that the argument was not whether we were talking about a 90 per cent. subsidy but whether or not we were talking about a 100 per cent. subsidy. It was on that particular issue that I hung my argument about local authority freedom. I think

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it still stands. If a local authority has a 100 per cent. subsidy for a function, it will have less freedom than if it makes a contribution from its own finances.
On the second point, the residual subsidy is a subsidy concerned with the phasing out of present subsidies. The transitional subsidy is to meet the shortfall that could arise in the course of this phasing out. It is a sort of second subsidy. I do not think any of us have indicated that it would ever meet all the difference; it meets the major part of it until 1975–76. What happens after 1982 has yet to be decided. It is for these reasons that I return to the argument that we consider it essential to keep this right relationship between central and local government. We feel the subsidy ought to be divided in these proportions between central and local government.
6.26 p.m.
LORD GARNSWORTHY: I should like to say a word on the question of local authority freedom because I do not follow the noble Baroness in what she had to say. Shortfall is being created as a result of the pursuance of Government policy. The Government are responsible for whatever shortfall local authorities will have. Can she please explain, if the Government accept responsibility for the policy they are forcing on local authorities, how this possibly interferes with their freedom? My noble friend asked about the difference between 90 per cent., 85 per cent., 80 per cent. and 75 per cent. How does that affect freedom? If the local authorities got 100 per cent. of their shortfall this will give them freedom. It will give the ratepayers freedom, a freedom they would very much appreciate, instead of being penalised.
THE EARL OF BALFOUR: Before the Minister replies, I wonder whether I might say a few words on this point. I speak as a county councillor of Scotland. I have never felt as a councillor that the 100 per cent. subsidy is a good thing; because local authority councillors have never taken the care they would otherwise take if they were involved in an expense which occurred in the rates. I have found this from past experience particularly in education which, some years ago, attracted a 100 per cent. grant Although housing tends to be an ever
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increasing expenditure, even if the rents are increased it may be some time before the housing deficit is written off. I assume that this transitional subsidy is to assist the local authority during this period when it has a deficit or shortfall.
LORD SHEPHERD: I hope the noble Earl will ensure that what he has just said in general criticism of the way in which local authorities administer their subsidies receives the widest prominence in the district in which he serves. I hope he will ensure that it receives wide circulation, because he clearly believes it. I think that in those local authorities, those persons responsible for his election are entitled to have his views before them.
I certainly join with my noble friend in the joy felt on this side of the Committee when the noble Baroness replies to the more difficult Amendments that are moved from this side. I think the noble Baroness was beginning herself to believe that by reducing subsidies you somehow give local authorities a greater sense of freedom. I think the noble Baroness believes that this is the Government's intention. I know it is irregular, but it may be that it would help the noble Baroness in impressing upon us that it is the Government's genuine desire to see this increased responsibility and sense of freedom.
In Clause 18 which is the clause dealing with rent rebates and rent allowances, subsection (3) says:
"No rebate from the rent of a dwelling shall be granted by virtue of this section to any person …"
There then follow three categories of people. Here there are laid down specifically by Her Majesty's Government through an Act of Parliament certain things that a local authority cannot do. In Amendment 87E I seek to give discretion to the local authorities to be able to use their discretion as to whether these three groups of individuals should be entitled to a rent rebate. If the noble Lord responsible for that Part of the Bill is prepared to say that he will accept Amendment No. 87E, which gives this discretion to local authorities, I shall find the case made by the noble Baroness infinitely stronger.
I agree with my noble friend. I do not see how a local authority can feel

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any real increase of freedom by a reduction in the subsidy. Its sense of freedom will be infinitely less because its opportunity and ability to meet major housing problems will be that degree less as a consequence of this continuing reduction in the State contribution to the subsidy and the increases which, clearly, will have to be laid on the general ratepayers. If any noble Lord opposite can advise me that the Government will accept Amendment No. 87E, or the spirit of it, I should find the case made by the noble Baroness a good deal stronger.
6.31 p.m.
BARONESS YOUNG: May I say, in answer to the noble Lord, Lord Shepherd, that I do not think I ever said that by reducing subsidies one increased a local authority's freedom. The point of the argument is whether or not the subsidy is 100 per cent. I am saying that if a local authority does not pay something towards it, inevitably the Government will interfere increasingly to see how the subsidy is spent. They will ask for detailed reports; they will be restrictive. I should like to thank my noble friend Lord Balfour for his remarks, because I think the general principle is always true that if you have to pay for something it increases your sense of responsibility.
LORD DIAMOND: Regretfully, we are not wholly satisfied, and that is putting it mildly. But we are always in the position of being willing to pick any crumb from the table of the rich Ladies and rich Lords opposite, and that is what I am proposing to do. But first I must make the point that the freedom involved in the matters with which this clause is concerned is, in any event, nil. The local authority is required to put up the rents and this clause deals with the amount by which the rent increases are less than the
"standard amount for that year as defined below ".
I am reading from subsection (6). So there is no real point in the argument that freedom in this clause is affected, because there is none to begin with.
The noble Baroness insists on her point that in the general relationship between the local authority and central Government a greater sense of freedom is felt if something less than 100 per cent. is
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given. There is a smaller sense of dependence if you receive something less than 100 per cent. Let us see whether we can reach agreement from that premise. We have, therefore, in the first year a contribution by the local authority of 10 per cent. and a subsidy by the central Government of 90 per cent. Therefore we have a situation in which the sense of freedom of the local authority is preserved and maintained because there is a 10 per cent. contribution out of the ratepayers' pockets. Good! Let us assume that that is established and that everybody in the local authority goes about waving flags, whatever the local flag may be, and saying, "Good!, we are now free; we are paying 10 per cent."
I am saying now to the noble Lady that, as she will appreciate, the Amendment excludes the whole of that table. If she will say that we can exclude part of that table and merely leave it at the first line of 90 per cent., we have then met her argument completely. The freedom of the authority is maintained and held inviolate for all time. There is a 90 per cent. contribution by the central Government and a 10 per cent. independence sign by the local authority and therefore everything is fine. If the noble Baroness will say that that, which was her only argument, can be accepted by both sides of the Committee, it is satisfied by the first line of the table. Will she tell us that she is quite happy to receive an Amendment at a later stage deleting the rest of the table which is quite unnecessary having regard to her argument? As your Lordships will perceive, it merely goes on to increase the contribution made by the local authority. But once a local authority has achieved a sense of independence and freedom, at a cost of 10 per cent., why should it pay 15 per cent. or 20 per cent. or 25 per cent.—or such figure as the Secretary of State may determine? One never knows—it may be a Socialist Secretary of State. That should set the noble Baroness thinking.
In those circumstances I am asking the noble Baroness whether she will assure us that an Amendment would, in principle, be acceptable if it stopped at the first line and left it at 90 per cent./10 per cent. In such circumstances I would seek the permission of the Committee to withdraw this Amendment and to

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introduce, at a later stage, an Amendment giving the local authority the feeling of freedom which the noble Baroness thinks it so essential to be demonstrated by a 10 per cent. contribution, and leave it at that.
BARONESS YOUNG: That, of course, would be a somewhat different Amendment from the one which the noble Lord has on the Marshalled List. But it seems to me that the point about percentages is that the normal percentage would be 25 per cent., which is what one would expect, and not just a 10 per cent. contribution. I am quite sure that the noble Lord, who knows the conventions of your Lordships' House better than I do, will know that I could not accept his proposed Amendment. But, it must be accepted that it is a transition subsidy we are talking about, whose purpose is to help authorities who have made losses on their Housing Revenue Accounts because of the withdrawal of present subsidies which have not been made up by the residual subsidy and increased rents. It is a subsidy which is on a sliding scale to help local authorities through the most difficult years, which will be the first ones, and the normal level will be 75 per cent. from the Government and 25 per cent. from the ratepayers.
LORD DIAMOND: The noble Baroness entices me further and further. I have an Amendment down which tests this very point. That Amendment is on the Marshalled List and is not a theoretical one. We are at a point when it might be convenient to move from this Amendment to the next one, and so in the hope—I am not putting it any higher than that—that the noble Baroness may see reason if we withdraw this Amendment, in order to get on quickly to the next Amendment, I seek your Lordships' permission to withdraw this Amendment.
Amendment, by leave, withdrawn.
6.46 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 18:
Page 4, line 37, after ("1981–2") insert ("and subsequent years").
The noble Lord said: I beg to move Amendment No. 18 and perhaps it will be convenient if, at the same time, we consider Amendment No. 19 as the two are linked. While everything is fresh in the mind of the noble Baroness may I
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say that we are dealing with stage three of her argument; that is, that where you have to have a sense of freedom by the local authority, which we have established, and also what the noble Baroness calls the normal relationship of 75/25 per cent. I am now dealing with an extraordinary, exceptional provision, overlooked by the noble Baroness and her advisers—your Lordships see I am so persuaded by the noble Baroness that I march with her step by step; I am sticking to her like a leech. The Bill, surprisingly enough, provides under Clause 3(4) that, instead of having the normal 75/25 per cent.:
"The Secretary of State may from time to time by order, for such years after 1981–82 as may be specified in the order"—
clearly it would be a Socialist Secretary of State—
"in column 2 of the Table above for 75 per cent. substitute such other percentage, not being less than 60 per cent., as may be specified in the order".
I am sure that the noble Baroness had not noticed that figure of 60 per cent., because of course this is abnormal and totally outside her philosophy. Therefore the noble Baroness and I want to delete the 60 per cent. and restore for present purposes what she calls the normal relationship of 75/25 per cent.
I will not say that I am wholly persuaded by the noble Baroness's argument about the 75/25 per cent., but in these matters it is a case of noblesse oblige, and in my new ennobled state I felt that I must show a little courtesy to the noble Baroness and move from the immediately preceding Amendment to this one to give her an immediate opportunity of saying: "Yes; this is an error in the Bill, and now that it has been called to my attention, we will restore the normal situation of 75/25 per cent.". I look forward to sharing the noble Baroness's enthusiasm on having her normal relationship as between local authority and central government reestablished. I beg to move.
LORD SANDFORD: I think the noble Lord has had enough of the noble Baroness for the time being, and I will deal with the question of what happens after approximately 10 years from now. It is perfectly true, as my noble friend says, that the 75/25 per cent. relationship is in many ways the normal and

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standard financial relationship between central Government and local government. It confers on the relationship all the advantages for which my noble friend claimed—and no one is in a better position than she is to express that, because she does so from her personal experience. But the fact remains that after 10 years of this new system there will undoubtedly come a moment when a review is called for to see how it has been working out.
In the great majority of cases a transition subsidy will have faded out of the picture altogether, and those authorities who need subsidy at all will be relying mainly on the rising cost subsidy to which we shall come in the next clause. But there may be some that are still relying on a small measure of transition subsidy. Most of them will be those who are under housing stresses and still face major housing problems, and it may well be that in their case the percentage ought to be increased. There may, on the other hand, be others who for one reason or another are still drawing transition subsidy, but are not in anything like such great need as others. There may then be an occasion to invoke Clause 16, which the noble Lord will have noticed enables the Secretary of State, after consultation with the local authority associations, and subject to a Negative Resolution of either House of Parliament, to make adjustments in respect of all local authorities, in respect of certain classes of local authorities, or in respect of particular local authorities.
So we reach a position where, under the clause as it stands, it will be possible for the Secretary of State in those conditions to make further adjustments towards concentrating the subsidies available on those places which at that time, 10 years hence, are still in need of particular subsidies, and, in order to do so, reducing somewhat the subsidies that would then be payable or under payment to authorities that do not really need them. That is the reason why we need the flexibility provided for in this clause as drafted. That does not mean to say that there may not be cases where in certain circumstances it may be necessary to amend the standard rate of 75 per cent., which has all the advantages that my noble friend claimed for it, upwards in some cases, or downwards as far as
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60 per cent. in others. I hope that that explanation of the way in which it is intended to use this discretion in the course of this review will satisfy the noble Lord.
LORD DIAMOND: I hope the noble Lord, Lord Sandford, will not take amiss what I am now going to say, and I hope that it will not cause any difficulty. But, having listened to the noble Baroness and to the noble Lord, I still prefer the noble Baroness. The noble Baroness persuaded me that, at all events for the moment, it was right to have regard to a figure which is not unknown in local authority circles; namely, the 75/25 per cent. relationship as between local authority finance and central government finance. The noble Baroness persuaded me that it was right in those circumstances for me to withdraw the previous Amendment so that we could immediately consider this one. Now the noble Lord, Lord Sandford, moves off that ground completely and says that, looking forward to 1982–83 (which is a pretty long time for any Conservative Minister to look forward to as a Minister; though I do not wish the noble Lord any ill), he thinks the Minister at that time ought to have a certain flexibility.
To be quite serious about this, we are talking about an authority which still finds that it is collecting less by way of rent increases in the standard amount even as long ahead as 10 years' time. So there clearly must be difficulties there. The noble Lord says that there may be circumstances in which 75 per cent. or more should be paid. That is quite all right: one is only saying that a reduction is not wanted. The noble Lord and I are at one in our desire to give the Minister of the day flexibility in paying a subsidy which is more than 75 per cent., because it may prove over the years that that is necessary. But that does not in any sense justify a reduction of the percentage to a figure of 60 per cent. This is an absurd proportion as between local authority and central Government—66/40 per cent. The noble Lord cannot give any other examples of it. It is a situation arising out of the Government's own Bill. It is intended to be a transition subsidy. When we were talking about other subsidies the noble Lord, Lord Sandford, said that the transition subsidy would take care of that; and now, when we

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come to the transition subsidy, the noble Lord says that the increase in rising cost subsidy will take care of that. We feel that we have gone far enough along this road of trying to reach agreement by accepting even the tiniest crumb. We feel that the Government are now saying that they have no intention other than to extract the maximum possible from the ratepayer and the tenant in order to save Exchequer money—of course for
LORD DRUMALBYN: I beg to move that the House do now resume.
the ultimate benefit of the taxpayer. This is a situation to which we are wholly opposed, and on this occasion I must seek to divide your Lordships' Committee.
6.51 p.m.
On Question, Whether the said Amendment (No. 18) shall be agreed to?
Their Lordships divided: Contents, 32; Not-Contents, 70.

