HL Deb 13 June 1972 vol 331 cc725-69

4.35 p.m.

House again in Committee.


On Question, Whether Clause 5, as amended, shall stand part of the Bill?


We return with renewed vigour to this Bill, which is going to put right all the problems which the Statement has shown the Government to be suffering from, and this Bill is apparently to provide the additional houses which everybody recognises are needed. This clause is designed to assist in that. It refers to a small but nevertheless welcome subsidy, and is so placed in the Bill that it is the last subsidy which I could describe as being a subsidy towards houses rather than a subsidy towards people. We are to turn at a later stage of the Bill to rent subsidies, whereby people who cannot afford to pay rent will be given the necessary amounts to enable them to do so. So I think it would be right to draw the attention of the Committee at this point to the inadequacy of the Government's housing proposals, as reflected in this particular clause.

The cost of this particular subsidy to the Government is estimated at about £15 million. Indeed, the total housing subsidies, looking as far ahead as the Government can, namely to 1976–77, are estimated to be just over £100 million at current prices: I am talking about houses as opposed to help to individuals. For the year 1970–71, the last year for which we have estimated figures, under the present system which the Government propose to replace something like £150 million net is being provided—that is to say, provided on similar subsidies for houses, as opposed to people. One does not know what that part of the total housing help would have amounted to in 1976–77, but I think it is reasonable, having regard to the figures which the Government have given us of £100 million increase by the mid-'seventies and £200 million by the late 'seventies, to assume a £100 million increase from the £150 million I have given, to £250 million. So the present position is that we would have, if this Bill were not before us, the prospect of something like £250 million being devoted in 1976–77 to subsidies for building more houses, whereas under the Bill we have something like the prospect of £100 million. The comparison is between £250 million and £100 million for what I might call basic housing subsidies. That is the measure which I wanted to put before the Committee, to show how lacking this Bill is in looking towards the real housing needs of the country which we have been recently discussing, arising out of the Government's Statement.

This, then, is the purpose of this particular clause: it is to add a modest £50 million to the housing and to the other subsidies which provide for building houses. It is an unsatisfactory clause in many respects. It is complicated, and not very clear. I know that the noble Baroness has said that the ability to get the subsidy will arise under two heads. With the greatest respect, that is the view which I myself took, but it is not all that clear that you can have two goes at the subsidy under two headings and not merely under one. If I have got this wrong I should be glad to be corrected when the noble Baroness comes to reply. If I am right, perhaps she could confirm this, because there is a great deal of misunderstanding about the matter in the country.

That is the first difficulty arising out of the Bill. Secondly I want to mention a matter we have already discussed on earlier stages. It is extremely complicated. The third point is that the total is very small and the Government have been unwilling to move in any way to increase it. So although we have a subsidy—and we are all grateful for some help—it is not the kind of help which is adequate, clear or sufficient in helping to meet the nation's need for more houses.


I do not think we need return to the argument about the total amount of subsidies that might have been paid in the future and to compare it with the present system, because we have debated this matter at considerable length. But I should like to clear up the point about the operational deficit subsidy being payable under two heads. It is true that it is payable under two heads; and in the case of an authority which had a larger deficit on its Housing Revenue Account, which it made up by a rate fund subsidy, in the year 1971–72 it was larger than the rate fund subsidy for 1970–71. The authority would receive 50 per cent. subsidy on the rate fund contribution that it made for 1970–71. In addition it could receive a subsidy if it qualified under subsection (5) on this formula, which is the difference between the housing authority's reckonable expenditure for 1970–71 and 1971–72, less £15 multiplied by the number of houses that the housing authority had in March, 1972. In those circumstances it could receive subsidy under two heads.


I am grateful to the noble Baroness for that confirmation. However, I wonder whether I could remedy what I obviously failed to do when I spoke previously and make it clear that I am not concerned at the moment with the total amount of subsidies which we have discussed. We have reached the stage of the Government's saying that they are prepared to give us information on that. I am referring to the need to build houses and to the Statement made by the noble Lord, Lord Sandford, a few minutes ago that although he had not the figures with him then, we could easily return to the matter on this Bill. I am returning to it, and for the following very good reason. What we on this side are concerned with is the lack of Government recognition of the need to build more houses. We do not think that the subsidy structure is adequate for that. We have already argued that the total of subsidies is falling enormously as compared with what it would otherwise have been. That is not in dispute at the moment. I am raising a matter within the total of subsidies; namely, the kind of subsidies. Not only is the total amount of money which is being devoted to house building through subsidies being reduced, but the new structure of subsidies will militate against a continuation or an increase in the rate of house building. Why do I say this? Within the same total that the Government are claiming when they say they are keeping figures level there is a switch away from houses and towards people.

The major subsidy at the present time is a subsidy on houses; namely, the interest subsidy, which means a contribution towards the cost to a council in building a house. According to my recollection, I referred to a figure regarding subsidies a short time ago of £100 million, and if the noble Baroness will be good enough to refer to the letter which her noble friend Lord Drumalbyn wrote to me two days ago she will see that the estimated subsidies under the new system for 1976–77 at current prices in England and Wales amount to between £320 million and £385 million. But if you exclude the subsidies for people, the rent rebates, the rent allowance and the payments by the Supplementary Benefits Commission, which are payments to people, you are left with a figure of the order of £100 million for subsidies for houses. That is what we are talking about and that was what the noble Lord, Lord Sandford, was talking about in the Statement.

We are discussing a clause which is inadequate to provide the necessary number of houses. I want to pursue the question whether I am right in saying that it is inadequate. There is no doubt that it is inadequate so far as new houses are concerned, because the noble Lord, Lord Sandford, has said that the demand for new houses is at a higher rate than ever before. I should be surprised if it were not—it always is. It is one of the statistics that one does not need to carry in one's head. It is just like saying that each year the country produces more than it has ever produced before—it always does. You do not have to argue that one. As one of my noble friends asked, how does that demand for new houses compare with the demand for houses to let? This is a Bill which will affect local authorities who build houses to rent. With regard to this clause, am I right in saying that it is inadequate in amount and structure to provide for the houses required to be built by local authorities for letting to tenants who are seeking to rent them?

The noble Lord, Lord Sandford, was a little hesitant in giving us the figures for people seeking houses to rent. I was surprised about that, because these figures have been compiled time and time again. They are on local authority housing lists. They are totalled and published from time to time. I should have thought that if he did not have them handy then, he would have them handy now, and would have had an opportunity of what one calls "refreshing one's memory". The last figures must have been published within a recent and relevant period. I am asking the noble Baroness to let us know whether we need more houses to let or whether we do not. If we do not, then my argument falls to the ground. If we do not, then we do not need to subsidise local authorities in building those houses. I suspect that there are still tens of thousands of people on the housing lists seeking accommodation, including, in particular, a vastly higher number of young people seeking to get married and set up their own homes, than one will ever find on the lists of those seeking to buy houses. One knows that although many want to buy houses, they find it impossible, having regard to their means and the extent to which house prices have risen recently under the present Administration, particularly in the South and South-East of England. We should like to know what the figures are so that we can judge whether there is need—as I think there is—for a clause which provides a larger subsidy and relates it more particularly to housing than to people.

4.48 p.m.


On Clause 5 we are debating the operational deficit subsidy, and I should have thought that the noble Lord, Lord Diamond, would want this clause to stand part of the Bill, if for no other reason than that it is about a subsidy which will meet a cost at present borne by ratepayers, who will now get the benefit of the subsidy. If the clause does not stand part of the Bill ratepayers will lose the benefit and I cannot believe that that is what the noble Lord wants. I think that because he knows that is the right argument he has hung his case on a long discussion about the rising costs subsidy which is really irrelevant to this clause. I can only put the rising costs subsidy as I see it. As the noble Lord, Lord Diamond, said quite correctly, it is the aim of the Bill to subsidise people, not houses. The withdrawal of the subsidies is the withdrawal of subsidies on houses, and in the case of the rising costs subsidy it will go to areas with the greatest housing need. These areas will then get the 75 per cent. cost of the subsidy borne by the Government until 1975–76. As we have already debated this matter on the preceding clause I do not wish at this point to repeat the arguments.


The noble Baroness knows the difficulty I am in. She knows that under this clause we are being offered a subsidy—and albeit inadequate, if you offer a hungry man a bite of bread, however dry, he will prefer to take that rather than have nothing if he is, as we are on this side of the Committee, on our knees because of the situation in your Lordships' House. The noble Baroness knows that, and of course I accept it. Nevertheless, I regard it as my duty to help and to see that people who need houses get them. There are two categories of people who need houses, the largest category being would-be local authority tenants. Under this Bill a method is devised for providing subsidies to local authorities who cannot afford to provide the houses they need for their tenants. So I come back to the justification that I made earlier on, that the Bill is ill-designed because it devotes too little of the money subsidies to housing and devotes the rest to subsidies for people under an entirely new scheme of the Government's own creation.

On the question of subsidies for housing, I think they are too small. The amount provided by this clause is too small, but I am always willing to have regard to the facts, if I can get them. So for the third time I ask the noble Baroness whether she is in a position to give me the facts? If she is not in a position to do so now, would there be an opportunity for her to give them to me a little later on during the course of a short day's or a long night's Sitting, as the case may be? I should not have thought it would be so difficult to get hold of facts which are so well established and which probably I could find in the Library in the course of a quarter of an hour. I am very surprised indeed that the Government are not willing to let us have the total of the people on the housing list. It is as simple as that. Of course there must be some doubt about it. The Government have a figure of would-be house purchasers and cannot be precise, but it is the best estimate that the Government can make and we are grateful to them because whatever estimate they have made it will be helpful. Governments always try to give the right facts, so what we are now saying is: "Please will you put those figures in context by letting us know what the demand is for local authority houses?" It is a reasonable request and I am pressing it.

