HL Deb 08 June 1972 vol 331 cc425-82

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 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 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 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 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, 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 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.

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 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 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 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 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 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 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 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 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 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 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 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 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,"— 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 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, 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 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 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, 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 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, 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; 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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"— 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 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 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 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 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 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 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 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 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 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 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 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 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.

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