CONTENTS

Avebury, L.

Henderson, L.

Segal, L.

Beswick, L.

Hughes, L.

Shackleton, L.

Blackett, L.

Jacques, L. [Teller.]

Shepherd, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, Bs.

Southwark, Bp.

Diamond, L.

Lloyd of Hampstead, L.

Stow Hill, L.

Douglas of Barloch, L.

Mais, L.

Strabolgi, L.

Gaitskell, Bs.

Milner of Leeds, L.

Summerskill, Bs.

Garnsworthy, L.

Noel-Buxton, L.

Tanlaw, L.

Greenway, L.

Phillips, Bs.

Willis, L.

Greenwood of Rossendale, L.

Rea, L.

Wynne-Jones, L.

Hale, L.

Ruthven of Freeland, Ly.

NOT-CONTENTS

Aberdare, L.

Dundonald, E.

Merrivale, L.

Ailwyn, L.

Eccles, V.

Milverton, L.

Allerton, L.

Elles, Bs.

Monck, V.

Alport, L.

Ferrers, E.

Monckton of Brenchley, V.

Balfour, E.

Ferrier, L.

Monsell, V.

Barnby, L.

Fortescue, E.

Mowbray and Stourton, L. [Teller.]

Beaumont, L.

Gainford, L.

Belstead, L.

Goschen, V.

Nugent of Guildford, L.

Berkeley, Bs.

Gowrie, E.

Pender, L.

Bessborough, E.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Rankeillour, L.

Boyle of Handsworth, L.

Reigate, L.

Brougham and Vaux, L.

Helsby, L.

Sandford, L.

Carrington, L.

Hood, V.

Sandys, L.

Colville of Culross, V.

Hylton, L.

Savile, L.

Cork and Orrery, E.

Hylton-Foster, Bs.

Sempill, Ly.

Cowley, E.

Kemsley, V.

Sinclair of Cleeve, L.

Craigavon, V.

Killearn, L.

Somers, L.

Crawshaw, L.

Kinnoull, E.

Terrington, L.

Cullen of Ashbourne, L.

Lauderdale, E.

Tweedsmuir, L.

de Clifford, L.

Lothian, M.

Tweedsmuir of Belhelvie, Bs.

Denham, L. [Teller.]

Loudoun, C.

Vivian, L.

Derwent, L.

Margadale, L.

Wakefield of Kendal, L.

Digby, L.

Massereene and Ferrard, V.

Wolverton, L.

Drumalbyn, L.

May, L.

Young, Bs.

Resolved in the negative, and Amendment disagreed to accordingly.

Moved accordingly, and, on Question, Motion agreed to.
House resumed.

POLICE BILL
6.59 p.m.
LORD WILLIS: My Lords, I beg to move that this Bill be now read a second time. It is a very simple and short Bill to amend Section 44(2) of the Police Act 1964, and I stand here really as a "spear carrier and messenger" rather than as a principal, because the real work behind this short measure has been done by my right honourable friend in another place, Alfred Morris, on behalf of the Police Federation, which he advises. The Bill has the full support of the Police Federation and of the Scottish Police Federation. Its roots lie back in the history of the police force of this country, because 54 years ago in 1918 there was great unrest in the police, especially in London, and the police began to organise, quite illegally at that time, the National Union of Police and Prison Officers. They put forward demands for better pay and conditions and union recognition. As a result, their leaders were dismissed from the force and a strike was organised. This strike was settled, after some bitterness, on terms which gave the policemen most of their demands except for recognition of the union. It was understood that there were certain difficulties in recognising a straightforward trade union with a body of men like the police who have clearly a duty to be impartial.
In 1919 a Departmental Committee was set up and this recommended the establishment of the Police Federation, which has existed ever since. It was a sort of company union, financed out of official funds and deliberately insulated from any contact with any outside bodies. In spite of these difficulties it could, and did, speak for the ordinary policeman and it won growing respect. For example, in 1953 the Police Council for Great Britain was set up as a Whitley negotiating body for police pay. In 1955 the Federation had progressed so far that it was permitted by Parliament to raise its own funds by voluntary subscription. In recent years the Federation has increased in scope and influence and it would be impossible for anybody who knows anything at all about the operation of our police force in this country to imagine the efficient running of the force without it. But it is still hampered by the restrictions which were imposed over
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fifty years ago in vastly differing circumstances. Among these restrictions was the insistence that the Police Federation:
"shall be entirely independent of and unassociated with any body or person outside the Police Service."
The Federation feels that it is now old enough and responsible enough to decide what company is shall keep, and that is really the purpose of this Bill. It will enable them—within limits—to do exactly that. There is obviously no question of taking on political associations or of affiliation, for example, to the Trades Union Congress, because the leaders and members of the Federation realise that the independence and impartiality of the police must be protected and must be visibly seen to be protected. In the Bill I am now introducing there is a safeguard that lies with the Home Secretary, because he has the right of final approval of any association the Police Federation wish to make with an outside body.
What the Federation wants to do is to end the ridiculous situation which exists to-day in which it is illegal for it to associate, for example, with the National Association of Retired Police Officers, which is clearly nonsense. It wishes—and this is very important with the coming of the Common Market—to extend its links with the appropriate European and overseas police organisations. That, in a nutshell, is what this Bill is all about: to amend the 1964 Police Act so that the police have the right to do these simple things, always bearing in mind that the Home Secretary has the final right of approval. That is the Bill and I hope that it will commend itself to your Lordships.
For my part, I am delighted to have this opportunity to introduce it to your Lordships' House. The first speech I made in this House was on the police, during the Second Reading of the Police Act 1964 which this Bill now seeks to amend. I said then that the British public expect incredibly high standards of its police force. What is extraordinary is how often these high expectations are fulfilled, not how often they are let down. Recently I have been doing some research in the Midlands for a new police series that I am going to produce for television. I have been very active and have spent a great deal of time with the local police force of a small town in the Midlands.

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Anything less like the "Fascist pigs" that the police are called in some quarters would be hard to imagine. They are—as they were in 1964, and as they were in 1918 when they went on strike—a collection of human beings who are trying to do their jobs, with all the variety of human beings ranging, if you like, from Barlow on the one hand to Dixon on the other. They are not perfect; but then they would not be human beings if they were perfect. Those who seek to attack them as "Fascist pigs" might pause to think: would they rather have no police force at all? Can they imagine a society that could exist without a police force? Would they rather have the police force of some other country? I cannot think of any force which is better than the one we have at present. This little Bill that I have the honour to introduce to your Lordships' House will help our policemen to do their job just a little better, and I therefore commend it to your Lordships' House. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Willis.)
7.8 p.m.
LORD STOW HILL: My Lords, may I apologise for intervening in this debate on Second Reading without having put my name down to speak. I do so because I was delighted to hear what my noble friend said with regard to the police force generally in this country. We have a most admirable police force and it is a great pleasure to me in particular, because I have had some association with them, to listen to what was said in praise of them. They deserve every word of it. I had a lot to do with the Police Federation some years back; I found them extremely helpful and very responsible. I am quite sure that this Bill, which makes further provision for their independence—and, may I add, independent dignity—is a Bill which comes not a minute too early. I am very glad to see it brought before this House from another place, and I cordially hope that your Lordships will think it right to give it a Second Reading.
7.9 p.m.
LORD SHACKLETON: My Lords, since this is a Bill which I understand has the support of all Parties, it is right that I should also support my noble friend Lord Willis who has moved the
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Second Reading with such eloquence and knowledge. Let me on this occasion congratulate him on being in his place in time—remembering a previous occasion. The British public have a love/hate relationship with the police. I am certain that, like every other institution, the police need the recognition and gratitude of so many of us for what is at times a most difficult task, which is discharged with greater moderation, discipline and decency than by any other police force in the world. The fact that there is to-day this recognition of the Federation—and it has taken rather a long time for people to recognise that it has grown up, so to speak—is very proper. We have had the endorsement of a former Home Secretary and we are hoping for endorsement from the noble Baroness.
I hope that this Bill will pass rapidly into law and that it will do so with the blessing of your Lordships. On these occasions I think it is also right to congratulate the Member in another place, Mr. Alfred Morris, who has been responsible for more than one Bill which has cone before your Lordships' House. His own sponsorship and support has been valuable, and I congratulate him particularly on picking a great expert in my noble friend Lord Willis.
7.10 p.m.
BARONESS YOUNG: My Lords, on behalf of Her Majesty's Government I should like to welcome this Bill and to thank the noble Lord, Lord Willis, for introducing it. It is a Bill which has the support of the Government. The Police Act 1919 made provision in Section 1 for the introduction of the Police Federation, later split into a Federation for England and Wales and one for Scotland. As the noble Lord, Lord Willis, said, in the years immediately preceding the 1919 Act industrial relations in the Police Service had deteriorated to the extent that there was a strike over the right of the police to form a trade union. The 1919 Act was designed to provide for adequate representation while at the same time preserving the impartiality of the Service and ensuring that it should not be a party to any industrial dispute. Section 2 of the Act barred members of police forces, with minor exceptions, from trade union membership; and Section 3

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made an offence any attempt by persons inside or outside the Service to cause disaffection. Section 1(2) of the 1919 Act provided that:
"The Police Federation and every branch thereof shall be entirely independent of and unassociated with any body or person outside the police service."
Essentially the same provision is repeated in Section 44(2) of the current Police Act 1964 with which the present Bill is concerned.
The Police Federations made representations to the previous Government that Section 44(2) was unnecessarily restrictive. These representations resulted in an undertaking to amend the Act at a suitable opportunity, and that undertaking was repeated by the present Government on assuming office. The Bill has the support of both sides of this House and the Secretary of State for Scotland has also indicated his support of the Bill. In the view of the Federations, Section 44(2) debars them from links with eminently respectable and responsible bodies; and the noble Lord, Lord Willis, has given examples such as the National Association of Retired Police Officers and certain international or European police bodies. The Federations have not asked for any amendment of Section 47 of the 1964 Act which bars membership of trade unions and similar associations. The Bill does not offer unrestricted freedom to the Federations. It empowers the Secretary of State to authorise either a federation at national level or a branch at police force level to be associated with a specified body or person outside the Service. It also empowers him to impose such conditions as he may see fit and to restore or modify any authorisation previously given. He therefore has full power to safeguard the public interest.
In conclusion, my Lords, I would say that this gives us all an opportunity to say how grateful we are for the work the police do, often in difficult and dangerous circumstances. We are very glad to have this opportunity of showing our appreciation publicly and of being able
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to say so at this time. The Police Federations have always been responsible organisations and it seems eminently reasonable that the House should approve the small concession to their wishes which the Bill represents. I am very happy to support this Second Reading.
7.14 p.m.
LORD WILLIS: My Lords, I should like briefly to thank the noble Baroness for what she has just said and also to thank the Government, the Home Secretary and members of the Home Secretary's Department for the help they have given to the Federation in the drafting of this Bill and in the discussions that led up to it. As we all know, it is a small measure but it will help the Police Federation to do its job better, and make for a happier policeman, and that, after all, is what we are all looking for. I thank your Lordships very much.
On Question, Bill read 2a, and committed to a Committee of the whole House.