I agree that it would be odd to divide against this clause, which provides a subsidy, however small or however inadequate, to serve the purpose. But sometimes people divide in order to show their views with regard to the treatment they are getting from the Government. That is one reason for dividing but I am much more patient than that. I am sure that the noble Baroness is in some temporary difficulty which I hope will shortly be solved, and therefore I return to the question: what is the total of the housing lists in England and Wales?


I have not in fact got those figures but if it is possible to get them I will do so. I can only say that I think one has to be careful in using round figures as an exact measure of housing need. Therefore one would have to take carefully the interpretation of such figures when they are produced.


I intervene only because we had an important Statement a short time ago from the noble Lord, Lord Sandford, and I think my noble friend would acquit the noble Baroness because she is not a member of a Department. But the noble Lord, Lord Sandford, is a member of a Department. He made a Statement this afternoon which dealt with the trend among those who wish to buy their houses. He was asked a series of questions—which I fear he did not answer—as to what is the trend among those who wish to rent houses, and time after time we asked him what was the total on the housing list. The noble Lord, Lord Sandford, sits mute on the Front Bench. I think he ought, in a spirit of generosity if not gallantry, to come to the aid of the noble Baroness and help her. If he does not know, his officials are in what one might call "pigeon-carrying distance". I think the noble Lord, Lord Sandford, should give this information to us. If he cannot give it, then my understanding of and respect for him in his Department will, I fear, be less. I should like to give the noble Lord, Lord Sandford, an opportunity to answer these very important questions which have been put to the noble Baroness. I hope he will recognise that the noble Baroness is in some difficulty, and therefore if he has any gallantry connected with the Senior Service of which he was a member, he will now respond.


I am delighted to respond. In the Statement I said that an opportunity to discuss the whole question of the demand for rented houses will certainly arise, and I can foresee a number of occasions in our debates on the remainder of this Bill when the opportunity will arise. When the time comes, I shall certainly be ready with the figures and, given due notice, I can furnish noble Lords opposite with the relevant figures so that they can have a worthwhile debate. But as my noble friend has said—and this is why I did not rise to my feet earlier, because she made the point so clearly—this could not conceivably arise for discussion under the Question, Whether Clause 5 shall stand part of the Bill? We can have a very much better debate if we choose our moment, and I shall be happy to join the noble Lord, Lord Diamond, in selecting what that moment might be. I am quite certain that it is not the debate that we are now having on the operational deficit subsidy.


It is true, as the noble Lord has just said, that perhaps this matter is not relevant to Clause 5, but I want to go back to the serious statement just made by the noble Baroness, Lady Young, when she said that if she had the figures they could not be argued about or debated and one could not ascertain from those figures the various needs. I personally welcome both the operational deficit subsidy and the rising costs subsidy, but if the Government had come to this Committee and given us those figures the whole of this debate on housing finance would have had some serious basis. It is because we have not got those figures (and I asked for them in a question following the statement) and because we do not know how many people want to rent houses or how many people are paying too little for their council houses, or how many people are paying too much for them that we cannot argue any of these clauses at all seriously.


We should make much quicker progress if we did not have to get up time and time again in order to ask the same questions for the same information. The noble Lord, Lord Sandford, has now made it necessary for me to repeat what I said earlier—and these are the intentions I had before I heard the Statement. Indeed, I could show the noble Lord the notes which I had made, although I am sure he does not challenge my good faith. I had intended to speak on precisely this point on the question, Whether the Clause should stand part of the Bill? It was not my fault, although perhaps it was my good fortune, that the noble Lord should choose the time immediately before this to make his statement, and to say, "We can come back to this on the Bill".

May I repeat that the structure of the subsidies is naturally divided between houses and people and this is, for all practical purposes, the last one on houses. We have been discussing houses and we are now moving on to people. The next clause deals with the rent rebate subsidy; the one after that deals with the rate fund contributions in respect of rent rebates; the one after that deals with the rent allowance subsidy, and then we move on to town development. This is, therefore, the appropriate place in the Bill to seek to demonstrate, as I am, that the new structure of subsidies, leading to a switch away from houses and towards people, has left the country and local authorities with inadequate encouragement to build houses. The question is whether that encouragement is adequate, or inadequate.

One can answer that question only if one knows the rate of demand. The Government are suggesting—there is no purpose in the statement otherwise—that the demand for home-owned houses, home-ownership, is greater than the demand for tenanted houses. As I say, there would be no point in the statement if that were not their suggestion.

The Government are proposing a switch on as massive a scale as possible from tenanted, local authority houses to owned, home-ownership, houses, and that is the part of the statement to which the noble Lord either referred in connection with the original statement or mentioned in his supplementary reply.

The noble Lord bases his case on the fact that he knows the rate of demand for home-ownership. It was, he said, running at a higher rate than ever before. He made that statement on the basis of calculations of some sort. The criticism of the Government is clear. It is that when they consider houses, make a statement on houses and then debate houses, they have in their minds the people who desire to own their houses—as we have also—but they reject from their minds the needs of people who want to rent houses. The Government have not troubled to discover the figure relating to the queues of tenants.

If the noble Lord cannot let us have the information we seek, we will have to return to this matter, but in the circumstances I do not think it would be logical to seek to divide the House. We are grateful for even a small mercy, though this one is both small and ill-directed.

Clause 5, as amended, agreed.

Clause 6 [The rent rebate subsidy]:

5.3 p.m.

LORD GARNSWORTHY moved Amendment No. 57: Page, 10, line 21, leave out ("a percentage of").

The noble Lord said: I will, with the leave of the House, address my remarks at the same time to Amendment No. 59. We now come to the clause which deals with the rent rebate subsidy, subsection (2) of which provides: The amount of rent rebate subsidy payable to a local authority for any year shall be a percentage of the amount of the model rent rebate contribution (as defined in section 7(2) below) made by the local authority for the year. The percentages are set out in subsection (3). What does this clause do? I quote from the OFFICIAL REPORT of the other place relating to Standing Committee E. The Secretary of State said, and I have no quarrel with the way he put it: Ratepayers are being asked to contribute towards a deficit in the housing revenue account in so far as it is caused by rebates. That put the matter clearly. I rely on the same source to interpret that in figures because the Secretary of State went on: In 1972–73 the total amount of rebates granted to council and new town tenants is estimated to be between £140 million and £170 million. But the rebates are estimated to give rise to housing revenue account deficits of about £90 million to £100 million … That relates to the year 1972–73. He added: Rent rebate subsidy might meet about £105 million to £135 million and the net amount falling on the rates might be £35 million to £45 million."—[OFFICIAL REPORT, Commons, Standing Committee E, 16th December, 1971; cols. 429–30.] That is how the situation develops. The effect of my Amendment is to lay down that the Government shall pay 100 per cent. of the cost of relieving poverty, which is what this is really all about—that is, to relieve people whose incomes are too low to afford the so-called fair rents which the Government believe council tenants in receipt of reasonable incomes ought to be called upon to pay.

It is a novel idea that some council tenants should have to carry a special burden, as special as those who helped to produce the surplus on the accounts. It is a novel idea that local authorities should be expected to levy a burden on ratepayers to meet payments to those on the lowest incomes as determined by national policy. If ever there was an inequitable and regressive form of taxation it surely is the system of taxation applied in the sphere of local government, the rating system, because local authorities can levy no other form of taxation.

We on this side of the House say that the relief of poverty has been and ought to continue to be a national and not a local obligation. I sometimes wonder whether this Government, as one of their new ideas, will try to take us back to the days when we had boards of guardians.

Once again, we on this side in our approach to this Bill are not alone in our view that local authorities should receive 100 per cent. reimbursement of the cost of rent rebates, and, indeed, of the cost of administering them. The Association of Municipal Corporations, the Rural District Councils Association and the Urban District Councils Association have come together and in a joint statement have said: The cost of rent rebates and allowances should be accepted as a national responsibility to be met wholly by the Exchequer. Local authorities have no control over the level of pensions, supplementary benefits or minimum wages, and the liability arising from a difference between income and rent levels will, in the case of many authorities, add substantially to increasing the burdens on the general rate fund. The Association of Municipal Corporations said on its own, clearly and forcibly: Throughout the consultations on the Bill the Association has consistently maintained that the proposal that local authorities should contribute to the cost of rent rebates and rent allowances in the private sector is contrary to the relationship between central and local government. The existing contribution to rent rebates is a first charge on Exchequer subsidies and the share to be borne by ratepayers therefore represents a substantial change in policy. Whereas the provision of housing at a fair rent is the duty of a local authority, the need to supplement the income of the tenants is in the Association's opinion a matter for central Government. Local authorities have no control over the level of pensions, supplementary benefits, or minimum wages, and must therefore regard as an open-ended commitment any liability arising from a difference between income and rent levels.