HOUSING (FINANCIAL PROVISIONS) (SCOTLAND) BILL
Brought from the Commons; read 1a, and to be printed.
ROYAL BANK OF SCOTLAND LIMITED WIDOWS' AND ORPHANS' FUND ORDER CON- FIRMATION BILL
Brought from the Commons; read 1a, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936) deemed to have been read 2a and reported from the Committee.
CIVIL EVIDENCE BILL
Bill read 3a, and passed.
NATIONAL INSURANCE (AMENDMENT) BILL
Report received.

DEFECTIVE PREMISES BILL
7.16 p.m.
LORD STOW HILL: My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(Lord Stow Hill.)
On Question, Motion agreed to.
Clause 1 [Duty to build dwellings properly]:
LORD STOW HILL: My Lords, this is purely a drafting Amendment in order to bring that particular part of Clause 1 to which it relates into consonance with the earlier parts of that clause. I beg to move.
Amendment moved—
Page 2, line 27, leave out ("completion") and insert ("provision").—(Lord Stow Hill.)
On Question, Amendment agreed to.
Clause 2 [Cases excluded from the remedy under section 1]:
LORD STOW HILL LORD STOW HILL moved Amendment No. 2:
Page 2, line 32, leave out ("erection") and insert ("provision").
The noble and learned Lord said: My Lords, I beg to move Amendment No. 2. When we were discussing this Bill on Committee it was pointed out by the noble Earl, Lord Kinnoull, that there was a difference in the wording of the opening part of Clause 2 which seemed not to accord with the wording of Clause 1. In answer, I offered the explanation that really the wording of Clause 2 covered protection of the kind that was given by the National House building Registration Council's scheme. On further reflection, it has occurred to those responsible for the Bill and to me that it would be desirable to widen that wording in Clause 2 in order to cover schemes which might be approved hereafter which might be outside the scope of the existing word "erection". The word "provision" is wider in scope and accords with the similar word used in Clause 1. I beg to move.
THE EARL OF KINNOULL: My Lords, may I shortly thank the noble and learned Lord for having looked at this point
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again, and his advisers, and for proposing this Amendment.
On Question, Amendment agreed to.
7.20 p.m.
THE EARL OF KINNOULL THE EARL OF KINNOULL moved Amendment No. 3:
Page 3, line 33, at end insert:
("(7) Where an interest in a dwelling is compulsorily acquired—

(a) no action shall be brought by the acquiring authority for breach of the duty imposed by section 1 above in respect of the dwelling; and

(b) if any work for or in connection with the provision of the dwelling was done otherwise than in the course of a business by the person in occupation of the dwelling at the time of the compulsory acquisition, the acquiring authority and not that person shall be treated as the person who took on the work and accordingly as owing that duty.")

The noble Earl said: My Lords, I beg to move Amendment No. 3 on the Marshalled List. The House may recall that the question of compulsory purchase order and the effect it would have on this Bill was raised in Committee. It was pointed out then that the procedure of a compulsory purchase order was unlike that of any other normal procedures of a contract of sale, particularly as you were faced with an unwilling vendor as against a willing vendor under normal circumstances. For that reason it was considered that the compulsory purchase order qualified as a special case. It was also argued that the character of the sale under compulsory purchase procedures was entirely different owing to the fact that the purchaser or acquiring body took over no liabilities from the vendor, particularly, as an example, restrictive covenants.
It was also suggested that possibly eight cases out of ten of compulsory purchase orders came usually for the demolition of a property for a road widening scheme or some other purpose. In this one is only dealing with a small minority of cases of houses being held by the acquiring authority after purchase and perhaps let on a temporary basis. Indeed, I believe the acquiring authority would have quite a job to establish and justify the use of a compulsory purchase order in those circumstances. So we are dealing under compulsory purchase orders in this Bill with a very few cases

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—the special nature of the unwilling vendor. It was suggested in Committee that such vendors should be entitled to be excluded under Clause 2 of the Bill, along with certain other cases. The noble Lord, Lord Stow Hill, with his usual persuasion, expressed great sympathy with the Amendment then moved, but came down nevertheless against it after, he said, having followed the advice of his advisers. I understand that the primary reason why he came down against it was that he saw no reason why the general duty under Clause 1 should be an exception in the case of an acquiring body. After all, the house being built was built not only for the lifetime of the vendor but would be in use for subsequent purchasers.
The noble Lord also put forward the view that in cases of compulsory purchase the vendors receive full compensation from the acquiring body, which would possibly cover any cost of indemnity. On reflection I believe there are many good reasons to ask the noble Lord to reconsider this matter. In particular one has the example of the owner builder and the difficulty he may have in getting an insurance company to accept the indemnity insurance. In addition to that there seems to be no certainty that a district valuer will be able to evaluate with any accuracy the loss caused by the indemnity, but there is of course much greater certainty that the district valuer could judge the value of the house in its present condition.
My Lords, again I submit that the compulsory purchase order is a special procedure which only in limited cases deserves special attention. I have done my best, with the assistance of my advisers, to see that the Amendment is technically sound, but I appreciate that the noble Lord has not had long to examine it. Subsection (7)(a) contains a general exclusion of all vendors from claims under Clause 1 from acquiring bodies. However it is only from the acquiring bodies, and I believe the intention would be that any vendor would not subsequently be free of claims against tenants of the acquiring body or, for that matter, any new purchaser. Therefore it has only a limited scope.
Under subsection (7)(b) full exclusion of liability would be granted to owner builders against the acquiring authority in any subsequent claims. The noble Lord thought that previous Amendments on the Committee stage went rather wide, and I certainly agree with that; but I hope he will accept that this Amendment has a limited scope and gets to the core of the problem as one sees it. I beg to move.
LORD DOUGLAS OF BARLOCH: My Lords, I should like to support this Amendment because I think it is justified. This is a Bill which makes an inroad upon the ancient principle of caveat emptor—and quite justifiably—because buying a house is a difficult transaction for somebody who is not highly skilled, and not all purchasers of houses have expert advice. But in the case where a property is acquired compulsorily by a public authority we all know that those authorities have very skilled advice and that they do not pay more than the property is actually worth in its existing condition. It would therefore, I submit, be highly unfair if, after the property had been acquired at a price which was perfectly satisfactory to the acquiring authority, there should then be a recourse against the vendor under this Bill. I am sure that was not really intended and I hope that my noble and learned friend will accept the Amendment.
7.27 p.m.
LORD STOW HILL: My Lords, as the sponsor of this Bill I should like, if I may, to express my personal gratitude to the noble Earl for having given such a great deal of thought to this particular aspect of the Bill. When we were discussing it in Committee, as he has reminded us, there was obviously a considerable amount of sympathy for the purpose behind the Amendment that he then put down. I shared that sympathy, and I know that the noble and learned Lord who sits on the Woolsack equally shared it. As the noble Earl has reminded us, when I was answering his case on that Amendment I submitted that perhaps it went rather too wide and indicated that in my view the argument on the whole was weightier against the Amendment than in favour of it. But I intimated that view with some hesitation and I think it was the general desire of the Committee

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that we should revert to the matter on Report.
The noble Earl has now tabled a different Amendment, indicating a different approach, and his present Amendment, as he has pointed out, is much narrower in scope. I saw it for the first time this morning and have been studying it since, and it is possible that I have missed some of the implications of this rather complicated Amendment. If I have, I hope your Lordships will feel that it will not be unreasonable for me to revert to it on Third Reading. As it is, however, giving it the best consideration that I can, I feel that the advice I ought to offer to the House is most certainly to accept it. Therefore I give that advice to your Lordships. Once again I should like to express my personal gratitude to the noble Earl for all the trouble he has taken to get this part of the Bill right.
THE LORD CHANCELLOR: My Lords, before anything more is said perhaps I ought to make plain where the Government stand on this Amendment. As the House will remember, I intervened at the Committee stage to indicate that a question of policy was involved and that my noble friend Lord Kinnoull should perhaps be given another chance to think this subject out. What excited my sympathy on that occasion was not merely the thinness of the House (which I am afraid has been to some extent repeated on this occasion) but also the fact that this Bill, which carries with it full Government support—and I have always expressed my gratitude to the noble Lord, Lord Stow Hill, for becoming its godfather—is an important Bill from the point of view of consumer protection. But the object is to protect the individual consumer of this kind of service, rather than to protect acquiring local authorities who acquire property by compulsory purchase. The first part of the Amendment would undoubtedly achieve the object of protecting the consumer fully without extending the protection to the local authority, and therefore it struck me that it would achieve an excellent purpose if it was within the desire of the House to pass an Amendment of this kind. I cannot give him full Government support, because it would take a great deal longer than I have been able to have to have the necessary consultations, but if it is the will of the House to
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pass an Amendment of this kind, I certainly do not wish to express any hostility to it. I would rather play the part of the honest broker (which I attempted to play at the Committee stage) and leave it at that. And in view of the advice given to the House by the noble Lord, Lord Stow Hill, and his noble friend who spoke immediately before him, it may be that the House will wish to accept this Amendment, although as I have said the Government must remain entirely neutral upon it.
THE EARL OF KINNOULL: My Lords, may I thank the noble and learned Lord for his words of guidance? I also thank the noble Lord, Lord Douglas of Barloch, for his support. May I finally thank the noble Lord, Lord Stow Hill, for his qualified acceptance? I fully understand that he may wish to have a further look at the wording.
On Question, Amendment agreed to.
Clause 6 [Supplement]:
LORD STOW HILL LORD STOW HILL moved Amendment No. 4:
Page 5, line 42, leave out from ("provision") to end of line 43 and insert—
("(3) Any tern) of an agreement which purports to exclude or restrict, or has the effect of excluding or restricting, the operation of any of the provisions of this Act, or any liability arising by virtue of any such provision, shall be void.")
The noble Lord said: My Lords, I beg to move this Amendment, which also deals with a matter that was raised by the noble Earl, Lord Kinnoull, at the Committee stage of this Bill. He pointed out, in an argument which I thought, if I may say so, was very effective, that the provision against contracting out which now finds its place in Clause 6 of the Bill was perhaps not completely effective. He indicated that in his view its operation might be circumvented by an indemnity being taken from the person to whom the duty was owed. I then invited the Committee not to accept the noble Earl's Amendment, and my reason for doing so was that I felt it would be a pity if indemnity in general were made unlawful. I had in mind, for example, the kind of situation in which a builder gave an indemnity to a sub-contractor. An indemnity of that sort, I felt, could hardly be said to be against public policy or

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against the spirit of the Bill. Equally, insurance companies, after all, provide indemnity and it might interfere with the free taking out of policies to deal with this sort of risk. But I did indicate that it would be my intention to give further careful thought to the point that the noble Earl had raised, and I, together with those who advised me, have done so. I hope that we have now come forward with a new Amendment which achieves the objective that I believe the whole Committee would have desired to achieve and which the noble Earl had in mind.
My Lords, what this Amendment does is to introduce wording to the effect that there must be no agreement which has the effect of excluding the operation of any of the provisions of the Bill. Those words are far wider in scope, so I would submit to this House, than the words which at present appear in the Bill, and after giving it the best consideration that I and those who advise me have been able to give it we have come to the view that it would be interpreted by learned judges—although of course we cannot bind them in any way—in such a way as to prevent any of the sort of devices that the noble Earl had in mind and which might be resorted to in order to frustrate the operation of the Bill. That is the object of this Amendment. I hope that it is a satisfactory one and that it may commend itself to your Lordships. I beg to move.
THE EARL OF KINNOULL: My Lords, I would just briefly thank the noble Lord for his kind reference to myself, and also for looking at this matter again and for producing this Amendment, which I fully support. I am most grateful to the noble Lord.
On Question, Amendment agreed to.
EARL FERRERS: My Lords, I beg to move that the House do adjourn during pleasure until fifteen minutes before eight o'clock.
[The Sitting was suspended at 7.35 p.m. and resumed at 7.45 p.m.]

HOUSING FINANCE BILL
7.45 p.m.
House again in Committee on Clause 3.
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 20:
Page 5, line 2, leave out ("not being less than 60 per cent.") and insert ("being more than 75 per cent.").
The noble Lord said: I beg to move Amendment No. 20. I suppose to the onlooker this will appear as a continuing debate, and for that there is no reason for apology from this side, for this Bill affects something like one-third to one-half of the people in this country, and nearly all of those people are in the lower income brackets. For those who earn decent wages it represents a threat to their standard of living, and to rate-payers generally a burden that they ought not to be called upon to bear. The Amendment is designed to ensure that transitional subsidy does not fall below 75 per cent., and it is further designed to limit the amount of rate fund contribution associated with that subsidy to 25 per cent.
Clause 3(2) says:
"A local authority shall be entitled to transition subsidy if for the year 1972–73, or for any subsequent year, there is a shortfall in the local authority's rent increases."
I think I am safe in saying that nobody knows what that shortfall will be. Is not this one of the great difficulties about this Bill? It is one of the great difficulties about this clause. Nobody knows exactly in terms of pounds and pence what is going to be involved—nobody, that is, except the Government, who set out from the beginning to cut subsidies. It is true that they have had to change their mind on a number of matters as the Bill went through the other place, but reading the Reports of the Committee proceedings in the other place I have been struck by the fact that, instead of firm estimates, all too often the Committee were given (and I think the Secretary of State himself called them) "guestimates". Little wonder then that we had an article in yesterday's Times which, if it was intended to present to the readers the case that we have been trying to make and are trying to make, could not have been better written. I refer to

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an article by Mr. T. J. O. Hickey in The Times of Wednesday, June 7. He certainly brings home what we have been saying and what we are saying again and again, that when members of the Front Bench opposite talk about fair rents they cannot tell us what they are; they cannot tell us the implications of the so-called Birmingham Amendment, which I think was really the lessor Amendment and was carried last November and which represented a tremendous change of front on the part of the Government—in fact two changes in one day.
In this article he states that the fair rent is presented as a kind of platonic form laid up in Heaven to which the statutory formula gives unique access. It is, strictly speaking, incoherent. It would be truer to say that fair rents are plucked from the air. But I do not want to go too far with that because we shall be coming to the question of fair rents. The point I am anxious to make is that nobody knows what local authorities are being committed to. This Government know what they do not want to give, but local authorities do not know to what they are being committed. Subsection (3) gives a table showing the transition subsidy falling from 90 per cent. in 1972–73 down to 75 per cent. in the years 1975–76 to 1981–82. It then goes on to say that in subsequent years the figure shall be
"75 per cent., or such other percentage as may be substituted for 75 per cent. for the year in question by an order under subsection (4) …"
Subsection (4) states:
"The Secretary of State may from time to time by order, for such years after 1981–82 as may be specified in the order, in column 2 of the Table above for 75 per cent. substitute such other percentage, not being less than 60 per cent., as may be specified in the order."
The effect of reducing the transition subsidy is to place an increasing burden on the associated rate fund which rises from 10 per cent. in 1972–73 to 25 per cent. in 1975–76 and stays at that level until 1981–82. Thereafter the Secretary of State's contribution from the rate fund can rise to 40 per cent. It may well be that it will be claimed that the need for the subsidy will depreciate as the years go by. In that case the Government can afford to be magnaminous and to accept the Amendment moved by my noble friend Lord Diamond—that is to say, make 100 per cent. contribution—and all the talk about interfering with the free-
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dom of local government was the most utter nonsense to which I have ever listened.
The situation being created by the Government is that local authorities can have no option, no choice; it is unrelated to anything they themselves determine. In other words, they have no say in what the shortfall will be. The shortfall is as a result of Government policy and if ever there was a notion that responsibility depended upon the contribution from local ratepayers, this is not that kind of subsidy. The Amendment would set the limit of 25 per cent., but it would at the same time allow the Secretary of State to reduce the burden so far as 'the local authority is concerned. It is not burdens but help that local authorities need. If the appropriate figure is 75 per cent. up to 1982, what possible justification can there be for giving power to the Secretary of State to reduce it to 60 per cent. thereafter?
In any case, this is budgeting for a situation 10 years ahead, and I hope that the Government will have another think about the situation. As this Bill goes through the Committee stage in this House they should begin to show that they are not inflexible in their thinking. We should like to see a little flexibility, a little willingness, to meet the arguments being put not only from this side of the House but from outside the House from various associations. Indeed we should like to feel that when a point has been reached when papers like The Times are publishing articles like this that in their own interests the Government would do some re-thinking. If they continue to show inflexibility and stubbornness, I hope that the Committee will encourage the Government to do what they are reluctant to do; that is, take a new look at a situation that is based on "guestimates" rather than factual information.
LORD SANDFORD: I am glad to respond to the invitation from the noble Lord, Lord Garnsworthy, to demonstrate some flexibility. It is because of the flexibility in the system which we are commending to the Committee that it is not possible for anybody at this stage to be precise, or more precise than we have been, about the scale of subsidies that will be payable to particular authorities. Because there is this flexibility, local authorities will be free to exercise

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their responsibilities as housing authorities in deciding what their building programme shall be: it will not be dictated to them by the Secretary of State, or anybody else. Under this system they can work out for themselves what assistance will be given to them under the combination of all these arrangements and, in particular. what amount of rising cost subsidy their expanding building programme, if that is what is required, will attract. There is no restriction, no limit, imposed by the Exchequer under these arrangements on the amount to which housing authorities can commit themselves in the way of capital investment on their housing programme. This is the reason why it is not possible for us to be more specific.
The particular Amendment to which the noble Lord was speaking is the one which seeks to substitute for 75 per cent. 60 per cent. I think I explained adequately enough our reasons for including this figure.
LORD GARNSWORTHY: I think the noble Lord has got it the wrong way round. I want to rectify that error.
LORD SANDFORD: Yes, I understood that. I am sorry.
LORD GARNSWORTHY: I can understand the noble Lord's making a mistake. Quite clearly, he thinks the figure ought to be 75 per cent.
LORD SANDFORD: I know what the noble Lord is driving at. But as I explained when we discussed the two earlier Amendments, the reason why we want this figure is that we are providing for the possibility of a review after the lapse of a long period of time—10 years—at the end of which it may well be necessary for the Secretary of State, after consultation with the local authorities and subject to a Negative Resolution in either House of Parliament, to make further modifications, further adjustments, as between one class of local authority and another, or as between individual local authorities. In those circumstances it may well be right for certain authorities to have to bear a larger share of whatever small amount of transition subsidy may remain.
If the figure goes down from 75 per cent. to 60 per cent., it will not go down
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to some figure below which Exchequer subsidy has never fallen before. The noble Lord will know from his experience in local government that the police subsidy is paid at 50 per cent., the planning grant is paid at 50 per cent., and the rate support grant is paid at something under 60 per cent. These are quite normal percentages. There is nothing particularly inappropriate or burdensome about this figure. I am not saying that this will be a general adjustment, but it may be appropriate in some cases. As I said, it may well be appropriate in other cases, where an authority is still labouring under a heavy burden of housing stress, to alter it in the other direction. But I am sure that flexibility must be there, after that long period of time has elapsed.
LORD GARNSWORTHY: I am sure that we are all grateful to the noble Lord, Lord Sandford, for the explanation which he has given. He indicated that the Government's attitude demonstrates flexibility, but I think his explanation demonstrates the need for a little more information than we have. It is no use saying that local authorities will be free to determine their own programmes unless they know that they will get subsidy help. If subsidies overall are to be limited—the noble Lord indicates that he does not agree with that—and that is surely the aim of the Government—
LORD SANDFORD: No.
LORD GARNSWORTHY: It is. The aim is to keep subsidies within a global figure. It is an argument which we have been having almost since the Bill was proposed.
LORD SANDFORD: It is a point which the Opposition have been putting to us and we have been trying to disabuse them of it. I have said it once before and I will say it again. No capital investment restriction is imposed by the Government under this system. The figures which we have been giving are estimates of what the subsidies will be running at.
LORD GARNSWORTHY: I take the point which the noble Lord is making, but I do not for one moment accept that there is anything in the Bill which leads us to anticipate that subsidies will grow to meet inflation, or to meet expanded housing programmes. We had that argument on Second Reading. We have

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already had it on a number of occasions during this Committee stage. Clearly, one of the main purposes of this Bill is to contain the contribution which the Government are prepared to make in assisting local authorities in the matter of housing provision. If I am wrong, then The Times article is wrong and everybody outside the Government is wrong on this matter. I really think that the noble Lord, Lord Sandford, will have to go a great deal further than he has done this evening, if he is to convince us that we are in error on this point. There was a wonderful opportunity when my noble friend Lord Diamond analysed these figures and asked for confirmation on the very point which the noble Lord is trying to make, that the Government would meet this situation, but he certainly did not get that confirmation. When we are told that local authorities are free to work out costs and what programmes they like, and there is to be no limit by the Exchequer, we wonder whether that is seriously meant. Is it really suggested that local authorities will be free, no matter how many houses they build, no matter what they do, to come to the Government and automatically get subsidy support?
LORD SANDFORD: That is right.
LORD GARNSWORTHY: We shall be pleased to hear what the noble Lord has to say, and particularly pleased to read it in Hansard, because I think he is saying something which nobody speaking for the Government has said to date. My Amendment is intended to avoid a growing contribution under this head on the part of local authorities. If it be said that there will be a reduction in the shortfall as the years go by, then, quite clearly, the clause with which we are dealing will lay upon local authorities the need to provide an increasing percentage of whatever shortfall there may be. It is to avoid that situation that this Amendment has been moved. I should like the noble Lord to tell the Committee whether different rates will be paid to different authorities, when that will be determined, how it will be determined and, if the Secretary of State is to determine what those different subsidy rates will be, how much freedom the noble Lord thinks local authorities will really enjoy. It is really no good talking about 50 per cent. grants
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for the police and for services of that kind.
I repeat what we have said before from this side: we regard housing as a social service. The Party opposite, who at the present time are in Government, regard housing as a profit-making exercise. That is the great difference between the two of us. I hope that we shall get from the noble Lord a little more indication than he or anybody opposite has shown up to the present time of an understanding of the position of local authorities, who want to know where they stand, not merely now but in the years to come. They want to know that they will not have to bear an increasing burden, and they have a great yearning to continue to be as free as they have been up to the present time.
LORD DIAMOND: While not wishing to delay the Committee unduly, I should like to thank my noble friend Lord Garnsworthy for the excellent contribution which he has made and for eliciting a most extraordinary statement from the noble Lord, Lord Sandford, which I wish to pursue in order to inform myself more fully of the Government's intention. As I understood him, the noble Lord indicated that there would be no bar of any kind to the size of a local authority's building programme, or to the capital expenditure raised for that purpose. That is an important and novel statement of Government policy and we ought to get it absolutely clear. Is the noble Lord saying that there is to be no limit, for example, on the amount of Treasury approved local authority borrowing for housing purposes? Is the noble Lord also saying that, for subsidy purposes, there is to be no restriction on the amount spent per house in relation to any possible limitation of the kind that used to be known as a yardstick? There are two areas there, in particular, which were excluded from the definition given by the noble Lord, and I should like him to be good enough to reassure me on both those points.
8.10 p.m.
LORD SANDFORD: I think the debate on this Amendment has been most useful, and I am most grateful for the opportunity to confirm what I have just said. I will speak with as much precision as I can on this point, because I detect a