The Government are proposing to give 100 per cent. in the case of rent allowances in the private sector. I wonder why the different treatment, because it may possibly be claimed that the public sector receives other subsidies. If that argument is advanced it should be borne in mind that the so-called fair rents system which the Government seek in this Bill to impose on local authority tenants is that they shall pay rents at the same levels as those in the private sector for comparable properties. I certainly hope that that fact may be borne in mind when some explanation is given as to why the two different sectors are to be treated differently. Quite apart from what the Association of Municipal Corporations has had to say, the Urban District Council's Association, the Rural District Council's Association and many individual authorities have made their views known on this matter, and I doubt whether anybody can produce to the Committee this afternoon evidence of any body of standing which believes that the Government's approach on this matter is correct.

If local authorities were left free to determine rents on their estates that, it seems to me, would be quite a different matter. It would be reasonable in that event that if they charged rents that were below economic cost they should be called upon to bear the difference, because how local authorities balance their accounts would be, as it is now, subject to the approval or otherwise of their electorate. And what is wrong with that? Is that not the best sanction, the best check, that can be applied in this field of local government? But, since they are being compelled, as this Bill would compel them, to conform to a national scheme so far as rents and rebates are concerned, then the cost of those rebates and the cost of the administration of those rebates, should be met 100 per cent. from national resources.

May I touch just briefly on the question of the costs of administration? They are bound to be heavy. There is no escape from that. It is only a matter of the first assessment for rebate. There is a six-monthly reassessment and, having seen at least some the forms that were sent out prior to last April, I have the feeling that many people will share my view that these forms are pretty intricate things, not easily handled, and it will require people of ability and quite a number of people to face up to handling them and reassessing the position every six months.

Then, for a couple of years ahead we are to have another 50p increase in the rents, which surely will create a situation in which there will be every likelihood of further involved reassessment. I do not see how one can possibly go ahead increasing rents without taking account of it as a changed circumstance. Indeed, we shall reach a position in which, after three years' working of the Bill, a new level of fair rents is likely to be laid down with a three-yearly review of the situation. I am only pointing out that in this field of assessing entitlement to rebate there are going to be constant changes and there will need to be a considerable body of officials to deal with the matter. It is unfair and improper that local government should be asked to carry this or any portion of this extra burden. I hope that the position has only to be stated to be obvious.

If I may I should now like to touch on Amendment No. 59 which would leave out subsections (3) and (4). Clearly, if Amendment No. 57 is accepted by the Government, as I hope it may be, and, if not, then by the Committee, as at the moment I am optimistically anticipating, there would be no need for the table set out in subsection (3) or for the provision that subsection (4) makes for the years after 1981–82. It seems to me that the issue is quite clear: if power is to be taken out of the hands of local government and if local government becomes increasingly an agent of the central Government in regard to the relief of poverty, the cost of the operation should be borne by the Exchequer. If I may put it this way, as simply as I possibly can, he who calls the tune should pay the piper. I beg to move.

5.19 p.m.


I rise to welcome this Amendment. The noble Lord, Lord Garnsworthy, in moving it, has quoted from the joint statement made by the Association of Municipal Corporations, the Urban District Councils' Association and the Rural District Councils' Association. What he did not mention is that those three Associations represent and cover the totality of the authorities which are housing authorities and therefore it is a comprehensive statement on this point by those who will have to administer this Bill when it becomes an Act.

I entirely agree with the noble Lord, Lord Garnsworthy, that the relief of poverty should continue to be a national obligation. What we have to remember is that poverty is not evenly distributed over the whole country. There are areas of high unemployment; there are areas of low wages; there are areas with a high percentage of poor people; there are areas with a high percentage of old people; and there are equally others with a high percentage of young people or with a high dependancy rate. These are the places where rent rebates will be most needed and to my mind it is only fair and logical that these rebates should be financed and funded 100 per cent. from central Government sources. For many years Members of the Tory Party at all levels, both in Parliament and out of it and in local authorities up and down the country, have been urging local authorities to abolish rate fund contributions to Housing Revenue Accounts. It is surely paradoxical and illogical that a Tory Government should be imposing on local authorities a duty to make a rate contribution where there is a deficit caused by rent rebates.

On the Second Reading of this Bill I asked my noble friend Lord Sandford whether the Government had, for some reason or other, a rooted objection to 100 per cent. subsidies in the field of housing, and my noble friend replied that this was not the case; he quoted the instance of the 100 per cent. support for the first four years for rent allowances and the 100 per cent. support for the deficit on housing associations for the first three years. I am sorry he is not in the Chamber at the moment, but I would put the question to him and to the other Ministers that if 100 per cent. support is allowable in those particular cases, why is it not allowable also in the case of rent rebates? I very much hope that my noble friends will be able to accept this Amendment, and if they are not I would strongly urge all noble Lords on this side of the House to support it.


Although I personally am in sympathy with what my noble friend Lord Hylton has said, I wonder if it is possible to expect the Government to accept this Amendment. Is it not the clearest case of infringement of Commons privilege? Well, we live and learn; I am told by an ex-Financial Secretary that that is not so. No doubt this point will be made clear. It would certainly appear so.


I hope to be able to convince my noble friend—indeed I hope even to be able to convince noble Lords opposite—that this Amendment should not be pressed. The argument is made that it is wrong in principle that the ratepayers should help with the relief of poverty, but is that really a tenable argument? First of all, council housing is a service provided by local authorities at a charge. There are plenty of precedents for a local authority providing a service, making a charge for it and remitting the whole or part of the charge for those who cannot afford to pay the charge or the whole of the charge, and contributing from the rates to the cost of the remission. There are, for example, free school meals. Free school meals are a remission of charge made by the local authority for a local service, and the cost of that remission is borne on the rates. There are similar rate-borne remissions for charges for home helps for those who cannot pay the charge in full, for residential and temporary accommodation for the elderly and handicapped, and many local authorities make a specific voluntary contribution as well towards the expenditure for such purposes.


I do not want to misunderstand the noble Lord, but did I hear aright when he said that the cost of free school meals is borne entirely by the local authority?


The free side of it, I understand, is borne entirely by the local authority, yes; the remission is borne by the local authority. The Bill does not propose that the ratepayers should meet part of the cost of the rebates, and I think I should make it quite plain—it is a complicated matter—that they meet only part of any deficit on the Housing Revenue Account caused by rebates granted, whether granted to tenants who are in work or to tenants who are not in work. The very figures the noble Lord quoted from what my right honourable friend said in another place made that quite clear.

Thirdly, the rebate is not granted because of the tenant's poverty but because of his housing need. The great majority of tenants in work who receive a rebate will have an income above the supplementary benefit level, but the fair rent of their dwelling may still be high in relation to their income, particularly so, for example, in London. Unlike other basic necessities, the amount a man needs to spend on housing varies greatly from one part of the country to another. Where a tenant's income is about average and his rent is high, the rebate ensures that the tenant does not have to spend too high a proportion of his income on rent. So it is not just in relief of poverty; it is giving assistance in housing need where it is due. It may well be that a man may have a fairly good salary but have a large family and need a fairly big house to accommodate them, and in that case still, if he qualifies, he will receive a rebate of a proportion of his rent.

I think I should also make it clear that there is nothing unprecedented about rate fund contributions to meet housing need. Quite a number of local authorities now deliberately make a rate fund contribution to keep down the rents of all tenants, irrespective of their means. It is much more justifiable to ask the local ratepayers to make some contribution towards keeping down rents only of those tenants who genuinely need this help. Where a local authority, a housing authority, operates a rent rebate scheme at present, under Section 133 of the Housing Act 1957, it meets the cost either out of rates or by charging higher rents than it otherwise would do, or in both ways.

One of the defects of the present system is that a local authority does not get more subsidies if it grants rebates; the more generous its rebate scheme the greater the loss of income. The authority can only make up its loss at the present time either by increasing rents or making a rate fund contribution, and there are quite a number of authorities who make a deficit rate fund contribution to their Housing Revenue Account. If such an authority grants rebates, then the cost of the rebates is met wholly or in part by a rate fund contribution. For example, at the present time if the authority makes a deficit rate fund contribution of £100,000 and grants rebates totalling £75,000, then the whole of that £75,000 of rebates granted is in fact met from the rebates. Under the Bill, on the other hand, some authorities will also need to make a rate fund contribution towards the deficit caused by the granting of rebates, but they need not meet more than 25 per cent. of that deficit. But the point is that it is clearly established already that under the existing legislation those 60 per cent. or so of local authorities that have rebate schemes under the Housing Act 1957 do make rate fund contributions in respect of those rebates.

The noble Lord asked why there was a different treatment between rebates and allowances, and at one time, if he does not mind my saying so, I thought he tended a little to confuse the two situations of rebates and allowances, rent rebates being rebates of rents on local authority housing and allowances being allowances in respect of rent in the private sector. He asked why there was different treatment between rebates and allowances. The obvious answer is that 60 per cent. of the housing authorities, as I understand it, are already running rent rebate schemes and therefore have experience of them—they are, in any case, in respect of their own houses—whereas the rent allowance scheme, which we shall come to later, is in relation to privately-owned houses, and the local authority has no experience of granting allowances in respect of people occupying those houses.

The principle of the Bill is that there should be no real distinction between those who need assistance when they are occupying private houses and those who need assistance when they are occupying local authority houses. The reason for the difference in the rate is that the local authorities have no experience of running allowances in the private sector, and because of a pressure on their Housing Revenue Account in the early years this is a particular assistance which is being given to them as a start. I should have thought the noble Lord would welcome it. There is not a matter of principle in this, because in later years the subsidy towards the rent allowances is reduced to 80 per cent.

In my opinion that is a good justification, but apart from that there is the general principle of a 100 per cent. subsidy, which we have already discussed. It must be generally agreed that when one is spending other people's money one is not quite as careful as when one is spending one's own money. I should like to expand that point. If one has to pay some proportion of the cost of the service one is giving, one will be inclined to pay more attention to the administration of it and to the economy and efficiency of the administration, because it is at least partly one's own. One would be more inclined to pay attention to those things if one is actually making a contribution towards it. This is an important aspect which one should consider.

The noble Lord said that a 100 per cent. subsidy for rent allowances is to be provided for the first four years. I have explained that that is to help the local authorities with their finances in the early stages of the new system and because there is no comparable scheme in operation anywhere except in Birmingham, and there only on a modest scale. If a 100 per cent. subsidy were to be provided indefinitely, as my noble friend explained before, we in Parliament would be faced and the Government would also be faced with a strong and growing demand for closer control of the operation of the scheme and of the cost. In consequence, the latitude of the local authorities in administering their scheme, in the way in which they look at the tenant's income and the way in which they allocate their houses might be considerably impaired.

I hope I have been able to convince my noble friend at least that it is not right to make the percentage of the cost 100 per cent. for ever for any service of this kind. It is particularly not right to make it in the case of the rent rebate service to start with, because this is already a responsibility of those local authorities which operate the scheme. It would seem to me to be a retrogressive step to take this responsibility out of their hands and let them operate it purely as an agent for the Government under fairly strict control, as it would have to be. I do not think this is what anybody would wish.

5.34 p.m.


The noble Lord, Lord Drumalbyn, talks about taking something out of the hands of local authorities. This is precisely what the Government are doing.


All the way.


At present local authorities can decide and operate policy, and are answerable to their own local electorate for what they do. The Government are giving them nothing. The Government are giving them no choice and no latitude. The Government are telling them what they have to do and that if they do not do it they will appoint housing commissioners to do it. I wonder what kind of latitude the noble Lord is going to suggest housing commissioners should have in this field. Do the Government realise the level to which they reduce the role of local authorities? I have listened to the noble Lord very carefully. I understood him to say he thought I would welcome the provisions of this clause. The hour is early. We are going on for a long time, and if we are starting dreaming now I do not know what we are going to be like at breakfast time to-morrow. For the noble Lord to commit himself to a hope that I would welcome this imposition on local authorities is stretching an imagination of a kind I never thought he possessed. I have always regarded him, when he came to use his imagination, as being pretty level-headed.

I very much welcome the contribution of the noble Lord, Lord Hylton. I hope he will not mind my saying so. Perhaps he will not mind if I embarrass him a little, because he is a man of considerable principle. It may well be that a number of people will feel he ought not to have spoken as strongly as he did. I greatly appreciated his appeal to his colleagues. I am certain he will not regret having made the appeal. The Government would do well to study carefully what he had to say and should not dismiss it lightly. I was not speaking merely for those who sit on this side of the House. In what I had to say—I went to some lengths to quote—I was putting the point of view of the three associations. I am grateful to the noble Lord, Lord Hylton, for drawing attention to the fact that these three associations represent the totality of local authorities dealing with the problem of housing in the field of local government. I wonder how the Government dare set their views above those of these people.

I am beginning to understand why they do not want it written into the Bill that there shall be any obligation to consult with local authorities. Whenever there is a question of agreement being reached between local authorities the Government again and again say, "No. This would create a quite intolerable situation". We have tried to put Amendments to the Government. One asked that it should be the duty of the Secretary of State to consult with local authorities. That was turned down. The Government have accepted no Amendment beyond a couple of drafting Amendments which in no way change the sense of the part of the Bill with which we have been dealing.

The noble Lord, Lord Drumalbyn, referred to the inability to put trust in local authorities. What he said was that if they themselves have to pay something towards this, then they will be a jolly sight more careful in the way they do it. I may not have put it as nicely as he did and I envy his gift of words. But I do not believe for one moment that local authorities will be prodigal in this matter. I do not see how it can be contended from the other side that in this limited field, when local authorities are in no way responsible for policy, they cannot be entrusted to operate the rent rebate scheme as the Government have laid down. Furthermore, I do not see why anybody should suspect them of wanting to engage more officials to do the job than are necessary. After all, the people who serve in the field of local government are taxpayers as well as ratepayers.

What I am saying is that when, in the field of national affairs, we decide what shall be done about rents and what shall be done about rebates—and I come back to that point, even if the noble Lord does not like it—which subsidise wages that are too low to pay for the type of property which a local authority regards as essential if a family is to grow up in a decent environment, that means that a tenant who draws a rebate is too poor to pay for the needs of his family. I thought the noble Lord, Lord Drumalbyn, suggested that local authorities should use their discretion about the type of house into which they put tenants, and that they might have some regard to their ability to pay. I do not think the noble Lord will be quite so proud of what he has said about this Amendment as he usually has pretty good reason for being. When he reads the report of what he said not once but a number of times, lie will not be impressed by the implications of a number of things he has said.

The noble Lord, Lord Hylton, reminded the Committee—I think he particularly set out to remind your Lordships, especially those sitting opposite—that for years the Tory Party has been urging, "Do away with rate contributions to housing." I wonder how the noble Lord, Lord Drumalbyn, squares that with the point of view which he attempted to put to us. If I am wrong on the issue of school meals—at least, free school meals—then I am not wrong about the position so far as the school meals service generally is concerned. It is disgraceful if local ratepayers have to bear the whole cost of providing free school meals, but I do not really think they do, because the Government grant plays a very big part in local government finance. I am perhaps offering a hostage to fortune and the noble Lord, Lord Drumalbyn, may say, "Yes, but they pay some of the cost."

But I have made the point that this is a sphere where we are imposing a new burden on local authorities. I feel that the Committee ought to be given an opportunity of standing by what has been said by the three associations which have been mentioned a number of times, and by what they want done. Unless we hear something a very great deal more persuasive than we have heard—I hope that I am a reasonably modest person; I hesitate to think what my noble friend Lord Diamond will say, but he will probably say that I ought to have consulted him—I shall feel that I have a duty to ask the Committee to divide on this Amendment.


Before my noble friend Lord Drumalbyn replies I should like to say a few words. My connections are entirely in Scotland and we are discussing an English Bill which also affects Scotland, but I must first declare an interest. First, I am a county councillor; secondly, I am a landlord having property which could be let; and thirdly, I am particularly interested in those unfortunate people who want to leave one local authority area and seek accommodation in another area. Having said that, I shall try to be as unbiased and broad-minded as I can be throughout the whole of this Committee stage.

I am quite certain—and I shall be delighted if I am proved wrong—that under present legislation there is no housing subsidy or Government assistance of any kind which is more than 75 per cent. This Bill raises the rent rebate subsidy in its initial stages from 75 per cent.—which it might be now, although I do not think it is so high as that—to 90 per cent., and that is a very good thing. But I must also make the point that, when a person is eligible for supplementary benefit, a local county councillor cannot assist him in any way about whether he is getting the right amount or the wrong amount. Almost the only real advice I can give to somebody who feels that he has not had a fair deal from the National Assistance Board, is to tell him that he has the right of appeal. But when a person is eligible for a rent rebate, then I, as a county councillor, am in a position to get an answer and to quote him within a week almost exactly the amount of rebate that he will get.

I am not by any means criticising the National Assistance or National Insurance people. They are extremely courteous and very helpful. But on more than one occasion, when I have taken up a case and asked, "Is this person being fairly treated?" I have had the reply, "This information is confidential and, although we should like to discuss it with you, we are not in a position to do so". In other words, that is a very polite way of saying, "Mind your own bloody business". That is fair enough. But if I, as a county councillor and a Member of your Lordships' House, cannot find out whether people have been treated fairly, all I can say is that they do not have a hope in hell's chance.


May I comment on what the noble Earl has said about not knowing of any subsidy of more than 75 per cent.? I shall quote again from Mr. Aughton, who is becoming my "Bible" on this Bill because I find it so difficult to understand. Speaking of the rising costs subsidy and the operational deficit subsidy, which he said will be welcomed, he said: But it is more open to controversy whether any part of the cost of rent rebates should fall on the rates"— and added— and this is a new burden, since hitherto the cost of rebates has been wholly covered by subsidies—indeed, covered ten times over as the White Paper Fair Deal for Housing says. Here we have a subsidy which is being covered 10 times over, so it must he more than 75 per cent.

5.50 p.m.


I shall be more gentle in my comments than the noble Lord from North of the Border who has just spoken, and as evidence of my gentleness I shall begin by quoting a statement by Mr. Heath. This is what he said on television the night after the settlement of the miners' dispute: The fight against rising prices must be one with no holds barred. We have seen how he has been fighting against rising prices: there has been a 17½ per cent. increase in price of food; there have been increases in the price of clothing, school meals and in practically everything you care to think of. This clause which we are discussing is a plot to increase the rates as well as to increase rents.

The noble Lord, Lord Drumalbyn, who is always very well informed on these matters, gave us some examples of burdens for the relief of poverty which ratepayers have to bear. He mentioned a proportion of the cost of school meals, although let it be understood that the bulk of the cost of school meals comes from the State. Those were only very small items that he mentioned. But this is a gigantic item which is going to be put on the shoulders of the ratepayers. Not only will the ratepayers have to bear a portion of the rebates which will exist this year but the rebates will go on increasing as the rents increase every successive year. Therefore there will be a bigger gap between the so-called fair rent and the amount which certain tenants have to pay. The amount of that gap which will fall on the ratepayers will go on increasing year by year.