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certain amount of incredulity on the Benches opposite. How much new council house building is planned is a matter for each local authority. No capital investment restriction will be imposed by central Government. Thus, what is done depends not upon estimates of subsidy; it does not depend upon the figures we were discussing yesterday, or on central Government public investment control. It depends on what local authorities, on their initiative, decide to spend in the light of their own assessment of need and demand.
If noble Lords will look carefully at Hansard tomorrow, they will find that those are precisely the words used by my noble friend Lady Young. I was listening carefully to what she said, and she used virtually the same words. If this point has now registered with noble Lords, then this is indeed a tremendous gain. I think it is the fact that perhaps it had not registered yesterday which was delaying us and causing a certain amount of confusion among us. The figure of £350 million was mentioned as an estimate of what the effect of the operation of all these subsidies will be. But there never has been a question—and it is only noble Lords opposite who have continued to assert it—of one of the objects of this Bill being to contain the subsidies within this figure. That figure is an estimate of what these subsidies will amount to when this system is operated.
The noble Lord, Lord Diamond, asked me about the cost yardstick, and so on. These factors will certainly apply, and when we come on to rising cost subsidies the noble Lord will already have observed that these are based on the difference in reckonable expenditure (that is, expenditure approved under the cost yardstick) as between one year and the next; and to that extent there is a restraint and a restriction. Local authorities are not allowed to count any expenditure of any kind, whether approved or not; and I do not suppose that the noble Lord, from his previous position, would ever expect that that should be so. But I want to confirm that there is no capital investment restriction imposed by the Government. I hope that with that confirmation of this absolutely cardinal point in the system the noble Lord will find a number of his misgivings and doubts
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removed. I do not think I have anything, further to say about the precise matter of his Amendment—the difference between 60 per cent. and 75 per cent. I have explained our reasons for that already.
LORD DIAMOND: I am very grateful to the noble Lord, who detected a certain amount of incredulity. Unfortunately, some of those on this side of the Committee are so advanced in years or "long in the tooth", as the case may be, that they find a little difficulty in swallowing new facts. In what he has said, is the noble Lord making a distinction between approval of borrowing and approval of development? I understand what he said with regard to no restriction on the capital expenditure of a local authority. When a local authority has freedom to spend capital, it has only one question to ask itself, and that is, "Have I any capital?", and it proceeds therefore to borrow the capital on the market either in this country or abroad, as the case may be. I leave out the point about it being abroad, because that is perhaps rather a separate question which need not detain us at the moment in this Committee. Is the noble Lord saying, therefore, that there is no requirement on a local authority which requires to borrow money for capital expenditure purposes in regard to housing to get central Government approval in any way?
LORD SANDFORD: What I have just said is a broad observation on the general policy that arises here. When we get on to particular subsidies, there will be a number of restraints, restrictions, caveats and so on, such as the application of cost yardsticks, in the calculation of reckonable expenditure. We will come to all these points as we go along; but I do not want to detract from or add at all to the main, broad observation which I have made and which I think does considerably alter the approach of noble Lords' understanding if they have thought hitherto that the object of the Bill is to keep the overall subsidy figure within a certain global amount. This is not the object of the Bill at all.
LORD DIAMOND: I understand that point. I am very grateful to the noble Lord, and I assure him that I have taken that point fully on board. I only wanted to be absolutely sure—and perhaps it is

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a little unfair to shoot this question at the noble Lord without warning—as to whether the freedom he was referring to was a complete freedom. I do not press the question now. We shall not seek to divide the Committee on this particular Amendment, having regard to the discussion which we have already had on the previous one. I am very grateful to the noble Lord, but I hope that at some convenient point, perhaps between now and the Question, That the clause stand part of the Bill, he will be able to refresh his memory as to the precise position which the Government envisage in future with regard to local authority borrowing for the purpose of capital expenditure in relation to housing.
LORD SANDFORD: I shall certainly look at that point, and when I can get more clearly exactly what it is the noble Lord is asking me to say I will respond to it. But as we go through the clauses we shall see more precisely what the exact frontiers of this freedom are.
LORD GARNSWORTHY: I am quite sure the noble Lord opposite will not be surprised if I say that we shall need to examine very carefully what he has said to the Committee. If we have long memories, well, it is because we have reason to have long memories. When he uses the term, "This is only a broad observation", then that is so wide open that I am afraid it still leaves us, and is bound to leave us, somewhat incredulous. We shall certainly probe and press as the Bill proceeds, because we are quite clear that the Government, when they first started talking about subsidies, talked about cuts. Yes, they did—when they first started talking about them. That was before we knew anything about the terms of this Bill. So far as the Party opposite is concerned we have learned that there is a point at which the leopard does not change its spots; and we have a duty to at least one-third of the people of this country, since this Bill aims at increasing their rents, at extracting more from them and at making those earning decent wages pay towards subsidies for those earning poor wages—but of course it does. It is no use the noble Lord shaking his head. Fair rents are expected to produce, overall, a profit.
LORD SANDFORD: If the noble Lord would allow me to interrupt, I cannot let
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slip this opportunity to confirm again that the rent is fixed without any relation to the factors we are talking about here. It is a fair rent fixed by reference to the principles set out in Clause 50, which have been taken over wholesale from the principles first devised by the Party of the noble Lord opposite. There is no question of anybody paying any more, of paying a subsidy to anybody else, in the course of paying those fair rents.
LORD GARNSWORTHY: I can begin to understand why the noble Lord earlier suggested that we should not concern ourselves with the principle of the Bill but should confine ourselves to points as they arose. I can understand why he made that suggestion because clearly he wants to avoid the overall picture. At this stage I think there is little point in pressing the argument further and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
BARONESS YOUNG BARONESS YOUNG moved Amendment No. 21:
Page 5, line 9, after ("water") insert ("rates or").
The noble Baroness said: This is a drafting Amendment to make it clear that the amount of any water rates as well as of any water charges is to be excluded from rent income of a local authority in calculating the authority's rent increases for the purposes of this clause. I hope that the Committee will feel able to accept it. I beg to move.
On Question, Amendment agreed to.
8.22 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 22:
Page 5, line 13, at end insert—
("Provided that in calculating the local authority's rent increases there shall be deducted from the figures of rent increases in any year an amount equal to that proportion of the rent received in that year by the local authority which it attributes reasonably to the repair and maintenance of, and the repayment of interest and capital moneys borrowed for that part of the cost of dwellings which is or was in excess of the 'approved cost' for the purposes of Part 1 of the Housing Subsidies Act 1967.")
The noble Lord said: The words of this Amendment refer to a matter which we have recently been discussing, and perhaps I could take up that point first. In the wording of the Amendment,

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"approved cost" is another way of saying the yardstick; and the yardstick is a matter that I want to probe very fully. When the Housing Subsidies Act 1967 was introduced, it was necessary to have an approved cost in the context of that Act and the approved cost system has worked reasonably well, as I understand it. Many local authorities have built at a cost in excess of the approved cost and they are authorised to borrow the necessary funds to build at that increased cost provided the increase is not more than 10 per cent. above the yardstick. The questions which arise, and which arise out of this Amendment, in connection with the yardstick are twofold. First, what is to happen under the new system of subsidies with regard to the costs which are attributable to that excess so far as existing dwellings are concerned? Secondly, what of the future?
So far as existing dwellings are concerned, I recollect that the Minister said in another place, in reply to an inquiry by the Opposition spokesman who had asked if he intended to abolish the yardstick:
"We do not. Power to impose the yardstick is taken in subsection (11)."
Later, in replying to a request from the Opposition whether the Minister could explain, where dwellings had been built since 1967 which were in excess of the cost yardstick, whether the cost of paying for and maintaining those dwellings would be reckonable expenditure for the purpose of new subsidies introduced in this Bill, Mr. Amery's answer was "Yes."
So what the Minister was saying—and adding the two quotations together—is that the yardstick is to continue; yet payments in excess of the yardstick are to be treated as reckonable expenditure for the purposes of the new subsidies. What I am first asking the Minister to do is to clarify the situation and let us know, in case there has been a misprint, what the situation is with regard to subsidies under the new system as applying to, first, the excess costs attributable to exceeding the yardstick where the dwellings have already been built; and, secondly, the costs attributable to exceeding the yardstick where the buildings are about to be built.
One of the purposes of this Amendment is to enable a local authority to
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look after the repair and maintenance of its property without suffering in any way so far as subsidy provisions are concerned. Repair and maintenance is a regular item of expenditure in all local authority housing accounts. In some cases it is treated on the basis of the actual expenditure incurred; in other cases there is a reserve charged and the creation of a reserve fund serves to level out the cost of repairs and maintenance over a period of years. The purpose of this Amendment is to ensure that either of those systems would continue to be permitted without suffering any prejudice to their subsidy entitlements. Similarly the latter part of the Amendment refers to
"repayment of interest and capital monies borrowed for that part of the cost of dwellings which is or was in excess of the 'approved cost' for the purposes of Part I of the Housing Subsidies Act i967."
I have already referred to approved cost. Those are the purposes of the Amendment. If we can get the assurances that I have asked for we should not need to press the Amendment unduly. In that sense, I beg to move.
LORD SANDFORD: I think we are getting a little ahead of ourselves but I have no complaint about that. If we can discuss matters which fall to be discussed in Clause 4 when we are on Clause 3 I shall not complain so long as we do not have to discuss them all over again. But if I could, nevertheless, deal with these matters in the context of the Amendment moved by the noble Lord, I think that would be more orderly than to deal with them straight away in the form in which he put them to me.
His Amendment is asking that expenditure on repairs and maintenance should be taken into account when we come to make calculations about transitional subsidies, which is what we are discussing now. My answer to that is "No, they cannot"—not because they do not come into the overall calculations but because they come in on the calculations of the increase of reckonable expenditure which attracts rising costs subsidy under the next clause. So I hope that will satisfy the noble Lord that the factors to which his Amendment refers are taken into account and do attract subsidy; not under this particular subsidy, but under the rising costs subsidy. If I were to agree

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to his Amendment, local authorities would get subsidies for the same factor at two different points. That would lead them to get 150 per cent. or 180 per cent.; and I do not think that even noble Lords opposite would consider that to be equitable.
Turning to the second point about the cost yardstick, I confirm that approved expenditure within the cost yardstick will attract subsidy in the terms provided for under rising costs subsidy in Clause 4. But when the Party opposite introduced their Housing Subsidies Act in 1967—and that included the housing cost yardstick—they did not provide for any subsidies to be payable towards housing costs not approved under the yardstick, and we do not propose to introduce them now. So the answer to the noble Lord is that housing costs, yardstick costs, are certainly taken into the calculation under the rising costs subsidies, but these do not go beyond what is approved cost under the yardstick; and I do not think that the noble Lord would expect them to.
8.30 p.m.
LORD DIAMOND: I am sure that it is my fault that I did not understand that, and not the noble Lord's fault. I agree that once you deal with the question of the yardstick you cross the border between Clause 3 and Clause 4; that there is no need for us to consider it again under Clause 4 and that it will save time to get the whole point cleared up now. I thought the noble Lord was saying that the yardstick will still be used, but that it will not be used for the purpose of restricting the subsidy. Is that what he was saying? If so, I do not know for what purpose it will be used.
LORD SANDFORD: It will be used for deciding what should be counted as reckonable expenditure and what should not be. And it is the increase in reckonable expenditure that qualifies the authority for rising costs subsidy.
LORD DIAMOND: So then it will not attract rising costs subsidy? That is the point I am getting at.
LORD SANDFORD: It will, but expenditure over and above the yardstick will not.
LORD DIAMOND: That is what we are talking about and I am glad that at
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last we are ad idem, as the lawyers say. We are talking about the expenditure attributable to the excess above the yardstick. The yardstick is, presumably, being used for some purpose, and what I am seeking to get clear is whether or not the Minister was right when he said, "The answer is 'Yes'". The question he was asked was: "Can the Minister explain to me whether, where dwellings have been built since 1967 which are in excess of the cost yardstick, the cost of paying for and maintaining those dwellings will be reckonable expenditure for the purposes of the new subsidies introduced in this Bill?" I repeat that the Minister said, "The answer is 'Yes'". Now we have the refreshing situation in which a Minister in the House of Commons says "Yes", and a Minister in the House of Lords says "No".
LORD SANDFORD: No, we are not quite in that position. I notice that in the other place they, too, got ahead of themselves at this point. The cost of paying for and maintaining these dwellings are two separate things. Maintenance repairs I dealt with earlier. The cost that lies within the yardstick, plus the tolerance about which the noble Lord spoke, is reckonable expenditure, and counts. Any expenditure above that does not qualify as reckonable expenditure. If the noble Lord looks carefully, he will see that what I am saying now is quite reconcilable with what my right honourable friend said then.
LORD DIAMOND: Perhaps the noble Lord has not got Hansard handy.
LORD SANDFORD: Yes, I have.
LORD DIAMOND: Then may I invite the noble Lord to look at it?—I am not allowed to refer more precisely than I am referring to what was said in another place by a non-Minister. What the Minister said I can refer to, and what he said, clearly and precisely, was, "The answer is, 'Yes'". For that to have any meaning I have to describe what the question was to which the Minister said, "The answer is, 'Yes'". And at the risk of boring everybody intensely I am bound to repeat that what we are talking about is the excess cost beyond the yardstick; and I am grateful to the noble Lord because he has now clarified that the yardstick includes the tolerance. What