Let us take a simple arithmetical example. I suppose we can accept that 2 million tenants will get rebates; that is a moderate estimate because many Government publications have mentioned a higher figure. Let us assume that they get a rebate of £1 per week; that also is a modest figure, because the Government examples in the White Paper have given considerably higher figures. This means that £100 million a year has to be met in rebates. On the basis of the evidence in Government statements we can confidently call that £200 million a year. An increasing proportion of that is to be shouldered by the ratepayers every year. We have been told that it is the aim of the Conservative Government to give more power to local authorities. This Bill will increase their power. It will hand over to local authorities a power which local authorities have not hitherto possessed. In fact, local authorities will be given the duty of relieving a certain measure of poverty which has hitherto been regarded as the responsibility of the national Government. This will be unloaded on to the local ratepayers; and we know what the national Exchequer will do with the millions of pounds which it is going to save.

Under this clause the Government are proposing to put up the rates still further. They are very fond of putting up local rates. In the first year after they were returned to power, the rates went up by over 10 per cent. throughout the country. This year they have gone up by 12½ per cent. compound over last year's figure. The ratepayers are getting a very poor deal. We have to bear in mind, as my noble friend Lord Garnsworthy said, that rates are a regressive form of taxation; the poorer you are the bigger the proportion of your income you have to spend on rates. This applies even now after the very generous rebates which my noble friend Lord Greenwood of Rossendale made when he was a Member of another place and a Labour Cabinet Minister. There was published by an Oxford economic group some years ago—not so long ago as to be out of date—a study of the incidence of rates. It showed that the ordinary working-class person paid about 8 per cent. of his income in rates, whereas the comfortably off middle-class person paid about 2 per cent. So rates are a regressive form of taxation. While I am not one of those in local government circles who advocate the abolition of the rates I feel that there should be other forms of income which local authorities should enjoy. But that is digressing slightly from the main theme of my argument.

Accepting that rates are regressive and have risen by almost 25 per cent. since the present Government came into power, what is the prospect for local authorities in the next few years? The Government are to bear 90 per cent. of the cost of these rebates in the first year. The proportion will reduce by 5 per cent. per year until it becomes 75 per cent. in 1975. This means that ratepayers will have to meet 10 per cent. of the total cost of these rebates this year, rising to 25 per cent. in 1975. This will mean another big increase in local rates, on top of the 25 per cent. that rates have increased since the Conservative Government came into power.

The noble Lord, Lord Hylton, mentioned certain areas where industry is decaying—it may be the mining industry, the textile industry or the shipbuilding industry. There are certain areas which will have to carry a very heavy burden indeed because a very large proportion of their tenants will be getting rebates of their tenants will be getting rebates. The Association of Municipal Corporations has suggested, even if the Government do not give way on the general principle, that those areas which have to carry very heavy burdens should have some special form of assistance from the State. I support that proposal wholeheartedly. But I go very much further. I think that the whole conception of this clause is bad. Ratepayers are already bearing a bigger burden than they ought to be; that burden is being increased every year under the Conservative Government. It is about time it was stopped.


I still hope that I shall be able to persuade the noble Lord that it is a reasonable proposition that local authorities should bear a small proportion of the cost of the rent rebates they grant. It is a comparatively small proportion. I detect that the Committee as a whole is not opposed to the idea of making rent rebates mandatory; that is to say, the imposition of a duty to operate rebate schemes in place of an option to have them. Those authorities which at present exercise their option to have rebate schemes have to meet the cost by putting up their rents or from their rate fund contribution. Moreover, those authorities which do so, do so in line with a guidance circular which was issued by the previous Government in 1969. Their rent rebate schemes very often conform to that circular. When they do that, they are in line with Government policy as they will be here. But it is becoming mandatory instead of optional.

The noble Lord says that an imposition is being put on all local authorities with the introduction of mandatory rent rebate schemes requiring local authorities to make contributions towards them. But the fact is that whereas previously their ratepayers were in one form or another paying pretty well the whole cost, some in higher rents and others in higher rates, they will now receive a 90 per cent. subsidy from the Government in the first year, and not less than 75 per cent. in the first period of years. I really cannot believe that that is unreasonable, or that it is in any way mean or unfair. The noble Lord asks: Why do the Government dare to impose schemes in this way? The answer, in his own words, is: because the Government are taking the larger share in the payment of the piper's fee. And this in itself, on his own argument, is not an unreasonable point of view: that where the Government are setting up a national scheme they should see that there is a model rebate scheme and that that should be the basis on which the subsidy is paid.

The noble Lord mentioned the cost of management expenses, and I apologise to him for not having picked up this point when I was answering him before. It is perhaps worth mentioning that one of the ways in which assistance is at present given to the less well off is through rate rebates. Where rate rebates are involved, as I understand it, the local authority pays the cost of management of rate rebate schemes and 25 per cent. of the benefits, and the rest is borne by the Government. So far as the payment of benefits is concerned, the rate rebate scheme is very much in line with what is proposed for the rent rebate scheme. But so far as the rent rebate scheme is concerned, the Government will contribute to the cost of the management expenses at the rate of 75 per cent. of the total cost, up to a given limit, which is explained in a later paragraph. In other words, they will establish a formula for deciding what level of management expenses is reasonable in relation to rent rebates, and they will give a subsidy towards that. So in that respect also they are better off.

Noble Lords should also bear in mind that the local authorities are better off in another respect, too: they can get Government subsidy, and will get Government subsidy, to the extent that the rent rebate scheme causes a deficit in their accounts. In other words, if there is no deficit at all in their housing revenue accounts they will not need, and so will not get, a rent rebate subsidy. But those local authorities to which the noble Lord referred—those with a large proportion of tenants who receive rebates—will be just the people who are likely to have deficits in their Housing Revenue Accounts and who will receive subsidy towards the payment of the rents. I think it would be just worth while also to mention that the Secretary of State may himself make regulations to vary the provisions of Schedule 3, which sets out the basis of the model scheme; and to advise him on any question relating to the operation of rebate schemes in general, or of any particular rebate scheme, an advisory committee on low rebates and rent allowances is to be set up. If an authority applies to the Secretary of State on the ground that the general level of rents of a housing authority's dwellings is higher than the general level of all housing authorities taken together, he may authorise that authority to vary the model scheme to the extent that he directs; and, if so, the model scheme in the case of that authority will mean the model scheme as so varied in accordance with the direction. In other words, the sort of authority which the noble Lord has in mind will be able to receive a substantial contribution towards any deficit in its housing revenue account.

Considering that the whole purpose of this legislation is to meet need—as I have said before, both the need of the individual and the need of the local authority—it seems to me that it is only reasonable that the local authority, which has the primary responsibility for housing, should meet a proportion of the rent rebates given by itself for its own houses; and I would have hoped that the Committee would feel that the proportion of 25 per cent., which will be the norm, is not excessive. I hope that I have been able to convince noble Lords that really this is not a monstrous innovation, but that it is an improvement from the local authorities' point of view on what is already happening.

6.5 p.m.


I really must take issue with the remark that the noble Lord, Lord Drumalbyn, has just made, when he talked about the local authorities having the primary responsibility for housing. That is not what we are talking about. We are talking about the relief of poverty by means of rent rebates; and I say that the Government and the taxpayer, and not the local authorities, should have the primary responsibility for the relief of poverty. What is being done in this clause is to take part of the responsibility away from the taxpayer, and particularly from the Supplementary Benefits Commission, and lay it on the shoulders of the local tenants and the other ratepayers in the area. The noble Lord shakes his head. This is a fact.


I shake my head because the Supplementary Benefits Commission is concerned with those who are not in work, whereas the rent rebates will go to all who need it, irrespective of whether they are in work or not, which is a very much wider proposition.


I am well aware of what the noble Lord says. What I am saying to him is that part of the payments which are made by the Supplementary Benefits Commission in respect of the rents that are paid by the recipients is now going to be paid by the local authority under the rent rebate scheme, which is being made mandatory—and I am not quarrelling with that. I agree with the noble Lord that it is the general sense of this Committee, and I think of the people at large, that we should have mandatory rebate schemes. This is one of the respects in which there is no dispute about granting more or less freedom to local authorities. If we think it is a good idea for tenants to be assisted with their rents, then there must be a national scheme. The noble Lord is absolutely right; it would be quite unfair for a tenant who is in one authority to be given preferential treatment when compared with his neighbour across the road who happens to be in another authority. This is common ground, I think, between us. But what we are saying is that if the Government have decided on what the shape and form of this national scheme should be, then they should foot the bill. It is the responsibility of the taxpayers at large. Having decided, through their representatives, that this is the kind of scheme that they want and that this is what it is going to cost, they should finally sign the cheque.

I cannot see how the noble Lord can also say that authorities will be better off under this scheme. If he is going to make an assertion like that, by which noble Lords may be influenced on how they are going to vote on this Amendment if it is pressed to a Division, he should back up his statement with figures. Since most local authorities do not operate rebate schemes which are anything like as generous as the one set out as the model rebate scheme in the Bill, the cost of rebates is going to increase very markedly; and, as the noble Lord himself has pointed out, there are still many local authorities who do not operate rebate schemes at all.

So what I think one ought to look at is how much this 25 per cent. in 1975–76 will represent in terms of the total cost falling on the ratepayers and the other tenants in local housing authorities, and then we can see whether it is true that, as the noble Lord says, the local authorities will be better off. I just cannot follow this. I cannot see how it can possibly be true; but we cannot judge the validity of the noble Lord's assertion unless he is prepared to give us the figures.


The noble Lord, Lord Avebury, is indeed right and does the Committee a good service by bringing us back to what this debate is about. It is about whether, for the first time, the relief of the poor should become a local instead of a national responsibility. I am sorry; I should not have said "for the first time": I should have said it was about whether we should move from Elizabeth I to Elizabeth II, because the first time was, of course, the Poor Law of Elizabeth I. So that is what we are saying: should we go back to the kind of scheme in existence at that date, or should we continue what is the present method?

The noble Lord, Lord Drumalbyn, has supported his view with two arguments alone, and with respect one is an inaccuracy and the other is misleading. If anybody has been affected by what the noble Lord, Lord Drumalbyn, said I hope they will be good enough to listen to the facts which I am going to put before the Committee, and I should not dream of relying on my own view but will quote authorities.

There is no dispute anywhere I think but that there would be gross injustice as between different authorities if this scheme were to be effected. As the much quoted Mr. Henry Aughton, Borough Treasurer of Hemel Hempstead, said: One has only to consider the relative positions of a city with masses of rented housing, public and private, and a prosperous, almost wholly owner-occupied town on its outskirts. This shows that it would be totally unfair for the relief of charity to be visited on local authorities because their circumstances are so totally different. It is for that reason that the relief of charity is, and always has been, regarded as a national and not a local responsibility.

The noble Lord, Lord Drumalbyn, said, however, that for two reasons we ought to reject the Amendment. The first was a much overstated argument that you must have financial participation to prevent financial irresponsibility. I suppose this is a tenable argument with irresponsible people. I suppose it is a tenable argument with people who have any latitude as to how they are going to spend what is in their pocket. But we are dealing with highly responsible local authorities and what they are going to spend their money on—a tight, precise scheme laid down by the central Government, and subject of course to district audit as is everything which a local authority does. It is a scheme in regard to which the word "latitude" is totally out of place. The noble Lord, Lord Drumalbyn, spoke of latitude. There is no latitude worth talking about. The scheme is tightly drawn, and we shall be coming to it later on. If the Government wish us to sit at length we are happy to respond.

I can refer to it sufficiently now by saying that it is a tightly drawn, precise scheme, and the latitude open to the local authority is, for all practical purposes, non-existent. So the argument that you must compel a local authority to contribute, say 25 per cent., towards an expenditure to prevent it from being extravagant in something in which it has no latitude is a very far-fetched argument and I dismiss it completely. It is the argument to which you are forced down when you cannot think of a better one.

So let us turn to the substantial argument, that this is not an innovation and that we are in practice providing that local authorities should contribute towards national charity needs. The noble Lord completely misled us, or attempted to, in that argument. One of my noble friends helped greatly by referring to the statement that the cost of what we are doing at the moment is covered ten times over by the subsidies. That is one way of looking at it. May I put it not in my own terms but in those of the solicitor and Parliamentary officer to the G.L.C. speaking with the whole authority of the G.L.C.; and so as to avoid being accused of selecting any particular sentence may I read fairly fully what the G.L.C. has to say: Rent rebates are designed primarily to assist tenants with low incomes and it is considered that the cost of such subsidy should be borne wholly by the Government. We all march at one there. The G.L.C. continue: The council's view in respect of this subsidy is based upon the premise that the relief of poverty is not a proper function of local authorities. It is a national responsibility falling on central Government and the cost should be wholly met by the Exchequer. The principle of the cost of rebates being met by central Government is well established in practice in the case of tenants who fall within the ambit of the social security scheme. What the noble Lord, Lord Avebury, said about that was absolutely to the point. The social security contributions being made out of central Government taxation through the S.B.C. will fall from the present figure of £150 million over the course of the next five years to a figure well below £100 million, because central Government is being relieved of its responsibility for paying 100 per cent. of that kind of relief of poverty. Who is making it up? It is being made up in this scheme out of which the Government is requiring the local authority to pay a contribution.

I go on reading what the G.L.C. has to say: The provisions of Clause 6, as drafted, would shift to local authorities at least a share of what is now the responsibility of the Department of Health and Social Security in these cases. The G.L.C. officer goes on to the point which I am directing particularly to the noble Lord, Lord Drumalbyn. He says: It may be argued that many local authorities operate a rent rebate scheme for their tenants at the present time and that they are bearing the cost of such rebates themselves. This is the point which the noble Lord has just put forward, and I read—these are not my words: However, such an argument would, it is submitted, be false."— a strong word "false"— The present schemes are operated under the existing system of fixed subsidies, payable irrespective of the state of an authority's Housing Revenue Account. In effect, therefore, the full cost of the present rent rebate schemes is borne by central Government. It has been pointed out that if you compare the amount contributed by central Government it is overwhelmingly greater than the cost involved.


May I interrupt the noble Lord? If that is so, he must surely appreciate that the flat rate subsidies given at the present time related to the cost of housing are paid whether there is a rent rebate scheme or not. Therefore I would have thought it was quite clear that if you compare the authority which has a rent rebate scheme with the authority which has not, both authorities are given the same subsidy, but the authority which has the scheme is paying and therefore it cannot be paying it out of that housing subsidy.


The noble Lord would have assisted the Committee greatly if, when he first put forward his argument, he had given both sides of the argument. The noble Lord wants now to argue that, it would have been helpful if he had said that in the first place. My view is that it is wrong and that the view of the G.L.C., the A.M.C. and the Urban District Councils Association is right. The proper view to take is that this is indeed a first charge on the subsidy which the Government pay, willy-nilly; and that the only interpretation that you can put on it is that the Government pay as in other respects for the relief of poverty, that it is not and it should not be a local responsibility, and that it would be wholly unjust as between different localities to attempt to make it so. This point has been made by the noble Lord, Lord Hylton.

The view that I am putting forward and the view that he put forward—I do not want to embarrass him—are happily coincidental and we seem to be thinking on the same lines in this respect. The view that I am putting forward and for which I take responsibility is supported by the three associations after long negotiations with the Government and after listening to and reading what was said in the endless debates in another place on the Committtee stage there. I am not surprised that those debates went on so endlessly if it takes as long to get information in the other place as it does here; for one must keep pushing and pushing before one gets the hard facts. After all that, the A.M.C. held a special meeting on March 7 at which 261 authorities of the Association's membership were represented. With only three dissentient votes, the following Motion was passed by an overwhelming majority: That, while entirely accepting the need for radical reform of housing finance, the Association in pursuance of the reports by the Housing Committee now calls upon Her Majesty's Government to consider again modification of the Housing Finance Bill at present before Parliament with a view to securing that (a) … (b) … (c) … (d) … and (e) … What did they put as (a)?—and this is the only one I need read: The cost of rent rebates and allowances is accepted as a national responsibility to be met wholly by the Exchequer. So we are on my point that there is not a single local authority association which does not share the view which is put forward in this Amendment. There is not a person I have heard of who does not take the philosophical standpoint that poverty is a national problem and not a local problem. I should have thought that nobody wants to go back to the Poor Law of Elizabeth I; and I should have thought that the view of the G.L.C., expressed with the authority of the G.L.C. (which I happen to share) is a valid interpretation of what is happening at the present time: namely, that there is a subsidy and a subsidy unrelated (related only to housing); that it is a fixed subsidy; that the rent rebates are a first charge upon it; and that as the subsidy covers that by (I think my noble friend said) ten times, you cannot maintain other than that the relief of poverty in the way of rent rebates at the present time is being borne wholly by the Exchequer; that is to say, by the taxpayer. That is the present position and that is the position that should continue. It will continue only if this Amendment is accepted.


Are not my noble friend's arguments further underlining the proof that we, as a nation, spend a smaller proportion of our gross national product on housing than any other advanced country? In fact, we produce fewer houses per thousand than does any other advanced country.


I rise because it seems to me that when the noble Lord, Lord Drumalbyn, addressed himself to me he thought we could reach agreement. Let me say that there is nothing easier for him to succeed in doing if he will accept this Amendment. It is as simple as that. I think it would make a great deal of difference to the future proceedings in this Committee if he were to do so. I think it would make a great deal of difference to the reception of this Bill in the country generally. It would mean in particular that he would possibly become the agent through which his Government regained some of the goodwill that they had lost in the field of local government. There is no element in this field of subsidy where the Government could give way more easily and, if I may say so, at less cost. He said that he detected that the Committee as a whole does not disapprove of what the Government here propose. I should like to know where he has had any real evidence to that effect this afternoon.


I hope that I did not say that. What I said was that I detected that the Committee as a whole was in favour of rebates being made mandatory.


I am glad that I misunderstood the noble Lord, because I just could not appreciate why he should have used the words I attributed

to him. I am glad to acknowledge that I appear to have been in error. I think that the noble Lord knows that I should not wish in any way deliberately to misquote him. He referred to the 1969 Rent Rebates Scheme. He knows very well that in 1969 the local authorities were free agents. He himself went on to say—and I hope that I quote him correctly this time—that it now becomes mandatory instead of optional. I do not know how it is possible to argue on the one hand that something is mandatory and at the same time to say that you are extending the area of freedom of local government. If local authorities are being compelled to operate a policy that they have not previously seen fit to operate. I cannot see that there is an question of extending the area of freedom. I am grateful to the noble Lords who have spoken on this Amendment. I think there is no alternative but to put the issue to the vote.