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we are talking about is the excess cost beyond the yardstick tolerance. So if the yardstick is 100 and the tolerance is 10 per cent., what we are talking about is excess over and above 110. Suppose there to have been expenditure over and above 110, the question asked was: can he—the Minister—explain whether, where dwellings have been built since 1967 which are in excess of the cost yardstick, the cost of paying for those dwellings (that means paying for the figure up to 110, and paying for the balance in excess of 110) will be reckonable expenditure for the purposes of the new subsidy introduced in this Bill? Mr. Amery: "The answer is, 'Yes'". The noble Lord, Lord Sandford: "The answer is, No'".
LORD SANDFORD: We could go on for a long time like this, but it might be as well to stop now. My right honourable friend was not answering quite the same question that I am answering. He was not answering as fully as I am answering. I am dealing with the sole question of the yardstick, the tolerance and the excess above it. I am saying that the cost of the yardstick plus the tolerance are reckonable expenditure. The excess above that is not reckonable expenditure and never has been; and the noble Lord's Party, when they introduced their 1967 Subsidies Act, never provided for the excess to count as reckonable expenditure.
LORD DIAMOND: The noble Lord really keeps making the answer as plain as a pikestaff by saying that his right honourable friend was wrong in giving as an answer a simple, "Yes". What his right honourable friend should have said—this is what I thought his right honourable friend should have said and why I am pursuing it to get it clear, because I thought there must be a misprint or a mistake—is: "The answer is 'Yes', so far as the approved cost plus tolerance is concerned; and No', so far as the excess above approved costs tolerance is concerned." His right honourable friend did not say that, and therefore somebody has to clear up the Government's muddle.
LORD SANDFORD: If I may say so, we are in some difficulty because we can-
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not quote the passage immediately before that. My right honourable friend was asked a further question about maintenance, which I am not answering. Perhaps the noble Lord would be good enough to take my assurance that I will look at this point to see whether there is any other way in which I could make the position clear to him. Then we could perhaps leave it now.
LORD DIAMOND: I am broadly content with the information which the noble Lord has given. What he has said, really, is the usual ambivalent answer, "Yes, my right honourable friend made a mistake, but I am too much of a gentleman to say so." That is all right; we all understand that. It is perfectly clear now, at all events, that the yardstick is going to be maintained; and, of course, there could be no possible purpose in maintaining the yardstick unless you use it to measure. The part that you measure and approve of is paid for under the subsidy and the part that comes outside your measurement is not paid for. That I understand very well. That was one of the main purposes of putting down the Amendment—to clarify that situation. I think that the Committee has been more than generous in permitting this exchange of conversation to go on at this almost interminable length and will gladly permit me to seek to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.40 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 23:
Page 5, line 15, leave out ("amount") and insert ("sum")
The noble Lord said: It is perhaps convenient to discuss Amendments Nos. 24 and 25 together with Amendment No. 23. These are drafting Amendments, not suggesting drafting, but suggesting the need for redrafting. One finds in subsection (6) a possibility of confusion. The subsection reads:
"For the purposes of this section there is a shortfall in a local authority's rent increases for any year if the amount of those increases is less than the local authority's standard amount for that year as defined below, and the amount of the shortfall shall be equal to the difference (or, if the amount of those increases is zero, of an amount equal to the local authority's standard amount for the year)."

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There are a great many "amounts" in that subsection. That could be well understood were it not for the fact that in one case the "amount" is part of the phrase "standard amount"—
"the local authority's standard amount for that year as defined below".
So "standard amount" becomes a term of art. "Standard amount" has a separate and special meaning which is defined later on in the Bill. In those circumstances, I think it is less than elegant, and possibly confusing, to have in the same subsection continual references to the word "amount" when they are not connected with that standard amount, because one would normally use the word "amount" to identify it with the standard amount.
It is not as if there are not other words in the English language which would serve just as well. I have suggested, for example, that the word "sum" might serve; in other cases I have suggested that the word "amount" is no longer necessary where it is just a description and not a term of art; and in Amendment No. 25 I have made the matter more pointed by indicating how many "amounts" you would have to refer to if you substituted for the verb "is" the verb "amounts to". All I am indicating to the Government is that perhaps the subsection would be clearer if the word "amount" was left for use with the word "standard" to mean "the authority's standard amount", and any other use of the word "amount" were avoided by using some other word. Nobody other than a draftsman ever suggests to a draftsman what drafting should consist of, because it is a very recherché and arcane art with which nobody else would possibly attempt to interfere. Nevertheless, it seemed to me that there was a confusion here to which I might draw the attention of the Government. I will listen to what views they have, having considered the matter, which no doubt they have done. I beg to move.
LORD SANDFORD: As one layman to another in these matters, I must confess that this is the kind of Amendment which I should have liked to be able to accept if it were possible to achieve the purpose the noble Lord has in mind. I can see what he is trying to do, and I should have liked to do something on similar lines. But if we accept that
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the noble Lord has managed to introduce a measure of greater elegance with the first two Amendments, he has to add to the lack of elegance in the third Amendment, where we get the phrase, "and if the amount of those increases amounts to zero." I think this merely demonstrates the difficulty that laymen get into if they try to improve on the drafting of Parliamentary Counsel. I have looked into this, and done what I could to find which particular bits I could accept, but I am afraid I do not find it possible to accept any.
LORD DIAMOND: So long as the noble Lord has looked into it—I hope he realises that the third Amendment was a tongue in cheek Amendment, sort of rubbing of nose in it—and the draftsman cannot suggest a way of avoiding the possible confusion between "standard amount" and "amount" used in the ordinary sense, I leave it there and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.45 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 26:
Page 5, line 36, leave out subsection (9).
The noble Lord said: This Amendment is one of substance. It refers to the circumstances in which any subsidy or rate fund contribution is to be paid and relates thus to Part III of Schedule 1 and to Schedule 2 to the Bill. I realise that we have not yet got as far as Schedule 1 and that the proposal is to deal with that Schedule a little later, after Clause 12. That is what the Committee in its wisdom decided. and I think it is the right decision. Nevertheless, even though we are on a much earlier clause, it does refer to Part III of Schedule 1, and I have to refer to it to cover some of the difficulties.
There are two difficulties: one a lack of clarity, and the other a matter of substance. Part III of the Schedule, on page 113, sets out the limitation of certain subsidies, and correspondingly of the rate fund contributions, and it is a part of the Bill which is extremely complex and difficult to follow. There is a Table A (1) (2) (3) and so on, and A (2) reads:
"If the subsidy and contribution comprise elements based on different years, the reduction shall be made first in the elements, if any,

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based on the year of account, and, subject to that, in the element based on an earlier year before a reduction in the element based on a later year."
That of course is as plain as a pikestaff to everybody except me. It is because of the complexity in that Table and in the Schedule, which determine how the provisions of this clause are to apply, that I then come on to the substance. I refer to that because it seems to me that there could be a circumstance in which the subsidy being paid under this clause, varying between 90 per cent. to 75 per cent. (shall we say for the moment?)—although it could go even lower in a future year, down to 60 per cent.—could be phased out before the operational deficit subsidy under which the Government pay 50 per cent., I think it is, of the cost involved came in. It seemed to me that one way of avoiding this lacuna or gap would be to leave out subsection (9).
As to the meaning of the Table and of the Schedule, I think it would be more convenient to go into that in greater detail when we come to deal with the Schedule, and between now and then I may have had an opportunity of considering any information which the Minister has been good enough to provide which will enable one to understand the Schedule the better. But as to the substance of it, that is the reason for my moving the Amendment now—in order to prevent the occurrence of the situation I have just described.
BARONESS YOUNG: I wonder whether I may take advantage of the offer of the noble Lord, Lord Diamond, to leave the part dealing with the Schedule until we have reached that point in the Bill. I know that if there is any information we can supply by way of clarification or explanation, the Government will be very happy to supply it. The reason the Government are not able to accept this Amendment is because of the way in which both the transition and the rising costs subsidies are to work: they are paid to a local authority as a result of deficits arising in the Housing Revenue; Account. If this particular clause were removed from the Bill the subsidies could be paid regardless of whether the Account was in surplus or deficit; and that is not really the purpose of the subsidies.
LORD DIAMOND: I am grateful to the noble Baroness, and, as she says, we can come to the Schedule later. I quite see that the Government must have support for the purposes which she mentioned; but to move this Amendment was the only way in which I could seek clarification and alleviation of the anxiety which I have expressed and to which I do not think she has fully turned her. mind. This clause refers to the transition subsidy, and the noble Baroness rightly referred to the effect this has jointly with the operational deficit subsidy. My concern was to ascertain whether or not it would be possible to have the phasing out of a transition subsidy before the operational deficit subsidy applied. I am only concerned with that lacuna, or gap, and if I could be assured that when one ends the other comes in, then I should feel inclined to seek to withdraw the Amendment.
BARONESS YOUNG: My understanding is that the transition subsidy can go on—it might not, but it could go on—and the operational deficit subsidy—which concerns an authority that at present (that is to say, either in the years 1970–71 or 1971–72) makes a rate fund contribution—is a separate one and would go only to that particular authority. But the transition subsidy could go on.
LORD DIAMOND: I think we have to leave it at that and perhaps consider it further when we come to the operational deficit subsidy. I seek leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 3, as amended, agreed to.
Clause 4 [The rising costs subsidy, and associated rate fund contribution]:
8.56 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 27:
Page 6, line 5, leave out paragraph (a).
The noble Lord said: I beg to move. We are now dealing with a new clause which concerns the rising costs subsidies. If we leave out paragraph (a) we should leave out the reference to a figure of £6 which, according to my recollection, was a diminution from the subsidy that might otherwise be obtained. It

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is a diminution which does not apply except in the years mentioned; that is, 1972–73 and 1973–74. Paragraph (b) goes on to deal with the rising costs subsidy and says:
"(b) if for the year 1974–75 or any subsequent year there is any increase in the local authority's reckonable expenditure"
whereas paragraph (a) referred to the circumstance where:
"… there is an increase in the local authority's reckonable expenditure which exceeds £6 multiplied by the number of Housing Revenue Account dwellings …"
So what we are concerned to do in this Amendment is to achieve for 1972–73 and 1973–74 what the Bill achieves for 1974–75 and subsequent years. There seems to be no reason for differentiating those two earlier years and a very good reason for having the procedure defined in paragraph (b), namely,
"…any increase in the local authority's reckonable expenditure."
I hope, therefore, that the Government will feel able to look kindly upon this Amendment which I now move.
LORD SANDFORD: We now move on to the rising costs subsidy. The noble Lord's Amendment in fact invites me to explain why for the years 1972–73 and 1973–74 there is, as it were, a threshold of £6, over which a housing authority must go before it qualifies for a rising costs subsidy. The reason is that these are the years in which, under the movement towards fair rents, there will accrue to local authorities an increase in income amounting to roughly £26 per H.R.A. dwelling—an average increase in rents of 50p per annum per H.R.A. dwelling, which would yield an increase in income on the Housing Revenue Account of £26.
LORD DIAMOND: I am sorry: I did not quite hear the year.
LORD SANDFORD: The first two years of the changeover to this new system are expected to yield roughly those broad figures—an increase in income on the Housing Revenue Account of £26 per dwelling, corresponding to a rise of 50p per H.R.A. dwelling. That increase in income has to be seen against the withdrawal of the existing subsidy of £20 per dwelling, leaving an increase of income available to the local authorities in those areas of £6 per H.R.A. dwelling. After these years, during the initial stages
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of the progression towards fair rents, about which we shall be speaking shortly, that increase in income ceases, and therefore the threshold comes away. I think the noble Lord will agree that during these first years it is reasonable to have a threshold for the reasons I have given.
LORD DIAMOND: I do not see that it is reasonable at all. What the noble Lord is saying is, as I had indicated to him earlier but which he rejected at the time, that the whole of this Bill is drawn up on the framework of an increase in rents of £26 per annum. The first year is 1972–73. This Bill could not possibly be enacted before halfway through 1972–73 and therefore the increase for 1972–73 will fall wholly in six months and be an increase of £1 a week; that is, £26 in 26 weeks. Therefore, what the noble Lord is now confirming is that this clause is part of a whole scheme embodied in the Bill and this subsection which I wish to remove is one in which there is an assumption of an increase in rents of £26 per year and a falling away, a withdrawal of subsidy, of £20 a year which we have already passed. As we have passed the £20 a year, and as there is £6 here, it can only be on the basis of an increase of £26 a year.
I am therefore invited by the noble Lord to come back to the point that I was making that this Bill is predicated on that assumption and that that assumption has now been riddled by the Government because in the case of Binning-ham, and any authority like Birmingham, the £26 a year will no longer apply. How many "Birminghams" there are we do not yet know; what the Government are doing about Birmingham we do not yet know. The Government are being understandably coy and shy about what they are going to do about Birmingham. They have, however, introduced into the Bill a clause (I think it is Clause 63) which will come later that destroys the whole basis on which the Bill is built. This is part of the structure which has been destroyed, and that is why I am coming back to it. We could not possibly contemplate letting this Amendment go.
Am I not right in saying that the £6 referred to here is part of the framework and is the difference between the £20 which we have already passed and the