6.29 p.m.

On Question, Whether the said Amendment (No. 57) shall be agreed to?

Their Lordships divided: Contents, 58; Not-Contents, 87.

Avebury, L. Granville-West, L. Shackleton, L.
Bacon, Bs. Henderson, L. Shepherd, L.
Beaumont of Whitley, L. Hoy, L. Shinwell, L.
Bernstein, L. Hughes, L. Simon, V.
Beswick, L. Hurcomb, L. Slater, L.
Blyton, L. Hylton, L. Snow, L.
Brockway, L. Jacques, L. [Teller.] Stow Hill, L.
Burntwood, L. Leatherland, L. Strang, L.
Champion, L. Llewelyn-Davies of Hastoe, Bs. [Teller.] Summerskill, Bs.
Chorley, L. Taylor of Gryfe, L.
Crook, L. Lloyd of Hampstead, L. Taylor of Mansfield, L.
Delacourt-Smith, L. McLeavy, L. Wade, L.
Diamond, L. Maelor, L. Watkins, L.
Douglas of Barloch, L. Milverton, L. Wells-Pestell, L.
Douglass of Cleveland, L. Morris of Kenwood, L. Williamson, L.
Energlyn, L. O'Hagan, L. Winterbottom, L.
Fiske, L. Peddie, L. Wootton of Abinger, Bs.
Gaitskell, Bs. Platt, L. Wright of Ashton under Lyne, L.
Gardiner, L. Popplewell, L.
Garnsworthy, L. Seear, Bs. Wynne-Jones, L.
Aberdare, L. Belhaven and Stenton, L. Crathorne, L.
Ailwyn, L. Belstead, L. Cromartie, E.
Albemarle, E. Berkeley, Bs. Daventry, V.
Alexander of Tunis, E. Birdwood, L. de Clifford, L.
Allerton, L. Brougham and Vaux, L. Denham, L. [Teller.]
Alport, L. Buckton, L. Derwent, L.
Amory, V. Burton, L. Drumalbyn, L.
Auckland, L. Clifford of Chudleigh, L. Dundee, E.
Balerno, L. Colville of Culross, V. Dundonald, E.
Balfour, E. Craigavon, V. Eccles, V.
Balfour of Inchrye, L. Cranbrook, E. Emmet of Amberley, Bs.
Ferrers, E. Kinloss, Ly. Rhyl, L.
Ferrier, L. Latymer, L. Rochdale, V.
Gage, V. Limerick, E. Rockley, L.
Goschen, V. Long, V. St. Just, L.
Gowrie, E. Lothian, M. Saint Oswald, L.
Grenfell, L. Loudoun, C. Sandford, L.
Grimston of Westbury, L. Malmesbury, E. Sandys, L.
Hailes, L. Mancroft, L. Selkirk, E.
Hailsham of Saint Marylebone, L. (L. Chancellor.) Margadale, L. Sempill, Ly.
Massereene and Ferrard, V. Somers, L.
Hanworth, V. Merrivale, L. Stonehaven, V.
Harvey of Prestbury, L. Mowbray and Stourton, L. [Teller.] Trefgarne, L.
Hatherton, L. Tweedsmuir, L.
Hewlett, L. Northchurch, Bs. Vernon, L.
Hives, L. Nugent of Guildford, L. Vivian, L.
Hood, V. Oakshott, L. Wakefield of Kendal, L.
Howard of Glossop, L. Onslow, E. Wrottesley, L.
Hylton-Foster, Bs. Rankeillour, L. Young, Bs.
Kindersley, L. Reigate, L.

Resolved in the negative and Amendment disagreed to accordingly.

6.37 p.m.

LORD DIAMOND moved Amendment No. 58: Page 10, line 22, leave out ("model").

The noble Lord said: There are two ways in which the Government seek to restrict the responsibility of the taxpayer to carry the burden of relieving poverty on a national basis. The first is the one that we have very recently discussed, and relates to the percentage which is payable in the subsidy which goes to meet that giving of relief. The second is the one to which we are now moving on and which relates to the amount that qualifies for that percentage relief. The amount which qualifies at the moment is defined in subsection (2) of this clause: The amount of rent rebate subsidy payable to a local authority for any year shall be a percentage of the amount of the model rent rebate contribution … We have discussed the percentage, and unfortunately we have not so far succeeded in persuading the Government what would be the sensible thing to do about it. We now come to the qualifying amount; namely, the model rent rebate contribution. It is the amount of that contribution that I seek to redefine by excluding the word "model", because that has a special meaning.

The purpose of this Amendment is to enable the Government so to alter the Bill that the whole of the rent rebate contribution, together with the cost of administering it, constitutes an amount to which the percentage we have just agreed shall apply. Thus it will be appreciated that if the whole of those costs do not qualify, then the Government are making a double reduction. They are excluding some of the amounts which ought to be included; and then, so far as the remainder is concerned, they are applying a percentage less than 100. Clause 7(2), to which this subsection refers, states: The amount of the contributions to be so made for any year shall be the total of:

  1. (a) the local authority's standard amount of rent rebates for the year, as defined by section 20(8) of this Act, and
  2. (b) the amount, if any, by which the rent rebates granted by the local authority for the year exceed the said standard amount, and
  3. (c) the local authority's costs of administering their rebate scheme under Part II of this Act for the year."

We have still not got to the end of our journey because we now have to find out what Clause 20(8) says with regard to the standard amount. It states that: … an authority's standard amount of rent rebates' … means for any period:

  1. (a) if the Authority have been operating the model scheme for that period, the amount of rebates … otherwise than under subsection (1) or subsection (2) of section 21 below;
  2. (b) if the authority have not been operating the model scheme for that period, the amount of rebates … which they would have granted for that period otherwise than under subsection (1) or subsection (2) of section 21 below …"
So we are referred still further forward in our fourth step upon the journey of finding out the truth of what the Government are seeking to say. We find in Clause 21: A housing authority may grant to a person to whom their rebate scheme applies a rebate of a greater amount than they would otherwise grant if they consider that his personal or domestic circumstances are exceptional.

I remind your Lordships of what is the purpose of the Bill. It is, to quote the Government, to concentrate help where help is needed. So the first thing that this curious, topsy-turvey, muddled Government do is to exclude the one category which stands first in that definition; namely, somebody who needs an additional rebate because his personal or domestic circumstances are exceptional. That is the first comment I make: that the case of exceptional need because of domestic or personal circumstances being exceptional is excluded in a Bill which claims to provide for the concentration of funds where the need is greatest. So obviously we should remove that exclusion and put back into the Bill power to pay the rebate in a greater amount if the personal or domestic circumstances are, in the opinion of the housing authority, quite exceptional.

So we now find, if we put that back, that the other two items which are excluded by the use of the word "model" are, (a) the amount paid in excess of the model amount, and (b) the cost of administration. As to the amounts paid in excess of the model amount, these are amounts paid by the local authority in their judgment on the basis of the need of the person concerned; and so far as the local authority costs of administration are concerned, they are a new responsibility. The scheme cannot be administered without some costs of administration being involved, and therefore we say that this percentage, albeit we cannot now insist on its being 100 per cent. and have to accept a lower figure, should not be a double deduction by removing from the scope of this relief of the poor the excess over a model scheme or the costs of administration, or the special payments to a person who because of his personal or domestic circumstances, finds himself in an exceptional position. Those are the reasons why in this Bill, which we have been told so many times provides for dealing with people and for concentrating help where help is needed, these exclusions should be removed. This Amendment, I believe, serves that purpose and would remove them.

I will, if required to do so, quote the views of the local authorities, but I do not think it is necessary to do that again: they have been quoted both by the noble Lord, Lord Hylton, and by myself. Suffice it to say that the A.M.C., at a special meeting, and the G.L.C. have reached the same conclusion; namely, that these costs of administration should be included, and that the whole of the cost of providing for the relief of poverty should be paid by the central Government. We have not achieved the first; we were narrowly defeated on that. I regret that extremely, because I think this is a thoroughly reactionary step and one that will cause enormous problems and hostility in the relations between local government and central Government. These things will last a long time. I hope that the Government are not going to rub salt in the wound by saying that not only should a percentage be applied, but that the amount of percentage applied should be less than the true amount. Therefore I beg to move.


This Amendment does not raise a major issue. It seems to be a small detailed improvement in the Bill. It further seems to accord very much with the philosophy of the Bill in concentrating help on persons who need it. I hope that my noble friend will see his way to accept the Amendment.

6.45 p.m.


The noble Lord, Lord Diamond, has put his arguments in this case very clearly, but I am afraid I cannot accept the Amendment. I think that perhaps it might be for the assistance of noble Lords if I were to say a word or two to start with on the general subject, as we shall be going through rent rebates for a little time yet. I think the first thing that is worth mentioning, which the noble Lord did not mention, is that an authority may not operate a rebate scheme which is less favourable to tenants than the model scheme. The model scheme is defined in subsection (7) of Clause 20. It means, a rebate scheme, or as the case may be an allowance scheme, containing such provisions, and only such provisions, as the authority are for the time being required by this section to include in their scheme"— and that relates of course to the Schedules. Under Clause 21, as the noble Lord said, authorities may operate a rebate scheme which is more favourable to tenants and grant rebates higher than specified under the model scheme in exceptional circumstances, provided that the total of the rebates does not exceed the standard amount by more than 10 per cent. If noble Lords will turn over the page what the noble Lord quoted is found in Clause 21(3). They may vary the model scheme provided the variations do not carry the total of rent rebates to more than 10 per cent. of the standard amount. The excess over the standard amount does not count for the rent rebate subsidy, and the noble Lord wants that to count for the rent rebate subsidy.


It is a small point, but I cannot find the reference to 10 per cent. in the subsection to which the noble Lord referred, Clause 21(3).


I did not say that the 10 per cent. was in Clause 21(3). It is in fact in Clause 22. As I mentioned before, where the general level of rents for housing authorities' dwellings is higher than the general level of all housing authorities taken together, and the authority applies to the Secretary of State, the Secretary of State may authorise them to vary the model scheme to the extent that he directs. In that case, the model scheme in the case of that authority will mean the model scheme as so varied in accordance with that direction. So there is a certain amount of flexibility in the model scheme. The Secretary of State may himself make regulations to vary the provisions of Schedule 3, which sets out the basis of the model scheme; and I have already mentioned the advisory committee on rent rebates and rent allowances.


I am only seeking information. The noble Lord is referring to the power to vary the scheme. Is he saying that any excess over and above the scheme is included in the provisions of Clause 21 for qualifying for rebate?


No, the provisions in Clause 21 do not rate for rent rebate subsidy. I think the general principle here must be that if one lays down a model rent rebate subsidy then it is reasonable that expenditure in excess of that subsidy should not count for the subsidy. The Government are really saying, "This is the sort of scheme we think should be operated on a national scale. You may, if you like, have a more generous scheme than that, but if you do it is not reasonable to ask the Government to pay for it because then it would not be fair as between one local authority and another. One local authority may have a much more generous scheme than another: some local authorities' schemes may be very modest. It would not make sense, therefore, to ask the ratepayers in one area of local government to pay for a more generous rent rebate scheme in the area of another local authority." If you have this kind of scheme I think you are bound to have this kind of provision.

The same applies to the cost of managing the rebate scheme, and I am grateful to the noble Lord for putting me right on this point because I did make a slip. I admit that I was wrong and that he was right. The cost of managing the rebate scheme is borne on the rates up to the specified limits unless the Housing Revenue Account is in surplus. If the cost of managing the rebate scheme exceeds the specified limit the excess then counts under the provision that the noble Lord quoted, because it comes into the Housing Revenue Account. Then comes the rising costs subsidy as part of the general cost of management, which is recognised as reckonable expenditure for the rising costs subsidy. I should like to make that clear.

I hope that noble Lords will agree that in a national scheme of this kind it makes sense to have a model scheme so as to be fair throughout the country as a whole. That is the reason for it. I do not see that it would be reasonable not to have a model scheme and to let everybody have their own schemes to pay whatever any local authority wanted to pay. I do not think that any Government could provide for that. In such a case you would then move back to some kind of flat average rate which the Government would pay; but it would not have a completely open-ended commitment to pay whatever the local authority decided to grant in the way of rent rebates. I hope that the noble Lord will not press this Amendment, because I am certain that he, as Chief Secretary, would have resisted it in days gone by.


It is some little time since I was Chief Secretary, and my duty now is to attempt to do what falls to the duty of an Opposition—because, of course, noble Lords opposite are in great embarrassment and difficulty. They, like me, have received requests for assistance to put forward the views of the local authority associations in this argument as between the local authorities and the central Government. They find themselves somewhat inhibited by having to face a division of loyalties between their sense of what is right (as expressed by local authorities) and a sense of loyalty to their Party. I understand that very well. Therefore if we did not put this forward, the case for the local authorities would go completely unrepresented.

In my view that case is a solid one. It has been made by all of them, be they Labour, Liberal, Conservative or Independent controlled, or just in balance. Broadly, they have all agreed that this provision is wholly wrong in principle and that the relief of poverty should be a national and not a local responsibility. Furthermore, they agree that it should cover the cost of the rebate scheme and the cost of the administration. As to the cost of administration, the noble Lord, Lord Drumalbyn said very little indeed. I fail to see, therefore, why, if the Government are laying down a scheme which they require the local authority to administer, the cost of administration should not be borne—as we think the whole scheme should be borne—centrally.

So far as concerns the other argument produced by the noble Lord which appeals to my sense of wise economic management (which I trust I still retain), so far as I recall, Clause 22 provides that a rebate scheme is not an unlimited or open-ended commitment. This is a commitment up to 10 per cent. above the standard amount. Therefore we are not dealing with an open-ended commitment, or anything like it; we are dealing with a small amount of flexibility which is given to a local authority to say, "This gives the standard amount laid down by the Government in its wisdom, but we think we know a little more about local circumstances than the Government do. The Government in their wisdom have said that we may go a little further if the local circumstances justify this, and

help up to an increase of 10 per cent., but no more than that."

I am delighted to hear that the standard amount provided by the Government would be such a figure as the Government feel satisfied should apply at a minimum. When one is providing for a universal formula one tends naturally to provide a minimum figure, because of the matter to which the noble Lord, Lord Drumalbyn, has just referred—namely, the need for wise economic management. It would be unheard of to provide a standard figure which was all right for the bottom half of the local authorities but which would be totally excessive for the top half of the local authorities—or whichever way one wants to divide local authorities. But the Government would not do that. They are likely to lay down a standard scheme below which nobody would want to go. It follows, therefore, that we are dealing with a vast number of local authorities, with vastly differing circumstances, some much better equipped to cope with financial problems than others; and others having very considerable difficulties with regard to low wages, and so on, where poverty needs to be relieved much more fully than in other cases; and the local authority should have the 10 per cent. tolerance provided. That being the case, I do not think one is asking for anything unreasonable in suggesting that the whole amount—be it the standard amount or be it, because of local circumstances, the standard amount plus 2 per cent. or 3 per cent. or, if you like, the maximum tolerance of 10 per cent.—should, as so varied, qualify for the percentage. Already a percentage and not the whole amount is being paid, and therefore I come back to what I originally suggested: that this Amendment should stand.

6.59 p.m.

On Question, Whether the said Amendment (No. 58) shall be agree to?

Their Lordships divided Contents, 52 Not-Contents, 81.

Avebury, L. Brockway, L. Energlyn, L.
Bacon, Bs. Burntwood, L. Fiske, L.
Beaumont of Whitley, L. Champion, L. Gaitskell, Bs.
Bernstein, L. Crook, L. Gardiner, L.
Beswick, L. Delacourt-Smith, L. Garnsworthy, L. [Teller.]
Blyton, L. Diamond, L. Granville-West, L.
Greenwood of Rossendale, L. McLeavy, L. Simon, V.
Hale, L. Maelor, L. Snow, L.
Henderson, L. Milner of Leeds, L. Taylor of Gryfe, L.
Hoy, L. Morris of Kenwood, L. Wade, L.
Hughes, L. Peddie, L. Watkins, L.
Hylton, L. Platt, L. Wells-Pestell, L.
Jacques, L. [Teller.] Popplewell, L. White, Bs.
Leatherland, L. Ritchie-Calder, L. Williamson, L.
Lee of Asheridge, Bs. Seear, Bs. Winterbottom, L.
Llewelyn-Davies of Hastoe, Bs. Shepherd, L. Wootton of Abinger, Bs.
Lloyd of Hampstead, L. Shinwell, L. Wynn-Jones, L.
Longford, E.
Aberdare, L. Denham, L. Margadale, L.
Ailwyn, L. Drumalbyn, L. Massereene and Ferrard, V.
Alport, L. Dundee, E. Milverton, L.
Amory, V. Dundonald, E. Mowbray and Stourton, L. [Teller.]
Auckland, L. Eccles, V.
Balerno, L. Ferrers, E. [Teller.] Northchurch, Bs.
Balfour, E. Ferrier, L. Nugent of Guildford, L.
Balfour of Inchrye, L. Gage, V. Onslow, E.
Beauchamp, E. Gainford, L. Rankeillour, L.
Belhaven and Stenton, L. Goschen, V. Reigate, L.
Belstead, L. Gowrie, E. Rochdale, V.
Berkeley, Bs. Grenfell, L. Rockley, L.
Bethell, L. Grimston of Westbury, L. Ruthven of Freeland, Ly.
Birdwood, L. Hailes, L. St. Just, L.
Brooke of Cumnor, L. Hailsham of Saint Marylebone, L. (L. Chancellor.) Saint Oswald, L.
Brougham and Vaux, L. Sandford, L.
Buckton, L. Hanworth, V. Sandys, L.
Burton, L. Hatherton, L. Selkirk, E.
Carrington, L. Hewlett, L. Sempill, Ly.
Clifford of Chudleigh, L. Hives, L. Somers, L.
Colville of Culross, V. Hood, V. Stonehaven, V.
Craigmyle, L. Hylton-Foster, Bs. Tweedsmuir, L.
Cranbrook, E. Kinloss, Ly. Tweedsmuir of Belhelvie, Bs.
Crathorne, L. Latymer, L. Vernon, L.
Crawshaw, L. Limerick, E. Vivian, L.
Cromartie, E. Lothian, M. Wakefield of Kendal, L.
Daventry, V. Loudoun, C. Wolverton, L.
de Clifford, L. Malmesbury, E. Young, Bs.

Moved accordingly and, on Question, Motion agreed to.

7.6 p.m.


Perhaps it will be convenient to resume the House so that the Committee may be adjourned for an hour. I beg to move that the House do now resume.

House resumed.