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£26 which therefore falls to be regarded as an inflexible increase in rent for those local authorities which are with reckonable expenditure being dealt with in this clause for rising costs subsidy purposes? There can be no doubt that that is the case. There is an opportunity for the noble Lord to say something more about it if he wishes to do so. It is a further example of the way in which the Bill, since it was originally conceived, has been completely altered by the Government. It is a totally different situation now. Our anxiety is to prevent the £26 increase in rent for the reasons which I have referred to many times: economic, inflationary, hardship—a whole variety of reasons. For those reasons alone, I could not contemplate suggesting to the Committee that this subsection should remain in the Bill. I want to nail it completely and clearly that I have understood from the Minister aright that this £6 is the difference that I have already indicated. It is part of the framework of the Bill and has been shot to pieces by the clause which deals with Birmingham, and all the other Birminghams—and Birmingham is the second largest city in the country; we are not talking about a hamlet—and subject to anything further the noble Lord has to say, I strongly recommend the Committee to divide on this Amendment and I hope to get considerable support upon it.
LORD HYLTON: Can my noble friend tell us whether the Secretary of State has discretion to reduce the withdrawal factor of £20 a year in those cases where the local authority made out a case for not raising its rents by the foreseen £26?
9.5 p.m.
LORD SANDFORD: The noble Lord has introduced the Birmingham case into the discussion and I agree that it has relevance here. The discretion to which my noble friend refers is contained in Clause 63, the first one dealing with the increase to fair rents. The so-called Birmingham situation is the one which will be applied only to a limited number of authorities where it will not be necessary to increase rents by as much as an average of 50p per year in order to reach the fair rent figure. Birmingham's application to be considered under this clause is before the Secretary of State at the moment, so I cannot say very much about
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it. That makes it rather difficult for me to respond as fully as I should like to the noble Lord, Lord Diamond, at this moment. I am very ready to agree that he has a point here which will apply to these particular authorities. I do not think it will apply to very many authorities; the great majority of authorities will have an increase of income of the scale which I have just described; namely, an average of £26 per annum per H.R.A. dwelling. I recognise that he deserves a fuller response than I am able to give him at this moment in respect of particular authorities that are in the same situation as Birmingham.
I will undertake to reconsider this matter in respect of those particular authorities with a view to giving him a better explanation than I am able to at the moment of how their circumstances will be met in this respect. How their circumstances will be met in respect of the rise to fair rents is clear enough from Clause 63. The noble Lord is perfectly right, it has repercussions in this clause as well. I wonder whether the noble Lord will accept my assurance. I shall be only too glad to give him further assurances and explanations when in a position to do so, which I am not at the moment.
BARONESS GAITSKELL: Is not this the real, crucial criticism of this Bill? The Minister said that there will not be many authorities to which this applies. But how is it that the Government have not worked out, do not know, which are the authorities? I think Newcastle is another of them. And how can the Minister say that there will not be many authorities? On what authority does he say it? On what knowledge does he say this? Is not this, whatever one calls it, the real criticism that all of us have of this Bill on this side of the Committee?
9.9 p.m.
LORD SANDFORD: I really do not think so. Everybody knows that Birmingham are in many ways a unique authority in the housing field. They are the only authority which have already introduced rent allowances for private tenants. They are unique in many other ways. The fact that they are in this position does not in the least invalidate the structure of the Bill as a whole for the great majority of authorities.
LORD GARNSWORTHY: I do not want to add to the confusion because the Bill creates enough already, but Birmingham surely was not the authority which sparked this off. Amendments were introduced (if my recollection is right) in November of last year and at that time I think the case was more concerned with Leicester. It really was only as the local elections approached that Birmingham came into the picture.
LORD SANDFORD: That may be so, but Birmingham has been a unique housing authority since long before the last elections.
LORD DIAMOND: It is true that Birmingham is a very special case but it is an extremely large case. The noble Lord first of all has offered to give me further information. May I say that I am grateful to him. Of course the noble Lord will do that. We rely on him and accept his assurance in that regard. The noble Lord will not consider me discourteous, however, if I say that we are at the moment considering something which is even more fundamental than his assurances with regard to information. The noble Lord is not able to give us information about the Birmingham matter although it has been under consideration. The noble Lord said that the matter is before the Minister. It has been before the Minister and everybody has inquired about it and everyone has received the same answer for two months now, although it is something which cannot take all that time to consider.
The noble Lord recognises—and I am grateful to my noble friend Lord Garnsworthy for making it clear—that Birmingham is not unique in this situation at all events. It is not unique in the situation that it is an authority
which, if it were to increase its rents all round by £26 a year, would puncture the ceiling because the fair rent figure is a maximum; it would puncture the ceiling and therefore could not do that. So the provisions of the Bill could not be enacted—the Government's own Bill could not be enacted. This is a subsection which depends upon that being enacted because it concerns £6 of that very £26. So we are in a situation where we have to recognise (with the greatest possible respect to the Minister Lord Sandford, for whose courtesy I am always grateful) that the Government themselves are in a terrible difficulty. It is clearly a difficulty which does not relate to Birmingham only. The noble Lord says that he cannot say to how many other authorities it applies. No, he cannot. But I think I can tell him that there are many authorities which are scratching their heads at the moment to see the extent to which they can come within the same walls as Birmingham has fitted itself into, acceptably so far as the Minister is concerned. You only have to have a few authorities of that size to make the Bill quite ridiculous. So I am saying to the noble Lord, Lord Sandford, that I am grateful for the information he has promised to give, but we shall obviously have to come back to this question many times if the Government insist on going on with the Bill. I repeat that this is evidence that the whole structure of the Bill has been punctured, and we certainly must show our views about this particular subsection here and now.
9.12 p.m.
On Question, Whether the said Amendment (No. 27) shall be agreed to?
Their Lordships divided: Contents, 17; Not-Contents, 60.

CONTENTS

Avebury, L.

Garnsworthy, L.

Shepherd, L.

Beaumont of Whitley, L.

Hale, L.

Stow Hill, L.

Beswick, L.

Llewelyn-Davies of Hastoe, Bs. [Teller.]

Strabolgi, L. [Teller.]

Davies of Leek, L.

Tanlaw, L.

Diamond, L.

Seear, Bs.

White, Bs.

Gaitskell, Bs.

Shackleton, L.

Wynne-Jones, L.

NOT-CONTENTS

Aberdare, L.

Balfour, E.

Berkeley, Bs.

Ailwyn, L.

Barnby, L.

Bessborough, E.

Allerton, L.

Beaumont, L.

Chesham, L.

Amherst of Hackney, L.

Belstead, L.

Cork and Orrery, E.

Cowley, E.

Gowrie, E.

Reading, M.

Craigavon, V.

Hailsham of Saint Marylebone, L. (L. Chancellor)

Reay, L.

Crawshaw, L.

Redesdale, L.

Daventry, V.

Hertford, M.

Reigate, L.

de Clifford, L.

Hylton, L.

Ruthven of Freeland, Ly.

Denham, L. [Teller.]

Kemsley, V.

Sandford, L.

Digby, L.

Kilmarnock, L.

Sandys, L.

Drumalbyn, L.

Latymer, L.

Sempill, Ly.

Dundonald, E.

Lauderdale, E.

Sinclair of Cleeve, L.

Elles, Bs.

Lothian, M.

Strathclyde, L.

Ferrers, E.

Margadale, L.

Terrington, L.

Ferrier, L.

Massereene and Ferrard, V.

Tweedsmuir, L.

Fisher, L.

Milverton, L.

Tweedsmuir of Belhelvie, Bs

Fortescue, E.

Monsell, V.

Vivian, L.

Fraser of Lonsdale, L.

Mowbray and Stourton, L. [Teller.]

Wolverton, L.

Gage, V.

Young, Bs.

Gainford, L.

Rankeillour, L.

Resolved in the negative, and Amendment disagreed to accordingly.

9.20 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 30:
Page 6, line 18, leave out subsection (3).
The noble Lord said: I beg to move this Amendment and it would perhaps be convenient if at the same time we considered Amendment No. 35—Page 7, line 21, leave out subsection (5). The first of these two Amendments concerns subsection (3) under which the Secretary of State has power to order that the amount on which the rising costs subsidy is based
"shall be determined in accordance with a formula specified in the order, being a formula designed to reduce the amount of rising costs subsidy so far as based on any year after 1981–82 specified in the order."
In short, here is a provision under which the subsidy is to be reduced, as I understand it, after the year 1981–82 if the Secretary of State so decides.
The second Amendment, No. 35, at page 7, line 21, concerns subsection (5), which states:
"The Secretary of State may from time to time by order, for such years after 1981–82 as may be specified in the order, in column 2 of the Table above for 75 per cent. substitute such other percentage, not being less than 60 per cent., as may be specified in the order."
Really both these subsections are saying the same thing: giving the Secretary of State power, for reasons undisclosed, to reduce the amount of the subsidy after the year 1981–82. This is a subsidy which has been frequently referred to as vitally necessary for local authorities—the rising costs subsidy—and so long as the local authority is subject to a rising cost which has to be calculated annually, I cannot see 'why there should be any
524
erosion of the subsidy. I therefore move the Amendment in the hope that the Government will either justify it or accept the Amendment.
LORD SANDFORD: It would be convenient to discuss this Amendment and Amendment No. 35 together because they both form part of the review which we think is necessary to have after the year 1981–82 to give the Secretary of State an opportunity to adjust the provisions of this clause in three different ways. All the remarks I made on a similar provision under Clause 3 apply here; namely, that after this length of time there may well be a need to refine still further the selectivity under which all these subsidies apply and to make distinctions, using Clause 16, as between certain classes of local authorities or even between individual local authorities. Some may need to have their subsidy increased, as the noble Lord, Lord Diamond, himself recognised; others may no longer need to have the subsidy at the rate of 75 per cent. It may also be convenient to re-introduce a small threshold of the kind we were talking about a moment ago. The Secretary of State has power to do all this, but it is prescribed in Clause 16 that before exercising the power to make these orders he has to consult with the local authority associations and the order that he eventually makes is subject to Negative Resolution in either House of Parliament. I think there are sufficient safeguards; there is the requirement to consult. The noble Lord will recognise that after the lapse of this period of time there may well be changed circumstances which will require the Secretary of State to exercise his powers in one or more of these directions.
LORD DIAMOND: I am very grateful to the noble Lord. I take it we are still on Clause 4 of the Housing Finance Bill. One should never jump to conclusions, and I wanted to check that first of all; and I take it we are still dealing with subsection (3).
LORD SANDFORD: And subsection (5).
LORD DIAMOND: In that case I find it difficult to relate the Bill to what the Minister said, but no doubt we shall achieve success if we plod along. What the Bill says is:
"The Secretary of State may by order direct that, for such years after 1981–82 as may be specified in the order …(b) the qualifying amount, if any, shall be determined in accordance with a formula specified in the order …"
If we had left it there what the noble Lord said would, of course, he relevant. But the subsection goes on:
"being a formula designed to reduce"—
not to vary but to reduce—
"the amount of rising costs subsidy, so far as based on any year after 1981–82 specified in the order."
As I read it, that order may only reduce the amount. If he did not want to reduce the amount he would not bring in an order. If he wanted to increase the amount of the subsidy he would be stuck; he has no power to vary upwards.
I am somewhat confirmed in that daring suggestion that the noble Lord, Lord Sandford, was talking about a different clause in a different Bill by referring to subsection (5). There again it provides:
"The Secretary of State may from time to time by order, for such years after 1981–82 as may he specified in the order …" —
substitute some other percentage for 75 per cent.—
"not being less than 60 per cent, as may be specified in the order".
There is there no limitation to the direction in which the variation can go, but the indication that it could go down to as low as 60 per cent. So we have in the second case an indication of the variation being a variation downwards to anything between 75 per cent. and 60 per cent.; but in the other case—unless I am misreading the Bill completely—there is a formula which gives the Secretary of State power only to reduce the amount of rising costs subsidy
526
after the year 1981–32. So I am bound to ask the noble Lord for a further explanation, in particular of subsection (3).
LORD SANDFORD: I used the term "vary" in respect of the rate of rising costs subsidy and was referring then to subsection (5). But when we are talking about the qualifying amount it is the Whole increase in reckonable expenditure between one year and the preceding year which qualifies, and as it is a whole amount it is not possible to vary that except by a small reduction in the qualifying amount, which is the same thing as introducing a threshold. There is scope for doing that under that particular subsection; but when we are talking about subsection (5) and the variation in the rate of the rising costs subsidy there is scope for reducing it to 60 per cent., or increasing it and selecting one local authority or class of local authority against another class of local authority in order further to refine the ability of the system to concentrate need on areas that need it.
LORD DIAMOND: As for the 75 per cent./60 per cent., we have had this argument before and at this hour one does not wish to delay the Committee longer on that. We have made it clear, as the noble Baroness said in a most persuasive speech earlier, that the frequent financial relationship between central Government and the local authority of 75/25 does not mean 60/40. Sixty/forty is much too low and there is no reason to give the Secretary of State power to introduce a diminution of that order in 1981–82, and it is better that that part of it should he emitted. If we cannot get that part omitted we have to omit the whole of it.
So far as the qualifying amount of subsection (3) is concerned, the noble Lord refers to this as a "threshold". I am a simple man and I do not exactly know what a threshold is. I do know whether you get your subsidy as before, or less than before. Even at this hour I can just about encompass that. It seems to me that the subsection is providing a latitude on behalf of the Secretary of State to retain more to local government and pay less to local authorities. That is why we must vote against it.
LORD SANDFORD: The noble Lord must vote against the subsection if he thinks he has to, but I am happy to be

527
drawn further into explaining this particular part of the noble Lord's Amendment, particularly as it may save us time because the next Amendment, No. 31, refers to this point. It comes into the general view. No. 31 is an Amendment to leave out the word "reduce" and to insert the word "vary", and for the reason which I have just given, that the qualifying amount is the whole amount by which one year's reckonable expenditure exceeds another, it is not possible to vary it upwards, but you can reduce it. The possibility is to reduce the qualifying amount, for instance by saying that the first £2 per H.R.A. dwelling should not qualify for rising costs subsidy except in the case of certain local authorities.
It may well be desirable after 10 years for certain authorities to qualify for rising costs subsidy for any increase in reckon-able expenditure over the previous year and at the same time to provide certain other classes of local authority which only qualify for rising costs subsidy for that amount of increase in their expenditure over a £2 threshold.
LORD DIAMOND: The noble Lord should not be so shy. He should say in more simple terms that it means that if this subsection is passed there can be less money paid to a local authority by way of rising costs subsidy. Am I not right?
LORD SANDFORD: The operation of all three options by the Secretary of State may well enable him to increase rising costs subsidy to some local authorities and reduce it to others. That is the kind of additional selectivity which may be desirable in 10 years' time.
LORD DIAMOND: The noble Lord insists on these subtle words such as "selectivity", but I insist on these plain words such as "more" or "less". So far as this subsection is concerned, a local authority will, if this power is exercised,
get less, as the noble Lord said. It may, for example, be desirable for the Government to exclude the first £2. Then on £2 you get that proportion of subsidy less. I can see no reason whatever why the Government should be taking that power as far ahead as 1981–82 so that, for all the years from 1974–75 until the system is altered, the Bill provides for the qualifying amount to be the whole of the excess in reckonable expenditure. There is a separate issue about the percentage to be applied to it, but "it" is the whole amount. The noble Lord now seeks to argue that there should be some reduction for some selectivity basis in 1981–82.
I do not have the power of the precise foresight with which the noble Lord is gifted, and I do not recommend to the Committee that we should give a Minister those powers at this stage. It is not inconceivable that, by the year 1981–82, it will be necessary to have a further Bill on housing finance in which changes can then be incorporated. It is even conceivable, although I am not persuaded of it, that by 1981–82 the Government may be out of their legislative mess and muddle and may have got matters straight. But I do not know, and perhaps that is going too far. At all events, it is not beyond the realms of possibility that there could be another Bill to deal with the situation in ten years' time. I doubt whether there has been any period of ten years in our history when there has not been a Housing Finance Bill of some kind or other. So I am not impressed by the argument, and I think we must divide the Committee in order to show that we believe that local authorities should from 1981–82 continue to get what they will be getting up to 1981–82.
9.38 p.m.
On Question, Whether the said Amendment (No. 30) shall be agreed to?
Their Lordships divided: Contents, 11; Not-Contents, 57.

CONTENTS

Beaumont of Whitley, L.

Hale, L.

Strabolgi, L. [Teller.]

Beswick, L.

Seear, Bs.

Tanlaw. L.

Diamond, L.

Shackleton, L.

White, Bs.

Garnsworthy, L. [Teller.]

Shepherd, L.

NOT-CONTENTS

Aberdare, L.

Ferrers, E.

Mowbray and Stourton, L.[Teller]

Ailwyn, L.

Ferrier, L.

Allerton, L.

Fisher, L.

Nugent of Guildford, L.

Amherst of Hackney, L.

Fraser of Lonsdale, L.

Rankeillour, L.

Balfour, E.

Gage, V.

Reading, M.

Barnby, L.

Gowrie, E.

Reay, L.

Beaumont, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Redesdale, L.

Belstead, L.

Reigate, L.

Berkeley, Bs.

Ruthven of Freeland, Ly.

Bessborough, E.

Hertford, M.

Sandford, L

Cork and Orrery, E.

Hylton, L.

Sandys, L.

Cowley, E.

Kemsley, V.

Sempill, Ly.

Craigavon, V.

Kilmarnock, L.

Sinclair of Cleeve, L.

Crawshaw. L.

Latymer, L.

Strathclyde, L.

Daventry, V

Lauderdale, E.

Terrington, L.

de Clifford, L.

Lothian, M.

Tweedsmuir, L.

Denham, L.[Teller.]

Margadale, L.

Tweedsmuir of Belhelvie, Bs.

Derwent, L.

Massereene and Ferrard, V.

Vivian, L.

Drumalbyn, L.

Milverton, L.

Wolverton, L.

Elles, Bs.

Molson, L.

Young, Bs.

Resolved in the negative, and Amendment disagreed to accordingly.

9.45 p.m.
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 31:
Page 6, line 23, leave out ("reduce") and insert ("vary").
The noble Lord said: If I may say so, my noble friend Lord Diamond has served the Committee well. If it is the duty of an Opposition to probe and to press a differing point of view, then he has put up a remarkably good performance this evening. If he needed a rest—and I am not quite sure that he did, for he seemed to be in good form—then I am delighted that it should fall to me to give him a brief respite. I beg to move the Amendment standing in my name on the Marshalled List. I am hopeful that the Government on this occasion may accept an Amendment that is so innocent and yet could achieve so much. Although there has been much objection from the other side this evening when we have referred to subsidy reduction, and despite what Lord Sandford said just now, I should like to think that they will seize this opportunity to accept the Amendment.
I wish to make clear what the Amendment aims at doing. We are still on the rising costs subsidy. The use of the word "reduce" has an ominous connotation. As I think the Government this evening have demonstrated, they clearly do not like us to talk about reductions. The use of the word "vary" would at least avoid the conclusion that movement of subsidies could be in a downward direction only. The use of the word
530
"vary" would give the impression that there would be a power of flexibility (of which we have heard so much) up or down. The Secretary of State clearly ought to possess this power. It may be said, and I have no doubt that it will be said, that he does possess it. At this late hour I feel that I have a duty to try to be helpful and to make it clear that he has this power. The word "vary was in fact used by the Secretary of State himself, in Standing Committee E on December 9, when he said:
"We may have major housing legislation before then or during that period; but that gives the Secretary of State a fair amount of flexibility which both sides of the Committee would wish to give him to be able to vary the amounts after local authority associations have been consulted and after the 10-year period."
I hope I have spoken with clarity and perhaps with some brevity, because there is a great deal more that could be said. Those are two qualities which I hope will commend themselves to the Government and persuade them to be a little magnanimous at this hour. I can see no harm being done to the Bill.
9.50 p.m.
LORD SANDFORD: I will certainly be as magnanimous as I can in response to this Amendment, but, as I have already explained—because we strayed into this Amendment when dealing with the previous pair—when the qualifying amount to which this Amendment refers is the whole of the increase in reckonable expenditure, it is not possible to increase it. If there is a variation is must be a reduction. It is just playing with words

531
to no purpose to make the substitution which the noble Lord is asking us to make. But the scope provided for the exercise of the Secretary of State's discretion at this point is coupled with his discretion under subsection (5). Under that subsection lie has power to increase the rate of rising costs subsidy from 75 per cent., which is what it would probably be at, to some higher figure if, in 1981 and 1982, there are housing authorities still burdened with heavy problems of housing. If there were such authorities it would very likely be the Secretary of State's intention and wish to do that very thing. In that case the amount of subsidy to those authorities—and it may well be necessary and desirable to be selective—would be not reduced, but increased. But we cannot use the word "increase" in subsection (3) because it is grammatically impossible.
LORD GARNSWORTHY: I thank the Minister for that very clear statement. He has reiterated what he said earlier and I take his point, that he regards this as a quite trivial Amendment. That was why I was hopeful that the Government might have been willing to accept it. If they will not accept Amendments of vital importance one would have thought that they would want to be a little conciliatory. The use of the word "vary" would do no harm. It would indicate quite plainly that there was a possibility of the figure going even above 100 per cent. If the Minister is so unresponsive in a small matter like this I would not wish to take up the time of the Committee in pressing it to a Division. But I express regret, and if this kind of attitude, this unwillingness to make any kind of concession, is taken, clearly it is likely to temper our approach to further debates. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.53 p.m.
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 32:
Page 6, line 32, leave out from ("below") to end of line 40.
The noble Lord said: I think that it might be for the convenience of the Committee if with this Amendment I speak to Amendments Nos. 33 and 34. When this Bill was in another place, during Second Reading the Secretary of State
532
said—I quote from the OFFICIAL REPORT of November 15, 1971, at column 36—
"Clause 4 provides a rising costs subsidy which will be of particular importance in encouraging local authorities with an existing programme to expand and continue their housing programmes without any fear of those expansions of programme having an adverse effect on their revenue."
As I understand it, rising rents are expected to produce a surplus which can be used to finance new building. But the more they build, the greater the likelihood, some think the certainty, of an increased burden on the ratepayer. Putting encouragement on one side, that would seem to risk positive disincentive to building.
Local authorities tend to differ in their approach to building houses. Some of the worst flatly refuse to tackle building by public enterprise; certainly they object to building to let at reasonable rentals on a scale commensurate with local need. Some feel that the home seeker should buy. Others see housing as a social service—we on this side do —realising the importance of families living and growing up in a decent environment, with rents at levels that permit a good living standard. All the means testing that features so prominently in current thinking by the present Government is disliked and rejected by masses of the people of this country.
These authorities who are keen to build, to do a good job, can be discouraged if they have to face too heavy a burden on the rates. If they are to undertake a programme commensurate with local need, then they require the financial resources to carry it through. So it would seem pregnant to inquire what advantage this new subsidy will have over the existing system, if it continues. The Amendment would ensure that the Government pay the full cost of subsidy instead of shifting the burden steadily on to the ratepayers, with all that that would involve in the building programme.
I should like to touch on the source of income which local authorities are expected to rely on; that is to say, ultimately, rent income. It has been said that when a local authority achieves surplus it can devote a good deal of money to new building projects. Does not that mean from the profits extorted from tenants? What sort of morality is that?

533
These people pay rates and taxes as well as the rest of us. Further, the issue of being in surplus is to be decided after meeting administrative costs that again are most questionable—and we shall be coming to this later in our consideration of the Bill. I beg to move.
BARONESS YOUNG: At this late hour I do not wish to take up the time of the Committee in reiterating the arguments that we have had about the proportions of the subsidies paid by central Government and local government. I can only say in answer to the noble Lord, Lord Garnsworthy, that we take the view that it is not satisfactory from the point of view of this relationship between central and local government for there to be 100 per cent. deficit subsidies, in this case in relation to the rising costs subsidy. I do not think I need go through the arguments that we had about this before. We believe that this is the right proportion, and we therefore feel unable to accept the Amendment.
LORD GARNSWORTHY: I. can only regret the reception given to this Amendment. At this hour I certainly should not wish to delay the Committee beyond an agreed time arranged through the usual channels, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
House resumed.

FRIENDS OF THE CLERGY CORPORATION BILL [H.L.]
Reported with Amendments.
THAMES BARRIER AND FLOOD PREVENTION BILL
Brought from the Commons; read 1a, and referred to the Examiners.